ClubCorp defends strategy amid discontent from minority shareholder

Eric Affeldt, CEO of ClubCorp, can’t seem to get a break. In the spring, a short-seller claimed the company’ stock was overvalued by more than a quarter. Now, a minority shareholder has sent public letter claiming that the company is undervalued, and that it should consider selling non-core lower-returning clubs or a conversion into a REIT. 

Affeldt, meanwhile, has said the company's story and financials are not well understood, primarily because it is the only public golf entity. It went public in 2013.  

FrontFour Capital, an investment advisory firm which owns less than 3.4 percent of ClubCorp’s shares, criticized ClubCorp’s stock performance, which is down nearly 36 percent in the past 12 months.

It said a sale would enable ClubCorp to pay off some of its debt and, in the process, boost the value of its under-performing stock. It said that ClubCorp owns the land at 126 of its 160 golf and country-club properties, for a total of roughly 30,000 acres. FrontFour also says that ClubCorp’s land is, according to a recent appraisal, worth about $1.5 billion.

“We believe that ClubCorp’s portfolio of assets, which includes 30,000 acres of fee simple acreage, would garner significant strategic and financial interest from a variety of parties,” FrontFour wrote. “Given ClubCorp’s currently depressed valuation, projected decline in capital expenditures and the potential near term exhaustion of tax mitigation strategies, the strategic alternatives process should consider whether the right time is approaching for a conversion to a [real estate investment trust] in order to unlock significant value.”

ClubCorp said it is confident in its business strategy.

“Our board and management continuously seek to provide long-term shareholder value and appreciate feedback from our investors,” Affeldt said. “We continue to believe in the merits of our business model and strategies and value the opinions of our shareholders.”

Other investors and advisors continue to support ClubCorp’s strategy to acquire underperforming clubs and invest heavily to reinvent them. 


Golf as a business is very tricky at the present time. ClubCorps leader Eric Affeldt is as capable as anybody to figure out the right path.JMHO

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