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The beaten-down shares of vending-machine payments provider USA Technologies Inc. jumped nearly 15% Tuesday on news that a hedge fund had taken a 12% stake in the company.
In a regulatory filing, New York City-based Hudson Executive Capital LP said it believes USAT’s “shares are undervalued and are an attractive investment.” The filing says Hudson Executive bought nearly 7.2 million shares for $39.3 million. The investment makes Hudson Executive USAT’s biggest shareholder, according to data from Yahoo! Finance.
Douglas L. Braunstein, Hudson Executive’s founder and managing partner, is no stranger to the payments industry. He’s a director of ATM network owner Cardtronics plc and the former vice chairman and chief financial officer of mega-bank JPMorgan Chase & Co.
A USAT spokesperson did not respond to a Digital Transactions News request for comment about the Hudson Executive investment.
While USAT has reported some business wins in recent months, the investment was the first major positive news for Malvern, Pa.-based USAT since it first disclosed major accounting problems last September, when it failed to file its annual report for fiscal 2018 on time. USAT’s shares lost half their value in early February when the company said its auditor had resigned and that some of its previous financial statements were unreliable. An internal investigation of USAT’s customer contracts and accounting practices found that sales pressure led to the recognition of up to $5.5 million in projected revenues too early.
The Nasdaq Stock Market LLC has granted USAT an extension to file its overdue financial reports with the Securities and Exchange Commission by Sept. 9, otherwise its shares face delisting from the Nasdaq Global Market. In a Monday news release, USAT said it is “working diligently to regain compliance with its periodic reporting requirements” and anticipates doing so no later than Sept. 9.
USAT also said it had extended the contract of interim chief financial officer Glen E. Goold from June 30 until the end of the year. USAT’s stock closed Tuesday at $6.76 per share, up 86 cents, or 14.6%, from Monday’s close. The shares rose another 7% Wednesday morning.
