Hedge fund ups stake in Angie’s List, seeks strategic input

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A New York-based hedge fund has increased its stake in Angie’s List Inc. to an "activist position" and says it wants to have input with management about the strategic direction of the company, including the choice of a new CEO and a possible sale of the business.

TCS Capital Management LLC disclosed in a Securities and Exchange Commission filing on Wednesday that it has increased its ownership stake in Angie’s List stock to 6.5 percent, up from 1.8 percent at the end of the first quarter.

Angie’s List shares rose nearly 11 percent Thursday and were up another 2.8 percent Friday morning, to $4.93 per share. The stock had fallen more 30 percent this year through Wednesday.

In the filing, TCS said it believes Indianapolis-based Angie’s List “may have multiple options to increase its market value.”

TCS said it intends to “have communications from time to time with one or more officers and members of the board … regarding the operations and strategic direction of the (company), consideration of a potential sale of the (company), strategic business partnerships and combinations, and the pending selection of the (company’s) next chief executive officer.”

Angie’s List, a 20-year-old consumer-reviews company, has never had a profitable year and has seen only four profitable quarters since going public in 2011. The firm is in the process of searching for a replacement for longtime CEO Bill Oesterle, who stepped down June 30.

On July 22, the company reported a loss of $8.3 million for the second quarter, ending its streak of two profitable quarters.

“We welcome TCS as a significant stockholder of ANGI,” an Angie’s List spokeswoman said Friday in an emailed response to questions from IBJ. “We value all of our stockholders and their views, and look forward to engaging with TCS. We have no further comment on their filing at this time.”

In response to the SEC filing, investment website The Street said “the attention of an activist shareholder” could put pressure on Angie’s List to consider a sale.

Potential suitors include HomeAdvisor, Home Depot, Lowe's, Groupon and Priceline, the website said, citing industry sources. Those companies would all value Angie’s List consumer data list.

Investment blog Activist Stocks, however, pointed out that TCS is a “smallish, usually non-activist, fund with only $150 million” in assets under management, and may simply be looking at Angie’s List as an attractive investment.

“This is their first activist position in close to eight years and only their third since it was founded in 2001,” the website said of TCS.

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