NEW YORK - Investment advisor Rubric Capital Management LP, which manages funds owning approximately 9.0% of Xperi (NASDAQ:ADEA) Inc. (NYSE: XPER), has issued an open letter to Xperi's stockholders, challenging the accuracy of Xperi's recent investor presentation and advocating for their own nominees for the company's board.
Rubric's letter, released today, accuses Xperi of underperformance since its spin-off, claiming that the company has misrepresented its total shareholder return (TSR) by excluding a full quarter of trading, inflating its TSR by 58%. The investment firm also criticizes Xperi's recently announced $100 million share repurchase program, labeling it as "window dressing," and questions the company's commitment to executing the buyback.
Additionally, Rubric disputes Xperi's claims of in-line dilution with peers, arguing that the company's dilution narrative is misleading due to a 53% increase in options and restricted stock units (RSUs). The letter also takes issue with Xperi's portrayal of executive compensation and its investment in the Perceive business, suggesting that either past disclosures were erroneous or the company is currently misleading investors.
The letter further notes that Xperi's directors have not made significant purchases of the company's stock with their own capital, arguing that this demonstrates a lack of alignment with stockholder interests. In contrast, Rubric emphasizes its substantial ownership stake and alignment with other stockholders.
Rubric also asserts that Xperi is falling short of its financial targets set during the 2022 Investor Day and questions the company's credibility and execution capabilities. The letter concludes by accusing the Xperi board of acting in bad faith during settlement discussions and attempting to undermine stockholder choice by offering Rubric nominee Thomas Lacey a paid consultant position to withdraw from the election.
Rubric is urging stockholders to vote for its nominees, Thomas A. Lacey and Deborah S. Conrad, on the white proxy card to bring accountability and alignment to Xperi's board. This call to action is based on the belief that current board members are not adequately representing stockholder interests.
This article is based on a press release statement from Rubric Capital Management LP.
InvestingPro Insights
As Xperi Inc. (NYSE: XPER) finds itself at the center of a contentious dispute with Rubric Capital Management, real-time data and insights from InvestingPro offer a clearer picture of the company's financial health and market performance. Notably, Xperi holds a market capitalization of 473.27 million USD, reflecting its valuation in the market. Despite challenges, the company boasts an impressive gross profit margin of 77.25% for the last twelve months as of Q4 2023, underscoring its ability to maintain profitability on its products and services.
InvestingPro Tips highlight that Xperi has more cash than debt on its balance sheet, suggesting a stable financial position that could weather potential market fluctuations. Additionally, the company's liquid assets exceed its short-term obligations, providing further evidence of financial resilience. This is particularly relevant given the current scrutiny of Xperi's financial strategies and shareholder value representation.
InvestingPro also notes a large price uptick over the last six months, with a 27.7% total return, which could indicate market confidence in the company's trajectory or response to specific events. However, it's important to note that two analysts have revised their earnings downwards for the upcoming period, which could signal tempered expectations for Xperi's future performance.
For those seeking a more thorough analysis, InvestingPro provides additional insights and metrics. There are 15 more InvestingPro Tips available for Xperi, which can be accessed by visiting https://www.investing.com/pro/XPER. Readers interested in a deeper dive into Xperi's financials and market prospects can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, offering a comprehensive tool for informed investment decisions.
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