TS03 Inc Trust Units TSTIF

When should investors push for a change?

[Blue_Sky]

Shares of TSO3 are down 66% year-to-date, 70% from the recent 2016 summer highs and have virtually created no value for holders in the 10 years of Ramblin's tenure. We have a failed distribution agreement with Getinge, are years behind expected sales and installs of the VP4 and are now 6-months into Ramblin's internal sales push with nothing to show but more bloated costs and an increasingly stretched balance sheet. So when should investors push for change? A blogger on this board recently discussed a proxy fight at a Canadian Energy company Crescent Point (CPG). The company was successful at winning its proxy battle with an activist but that didn't stop the board (likely at the request of shareholders) to remove the company's long time CEO, president and board member. Like TSO3, CPG was one of the worst performing stocks in its sector with a valuation that was far below its peers. Shareholders had experienced years of excess management compensation plans, poor allocation of capital, poorly timed capital raises and terrible operational execution. There are many parallels to draw on here at TOS. We have yet to execute on any commercialization strategy of RR's and his team after years and years and multiple partners. No one really knows how many units have been installed (excluding those that have been in Canadian hospitals for years) including RR and his team, a balance sheet that is beginning to look stretched (CPG had higher than industry debt levels / ratios) and an investor communication strategy that has failed at just about every turn. Like CPG, just about every sell-side analyst has abandoned the story and moved to the sidelines either with a hold or sell recommendation. Both have experienced attacks from short sellers and have seen higher than normal short interest ratios in their shares. TOS even had a short report published by a well known and pretty successful U.S. short seller. If you go back to his research Axler points to his success at exposing management teams which has resulted in a high percentage of CEO/CFO terminations. The real 'nail in the coffin' for the CPG CEO was a poorly timed equity raise at the bottom of the energy cycle. It was dilutive and shareholders never let it go. The capital was used to make non-accretive acquisitions and to fund growth THAT COULD NOT BE FUNDED WITH INTERNALLY GENERATED CASH FLOW (Sound familiar?) THIS CANNOT HAPPEN AT TSO3 but shareholders can't have any confidence that Ramblin and his capable CFO won't pull the trigger on a dilutive financing at the lows. All else being equal (energy sentiment and oil prices) I would suggest that CPG will trade higher now that its CEO has been terminated. It will be interesting to see how the market cheers this departure. If RR cannot deliver soon on a number of items including SALES, SALES, SALES, a new and improved distribution agreement with someone that is more competent than the current team at Getinge and providing non-dilutive financing then his fate will certainly result in the same as the CEO from CPG...I guarantee it!