Activist Push Has Telenav Popping As Fund Seeks Board Seats

Brett Hendrickson‘s Nokomis Capital has steeped up its interest in Telenav Inc (NASDAQ:TNAV) and is now seeking representation on the company’s Board of Directors. As reported in a recent filing with the Securities and Exchange Commission, Nokomis Capital has nominated Richard L. Todaro and Mikel H. Williams for election to the company’s board at its 2015 annual shareholder meeting, on behalf of the fund. In addition, Hendrickson has boosted his stake in Telenav to approximately 3.68 million shares from 3.48 million shares previously reported, thus taking control of 9.1% of the company’s common stock. Shares of Telenav have jumped by nearly 9% in today’s session.

As the financial world was melting down at the height of the 2008 crisis, Brett Hendrickson managed to raise $4 million from his family and friends to start Nokomis Capital. Hendrickson invests mainly in companies that have solid cash flow and good profit margins, and tends to favor companies that “make things you can touch and feel.” He employs a fundamental approach to picking his targets and goes both long and short, although he’s got a preference for the latter. His philosophy has paid off handsomely, as Nokomis’ public equity portfolio carried a market value of $362 million at the end of the second quarter.

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Hendrickson has acquired a taste for tech stocks lately, with roughly half of his capital being invested in companies from this sector. A notable play is NeoPhotonics Corp (NYSE:NPTN), a producer of circuits used in communications devices that was added to Nokomis’ portfolio during the second quarter. Hendrickson bought exactly 1.95 million shares, making it a top investment along with RealD (NYSE:RLD), the producer of 3D and other visual technologies. According to its latest 13F filing, Nokomis holds 1.58 million shares of RealD, up by 9% during the quarter. Kirkland’s, Inc. (NASDAQ:KIRK) has fallen out of Hendrickson’s favor, having reduced his exposure to the company for the third straight quarter, to 913,859 shares.

A producer of navigation systems and software, Telenav Inc (NASDAQ:TNAV) has a market cap of $293 million and does not pay a dividend. While Chuck Royce was cutting his holding in the company by 6% to 412,300 shares during the second quarter, Richard Driehaus decided it was a good time to join the party and initiated a position. His fund, Driehaus Capital, holds 312,109 shares according to its latest quarterly filing.

The stock has been in a downtrend since its late May high of $9.83, but has managed to stage a fragile rally lately, with shares ending yesterday’s trading session at $7.24 per share, having advanced for nine straight days before today’s gains. For the three months ending June 30, 2015, Telenav posted revenues of $43.2 million, up by 25.6% year-over-year, while the loss per share has narrowed to $0.19 per share from $0.39 per share a year ago. Wall Street estimates suggest the company is not going to stop at that, as analysts have projected revenues of $44.8 million and a loss of $0.18 per share for the current quarter. Analysts from B. Riley and Craig-Hallum recommend the stock as a ‘Buy’, while the average price target is $12.33, representing a 71% premium over the current price.

Telenav Inc (NASDAQ:TNAV)’s popularity among the hedge funds that we track increased during the second quarter, as the total number of funds holding long positions rose to 20 from 18, while the overall value of their investments in the company went up by 3.11% to $67.2 million. John W. Rogers is among the hedge fund managers that decided to reduce their exposure to Telenav, trimming his stake by 1% to 1.6 million shares, as reported in Ariel Investments’ latest 13F filing.

Disclosure: None