A group of funds controlled by David Nierenberg have called for the termination of Move Inc.'s chief executive and chief financial officer after the company said its investment in auction-rate securities is no longer liquid.
Nierenberg's criticism of Move, which offers Web-based real-estate listings, was reported in a Securities and Exchange Commission filing on Friday. CEO W. Michael Long and CFO Lewis R. Belote have served in their positions since January 2002.
In morning trading, Move shares surged 24 cents, or 10.5 percent, to $2.52 in morning trading. During the past 52 weeks, the stock has dropped from a high of $5.89 last March to a low of $1.62 on Jan. 22.
The shareholders, including Nierenberg's D3 Family Fund LP, said they were prompted to take action after Move announced last week that its investment in student loan auction rate securities, totaling $129.9 million, is not liquid.
Auction-rate securities are bonds with an interest rate that is reset at regular auctions. A growing aversion to risk has caused most of those auctions to fail of late, leaving the investors who own the securities unable to sell them. This has particularly hurt some companies that considered auction-rate securities as good as cash.
Move said it may be forced to reduce the value of the investments through an impairment charge.
Nierenberg said the company should also demand that the parties that sold Move the auction-rate securities should buy those securities back at full price.
The shareholders said they acquired the stake "as a long term investment because we believe that the company's troubled past under prior management, the current bursting of the residential real estate bubble, and Move's large continuing losses in Welcome Wagon and Rentnet.com obscure the enormous current and potential value of Move's profitable core businesses."
Nierenberg said Move should consider selling Welcome Wagon and Rentnet.com for cash and reinvest the profits into its core business.
The shareholders own 9.9 million Move shares, representing a 6.6 percent stake in the Westlake Village, Calif.-based company.
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