Shares of USA Technologies (NASDAQ:USAT) climbed 12% on Tuesday after hedge fund Hudson Executive Capital disclosed a 12% stake in the troubled networking and cashless transaction company.
USA Technologies has had a tough run in 2019, with its shares losing more than half of their value on one February day after the company revealed its auditor, RSM, was resigning. In conjunction with the resignation, USA Technologies' board said that some financial statements and related press releases are not reliable.
The issues surfaced during an internal probe USA Technologies initiated late last year. USA Technologies is behind in filing its annual report for the fiscal year ending June 30, 2018, and recent quarterly reports and is at risk at being delisted as a result.
The situation has attracted the attention of Hudson Executive, which is led by former JP Morgan Chase CFO Douglas Braunstein. In a regulatory filing, Hudson Executive disclosed it has amassed a 12% stake in USA Technologies via transactions between May 8 and May 16, buying 4.25 million shares at a range of between $5.69 and $5.80.
The filing contained standard language that indicated Hudson Executive officials "have had and may continue to have" discussions with USA Technology management concerning strategy and corporate governance.
The addition of Hudson Executive to the mix is a welcome relief for USA Technologies investors.
The firm's expertise with financial statements should be a valuable resource for management, assuming USA Technologies is willing to work with Hudson Executive. And if they do not work with the investor, Hudson Executive has the deep pockets to push for change in the management suite.