Parthenon LLC Sends Open Letter to Fellow Jewett-Cameron (NASDAQ: JCTC) Shareholders

Rhea-AI Summary

Parthenon , owning 6.2% of Jewett-Cameron Trading Company (NASDAQ: JCTC), has issued an open letter urging shareholders to vote "WITHHOLD" for all Board Directors at the upcoming February 21, 2025 annual meeting. The letter highlights significant concerns about the company's performance, noting that FY 2024 marked the first operating loss in at least 25 years.

The letter criticizes the Board's lack of personal investment, pointing out that insiders own less than 1.3% of outstanding stock, and no Director has purchased shares in the past decade despite the stock's decline. The company's stock has dropped 15% in 2024 and 40% over the past five years (ending December 31, 2024). Despite management's claims of anticipated improvements and statements about the stock being "undervalued", Parthenon expresses skepticism about the Board's commitment and their refusal to explore strategic alternatives to maximize shareholder value.

Positive

• None.

Negative

• First operating loss in 25 years recorded in FY 2024
• Stock price declined 15% in 2024 and 40% over past five years
• Insiders own only 1.3% of outstanding stock
• Board Directors haven't purchased any shares in past decade
• Board refuses to explore strategic alternatives for shareholder value maximization

Insights

Corporate Governance Analyst

This activist campaign by Parthenon represents a significant escalation in shareholder dissatisfaction with JCTC's leadership and warrants serious attention from investors. The confluence of concerning factors is particularly striking:

• Historical Context: The company's first operating loss in 25+ years during FY2024 signals a fundamental deterioration in business performance that cannot be dismissed as cyclical variation.
• Governance Red Flags: The revelation that board members have not purchased a single share in the past decade, despite the stock's 40% five-year decline, indicates a severe misalignment of interests with shareholders. The fact that all director holdings came from grants/options rather than personal investment is particularly troubling.
• Strategic Implications: Management's promise of improvement by Q3 FY2025 without corresponding insider buying suggests a lack of conviction in their own turnaround strategy. The board's resistance to exploring strategic alternatives could be preventing shareholders from realizing value through potential M&A or restructuring opportunities.

A successful 'WITHHOLD' campaign could force the board to consider strategic alternatives or lead to board refreshment, potentially catalyzing value creation. However, shareholders should recognize that such campaigns typically require sustained pressure and coordination to effect meaningful change. The 6.2% ownership stake of Parthenon provides credibility to their demands, but additional large shareholder support would likely be needed to force substantive changes in corporate governance.

Urges all fellow Shareholders to vote "WITHHOLD" for the re-election of all Board Directors

Board refuses to consider strategic alternatives to maximize shareholder value

Business profitability collapsed in Fiscal Year 2024

Stock performance has been abysmal for the past decade

Insiders own less than 1.3% of the outstanding stock

No Board Director has purchased a single share of stock over the past decade – even as the stock has plummeted

LOUISVILLE, Ky., Jan. 30, 2025 /PRNewswire/ --

Dear Fellow Shareholders:

Parthenon LLC is one of the largest shareholders in Jewett-Cameron Trading Company (NASDAQ: JCTC), with a beneficial ownership of approximately 6.2%.  We are writing this letter to urge our fellow shareholders to vote "WITHHOLD" for the re-election of all Board Directors on the proxy for the 2025 annual meeting to be held on February 21, 2025.  It is imperative that shareholders send a clear, powerful statement of dissatisfaction regarding the abysmal business and stock performance. By voting "WITHHOLD", shareholders – the actual owners of the business, whose capital is at risk – can deliver an unambiguous and definitive message that the Board has failed in its duty to both preserve and maximize shareholder value.  No Board Director, in our opinion, has earned a "FOR" vote.

We highlighted our concerns and dissatisfaction with the poor business and stock performance of Jewett-Cameron in detail in our open letter to the Board last year.   Unfortunately, profitability has deteriorated further since we sent the letter, as we feared it would.  The Fiscal Year (FY) ended August 31, 2024 was the first year that Jewett-Cameron suffered an annual operating loss in at least 25 years (based on our review of available Securities and Exchange Commission (SEC) filings).  

Management claims it is taking the necessary steps to improve performance, and has stated that those improvements will be evident in the third quarter report of (FY) 2025.  The third quarter report has traditionally been released in mid-July.  Management also has said it believes the stock is "undervalued" based on various balance sheet metrics.  Interestingly, and tellingly, no Board Director has purchased even a single share of stock over the past year in anticipation of this predicted future business renaissance.  Insiders show no interest in investing in their own company even with the stock down 15% in 2024, and down 40% over the past five years (ending December 31, 2024).  What do they know?  What do they fear? Why do they not wish to participate in the stock advance that would likely follow a significant profit turnaround?  The unwillingness to invest their own personal capital alongside outside shareholders says much more than management's empty promises.  We have heard the same promises for nearly two years in our discussions with management. 

Please vote "WITHHOLD" on the re-election of all Board Directors.  This is your company and your capital at risk.  The Board Directors have no personal financial investment in Jewett-Cameron stock.  All Board Director stock holdings were obtained through grants and/or options (based on an examination of SEC filings from the past decade).  This is a stunning vote of "no confidence" in the business they oversee.  It is even more egregious that stock performance has been horrendous and the Board will not explore strategic alternatives to maximize shareholder value.

Thank you, fellow shareholders, for your consideration.

Sincerely,

Thomas A. Corea
Chief Executive Officer
Parthenon LLC

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SOURCE Parthenon, LLC

FAQ

What is Parthenon 's ownership stake in Jewett-Cameron (JCTC)?

Parthenon owns approximately 6.2% of Jewett-Cameron Trading Company (JCTC).

When is JCTC's 2025 annual shareholder meeting scheduled?

The annual shareholder meeting is scheduled for February 21, 2025.

How much has JCTC's stock declined in the past five years?

JCTC's stock has declined 40% over the five-year period ending December 31, 2024.

What percentage of JCTC stock do insiders own?

Insiders own less than 1.3% of the outstanding stock.

When did JCTC report its first operating loss in recent history?

JCTC reported its first operating loss in at least 25 years during the fiscal year ended August 31, 2024.