Bloggers Criticize Slow Pace of Change

As originally appeared in the Troubled Company Reporter.

PICO Holdings, Inc. (Nasdaq:PICO), based in La Jolla, Calif., is a diversified holding company reporting recurring losses since 2008. PICO owns 57% of UCP, Inc. (NYSE:UCP), 100% of Vidler Water Company, Inc., a securities portfolio and various interests in small businesses. PICO has $662 million in assets and $426 million in shareholder equity. Central Square Management LLC and River Road Asset Management LLC collectively own more than 14% of PICO. Other activists at have taken to the Internet to advance the shareholder cause.

The activist bloggers are displeased with the slow pace of change at PICO. They note that, “In late 2015, American International Group became the target of activist investors. On February 11, 2016, those investors reached an agreement with AIG, whereby two activist nominees got seats on AIG’s Board. Those nominees were made Directors in May 2016. AIG has a total of 16 Directors.

On August 15, 2016, AIG announced that it would sell United Guaranty, its mortgage insurance unit, for $3.4 billion to Arch Capital Group.

On November 17, 2015, PICO filed its ‘Revision to Business Plan.’ Five new Directors came on the PICO Board between December 2015 and March 2016. Raymond Marino was named Chairman on March 23, 2016 — almost 5 months ago. There are 7 Directors on the PICO Board, 5 are shareholder nominated.

How can AIG sell a $3.4 billion mortgage insurer 3 months after 2 of 16 new directors were seated and PICO can’t sell a water right, homebuilder, oil & gas speculation, software stake, biotech preferred position or anything else in 5 months after 5 of 7 directors were seated?

We admit there are differences between AIG and PICO. First, AIG has a competent CEO who wants to keep his job. PICO has an incompetent and corrupt CEO who greedily squeezes every possible penny from PICO shareholders. Second, the AIG Board and AIG executives are presumably working together. Due to the corrupt machinations of Carlos “The NACD-Decorated Horse Thief” Campbell and Michael “Desperado” Machado, PICO executives are incentivized to work only in their self-interest and sell assets above book value.

Last, the AIG Board means business; we assume it would fire the CEO if performance targets were not met. Contrarily, the PICO Board is unwilling to fire Juicer for cause.”

The bloggers believe that the new PICO Board is reactive but not proactive. “Thus far, this PICO Board has done nothing except react to shareholder-inspired change. Left undone are the PICOGate investigation, Board declassification, UCP Director replacement, revelation of the status of UCP Officer Stock Ownership Guidelines, asset sales and return of capital to shareholders. Did we forget anything?

The current Directors and the current Chairman have been in place since March. Not one tangible result has been produced from this Board. Is the new PICO mascot a sloth?

We have been told that 3 PICO Directors are working diligently for shareholder’s interests. But it appears that 4 are not. And on a Board of 7 Directors, our conscientious Directors are overwhelmed. Given the results, or lack thereof, this explanation makes sense to us.

It seems to us that the plate in front of the PICO Board keeps getting fuller. It appears that issues keep arising and this Board refuses to resolve them expeditiously. The AIG Board understands that shareholders own the company. And as Kenneth ‘The Slug’ Slepicka recently learned, shareholders can punish directors who destroy value. In an economic world where time matters, unnecessary delay is destruction of value.”