13D Filing: Nierenberg Investment Management and Houston Wire & Cable Co (HWCC)

This Schedule 13D (the “Schedule 13D”) is being filed with respect to the shares of common stock (the “Shares”) of Houston Wire & Cable Company a Delaware corporation (“the “Company”).

Item 2.  Identity and Background.

This Schedule 13D is being filed by the following three limited partnerships (the “D3 Family Funds”), the following two corporations which are the sole general partners of the D3 Family Fund(s) indicated below (collectively, the “Reporting Persons”) and the following individual who is the President of each of the two general partners.

Item 3.  Source and Amount of Funds or Other Consideration.

The total amount of funds used by the Reporting Persons to make all purchases of Shares beneficially owned by the Reporting Persons, as reported in Item 5(a,b) was $12,546,222. The source of funds for purchases of Shares by each of the Reporting Persons is the working capital of the applicable D3 Family Fund.

Item 4.  Purpose of Transaction

On September 26, 2017, the Reporting Persons sent a letter to the Chairman and the CEO of the Issuer, which is filed as an exhibit hereto under Item 7, and is hereby incorporated by reference in this Item 4.

The Reporting Persons believe the securities of the Issuer are significantly undervalued and represent an attractive investment opportunity. Depending upon overall market conditions, other investment opportunities available to the Reporting Persons, and the availability of securities of the Issuer at prices that would make the purchase or sale of such securities desirable, the Reporting Persons may endeavor (i) to increase or decrease their respective positions in the Issuer through, among other things, the purchase or sale of securities of the Issuer on the open market or in private transactions, including through a trading plan created under Rule 10b5-1(c) or otherwise, on such terms and at such times as the Reporting Persons may deem advisable and/or (ii) to enter into transactions that increase or hedge their economic exposure to the Common Stock without affecting their beneficial ownership of shares of Common Stock.

No Reporting Person has any present plan or proposal which would relate to or result in any of the matters set forth in subparagraphs (a) – (j) of Item 4 of Schedule 13D except as set forth herein or such as would occur upon or in connection with completion of, or following, any of the actions discussed herein. The Reporting Persons may develop plans and/or make proposals with respect to, or with respect to potential changes in, the operations, management, the certificate of incorporation and bylaws, Board composition, ownership, capital or corporate structure, dividend policy, strategy and plans of the Issuer, potential strategic transactions involving the Issuer or certain of the Issuer’s businesses or assets, or may change their intention with respect to any and all matters referred to in this Item 4.  The Reporting Persons intend to continue to communicate with the Issuer’s management and Board about a broad range of operational and strategic matters. The Reporting Persons intend to review their investment in the Issuer on a continuing basis and may from time to time in the future express their views to and/or meet with management, the Board, other shareholders or third parties and/or formulate plans or proposals regarding the Issuer, its assets or its securities. Such plans or proposals may include one or more plans that relate to or would result in any of the actions set forth in subparagraphs (a) – (j) of Item 4 of Schedule 13D.

Item 5.  Interest in Securities of the Issuer

Item 5(a) is hereby amended and restated to read as follows:

As of the close of business on the date hereof, the Family Fund individually beneficially owned 379,779 Shares, constituting approximately 2.3% of all of the outstanding Shares.

As of the close of business on the date hereof, the Bulldog Fund individually beneficially owned 926,298 Shares, constituting approximately 5.6% of all of the outstanding Shares.

As of the close of business on the date hereof, the Offshore Fund individually beneficially owned 68,774 Shares, constituting less than 1% of all of the outstanding Shares.

By virtue of its relationships with the Offshore Fund discussed in further detail in Item 2, NIMO may be deemed to be the beneficial owner of the 68,774 Shares, beneficially owned by the Offshore Fund, constituting less than 1% of all of the outstanding Shares.

By virtue of his relationship with NIMCO and NIMO discussed in further detail in Item 2, Mr. Nierenberg may be deemed to be the beneficial owner of the 1,374,851 Shares beneficially owned by NIMCO and NIMO, constituting approximately 8.3% of all of the outstanding Shares.

The Reporting Persons, in the aggregate, beneficially own 1,374,851 Shares, constituting approximately 8.3% of the outstanding Shares.

Item 5(b) is hereby amended and restated to read as follows:

The Bulldog Fund, NIMCO and Mr. Nierenberg have shared power (i) to vote or direct the vote of, and (ii) to dispose or direct the disposition of, the 926,298 Shares held by the Bulldog Fund.

The Offshore Fund, NIMO and Mr. Nierenberg have shared power (i) to vote or direct the vote of, and (ii) to dispose or direct the disposition of, the 68,774 Shares held by the Offshore Fund.

Item 7.  Material to be filed as Exhibits

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, each of the undersigned certifies that the information set forth in the Statement is true, complete and correct.

D3 Family Fund, L.P., D3 Family Bulldog

Fund, L.P.,

By: Nierenberg Investment Management

Company, Inc.

Its: General Partner

————————-                                                       ——————————————-

                    David Nierenberg, President

DIII Offshore Fund, L.P.

By: Nierenberg Investment Management

Offshore, Inc.

Its: General Partner

————————-                                                       ——————————————-

                    David Nierenberg, President

Nierenberg Investment Management

Company, Inc.

September 27, 2017                                                         By: /s/ David Nierenberg

————————-                                                       ——————————————-

                    David Nierenberg, President

Nierenberg Investment Management

Offshore, Inc.

September 27, 2017                                                         By: /s/ David Nierenberg

————————-                                                       ——————————————-

                    David Nierenberg, President

September 27, 2017                                                           /s/ David Nierenberg

————————-                                                       ——————————————-

                  David Nierenberg

1.

DRIVE PROFITABLE REVENUE GROWTH – HWCC is well-positioned to participate in the cyclical recovery of both parts of its core business—-MRO and major project. We hope you will invest in internet commerce as a convenient, faster, and less costly way of doing business and utilize artificial intelligence as a customer service tool. While we don‘t have a good enough crystal ball to know how rapidly solar and wind energy will substitute for hydrocarbons, or electric cars for gasoline-powered vehicles, we hope you will grow Vertex rapidly, and your non-energy sales, to reduce over time HWCC’s reliance on energy . With solid opportunities to consolidate market share in the fragmented specialty fastener distribution business, with gross margins there approximately 40% higher than in copper wire and cable, and a renewed emphasis on growth, we see substantial upside potential at Vertex.

2.

USE FREE CASH TO HALVE DEBT, THEN CONSIDER ACQUISITIONS, REPURCHASES, AND/OR DIVIDENDS – HWCC has been a responsible capital allocator. In the last downturn it halved debt, reduced share count 8%, and paid a dividend until it bought Vertex . Last quarter it resumed reducing debt . We hope you will use free cash to halve debt again, after funding digital and Vertex ‘ growth . Given the cyclicality of energy ,debt reduction is always prudent.

3.	CONSIDER FURTHER EVOLUTIONARY CHANGES IN BOARD MEMBERSHIP – We are delighted with the last two board additions, Gary Yetman and Roy Haley, who bring considerable industrial distribution expertise. We hope you’ll add a digital native and a specialty fastener expert.

4.

CONTINUE INSIDER BUYING – We are delighted that three directors, including Bill, recently bought a total of 25,000 HWCC shares. We hope for continued insider buying; not all outside directors bought stock; no senior manager bought stock; and aggregate insider purchased ownership remains low, despite the quality of HWCC and the bargain price of its shares.

Thank you for your service to the stakeholders of HWCC and for considering our suggestions.

Sincerely yours,