Car Parts Investor Plans to Keep Hands on Wheel

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Problems? What problems?

That was the stance last week from Oak Investment Partners, the biggest shareholder of Carson e-commerce company US Auto Parts Network Inc., after an activist investor announced that it wanted to buy Oak’s shares in a turnaround bid.

Oak said in a press release the next day that the company’s not interested in parting with its 28 percent stake in the online parts retailer and that it has confidence in the company’s management team. That’s despite growing losses, shrinking sales and shares that are trading near all-time lows.

Timothy Maguire, managing partner of Laguna Beach firm Maguire Asset Management, said those problems call for a shake-up. In a harsh letter, Maguire said he had offered to buy Oak’s shares – adding to his firm’s 5 percent stake – because he wants to bring in a new board member; cut costs; and oust Shane Evangelist, US Auto Parts’ chief executive.

“We are writing to express our profound disappointment with management’s ability to effectively manage the company and its abject failure to safeguard shareholder value over the past five years,” Maguire wrote.

Shares of the company ticked up 12 percent to $1.26 on Sept. 25, the day Maguire’s letter was released, making US Auto Parts one of the biggest gainers on the LABJ Stock Index for the week (See page 48.) The stock continued to climb, picking up an additional 9 percent Sept. 26.

US Auto Parts executives did not return calls for comment.

Fred Harman, an Oak Investment managing partner and a US Auto Parts board member, was not available to comment.

Maguire, who first disclosed a 5 percent stake in the company in July, told the Business Journal his firm had intended to be a passive investor.

“The more we learned about the company, we determined there is tremendous opportunity,” Maguire wrote in an email, “but the board needs to make some difficult decisions.”

In addition to ousting Evangelist as chief executive, Maguire’s letter states he also wants the company to add his cousin, former Philadelphia insurance executive Sean Sweeney, to its board; sell AutoMD, a business unit he calls underperforming; and to sell more parts to auto repair shops rather than do-it-yourself mechanics.

Though Oak said it won’t sell its shares, Maguire asserted that the stock is still highly undervalued and that he’s still looking to increase his stake in the company.