Lichtenstein, who runs the Steel Partners hedge fund, had been on an aggressive buying streak, picking up a sizeable stake in New Frontier over the past two years.
Known as an activist investor, Lichtenstein’s interest in New Frontier had fueled speculation that the company’s management would take him up on his offer to finance its buyout and take the company private.
While a spokesman for Steel Partners declined to comment on the decision to begin selling off the hedge fund’s position in New Frontier, Matthew Goldstein, the Wall Street editor for TheStreet.com, said it was clear Lichtenstein has reversed his strategy because management elected not to take the investor up on his buyout offer.
“New Frontier's management never took Lichtenstein up on his offer of orchestrating a buyout of the company,” Goldstein said. “Instead, it countered with its own plan to keep shareholders, including Lichtenstein, happy. Last month it announced it would pay a special dividend of 60 cents a share to shareholders of records as of Jan. 15, and would institute a semi-annual dividend going forward.”
Steel Partners earned $1.8 million on the special dividend.
Over the course of two years, Steel Partners has seen its investment in New Frontier grow by an estimated 66 percent. According to a Securities and Exchange Commission filing, the hedge fund began its profit-taking in the company by unloading nearly 600,000 New Frontier shares earlier this week at an average price of $10 per share.
News of Lichtenstein’s about face sent New Frontier shares down nearly 3 percent to $9.75.
Steel Partners’ stake in New Frontier is estimated at $29 million.