Matrixx Initiatives(MTXX) believes that its Zicam line of homeopathic cold remedies will relieve your cold symptoms. Jove Partners believes that it knows how to solve Matrixx’s own ailments: a sale of the company to a strategic investor.

Jove filed a 13D today, disclosing a 5.1% ownership stake and declaring that

The Reporting Persons appreciate the job that management has done and is
doing to build the Zicam brand. However, they believe that the value created to
date has not been appropriately recognized by the market and will not be fully
realizable as long as Zicam remains a stand-alone brand. In particular, the
Reporting Persons believe that the Issuer’s profit margins have been depressed
and should normalize over the next several years. The Reporting Persons believe
that this normalization could be meaningfully enhanced if the Issuer were
acquired by a strategic investor.

Matrixx fell far short of estimates for 2006, blaming a late cold season. Jove’s thesis, that Zicam would be a more profitable product as part of a larger company rings true. The difficulty of competing for pharmacy shelf space with behemoths like Johnson & Johnson(JNJ), which recently expanded its girth with its purchase of Pfizer’s(PFE) consumer products division, is great. Improvements in distribution and manufacturing from being part of a larger company could be substantial as well.

One potential concern are claims that Zicam has caused users to lose their sense of smell. The company has already settled several lawsuits, but it is unclear what potential future exposure might be. This would clearly be a concern of a potential buyer.

I previously noted Jove when they filed a 13D on Lifetime Brands(LCUT) and some background information on them can be found in that post.

Jove’s filing led to a 12% jump in Matrixx’s shares today(2/22) as investors seem to believe that the company is now likely to be acquired above the current price. With no debt, and a market cap minus cash of less than two times sales, Matrixx may indeed be a good fit for buyer who can grow sales and margins.

Disclosure: I hold no postion in MTXX

Recently, Jove Partners disclosed a 5.2% stake in Lifetime Brands(LCUT). In its 13D filing, Jove reported that:

The Reporting Persons believe that the Issuer would benefit from additional marketing and industry expertise on its board of directors, and have suggested
individuals for consideration by the board.

Lifetime CEO Jeffrey Siegel was quoted as saying “Jove Partners is a [Lifetime Brands] shareholder who has been advising us at our request. They have tremendous expertise in e-commerce.”

Who is Jove Partners and what particular expertise might they bring to the table?

A search of SEC filings reveals no other filings by Jove Partners. However, reading the 13D reveals that Joel Tomas Citron is the managing member of Jove Partners. Mr. Citron is the Chairman of Oxigene(OXGN). More relevant, he was Chairman of Provide Commerce, parent company of ProFlowers, before its sale to Liberty Media. The similarly named Jovian Holdings was a major holder of Provide Commerce, with a 29% stake at the time of the acquisition. Citron was a director of Jovian Holdings as were Jared Polis, who was a principal of Blue Mountain Arts, guiding it to a $900 million buyout by Excite, and Arthur Laffer, famous for the Laffer Curve.

Based on Siegel’s quote and the experience of the three, I think it is likely that the board candidate(s) proposed include some combination of Citron, Polis and Laffer. Lifetime has significantly stepped up their online presence, adding products from their other brands to pfaltzgraff.com, and the background that Jove Partners has in ecommerce could be helpful in growing direct sales to be a significant part of Lifetime’s business.

Back in September, I wrote about Lifetime Brands. At the time, the stock was trading at $20.10 and the company had projected 2006 EPS of $1.50-$1.70. The company lowered that to $1.45-$1.55 with the release of 3rd quarter earnings, and on December 21, lowered it further to $1.10-$1.15, below 2005 earnings of $1.23. Though the company has not yet released 2006 numbers, on January 25, it stated that it expected 2007 EPS of $1.40-$1.70. The end result of all of this is that on February 15, the stock closed at 19.54, not far from where it was in September.

The particular problems that Lifetime has faced have been largely related to its direct to consumer business. The experience and expertise that Jove brings could indeed be helpful in helping the company resolve these problems and get back on the path to consistent, strong growth. In the meantime, I believe the shares remain a good value.

Disclosure: I hold a position in LCUT

You may recall my December post regarding Nuvelo(NUVO). The company reported that a pivotal trial for its lead compound, alfimeprase, had failed to meet its endpoints. On the release of this news, the stock fell 80%, and has continued to float downwards since.

Nuvelo began 2006 trading at $8.11 and quickly jumped above $17 when the company partnered with Bayer on alfimeprase. After December’s failed trial results, the stock closed the year at $4 and by February 7, has dropped to $3.33. For shareholders and the company, not a particularly good year.

The Board Of Directors, or at least the Compensation Committee appears to disagree. In an 8-K filed last week, the company reports:

On January 29, 2007, the Compensation Committee (the “Committee”) of the Board of Directors of Nuvelo, Inc. approved the bonuses for Nuvelo’s named executive officers (as defined in Item 402(a)(3) of Regulation S-K) for fiscal year 2006. The bonuses awarded are weighted and based upon internal targets as determined by the Committee. For the 2006 fiscal year, the target bonus for Nuvelo’s Chief Executive Officer was 40% of his base salary, and for officers at the senior vice president level the target bonus was 35% of their base. The Committee is vested with the authority and discretion to increase or decrease the size of the bonus pool and actual bonus amounts based on its review of each individual’s performance and achievement of corporate goals. The Committee determined that for the 2006 fiscal year the bonus pool would be funded at 92% of its target level and the named executive officers would be awarded bonuses at between 100% and 140% of their target levels, after taking into account the 92% funding of the bonus pool.

The 2006 bonuses to Nuvelo’s named executive officers are as follows:

Ted W. Love, M.D., Chairman and Chief Executive Officer: $289,248
Michael D. Levy, M.D., Senior Vice President, Research and Development: $184,828
H. Ward Wolff, Senior Vice President, Finance, and Chief Financial Officer: $50,313
Lee Bendekgey, Senior Vice President and General Counsel: $126,449

Now, I understand that the company’s management and employees worked hard, and that sometimes the science just doesn’t work. But it seems rather unseemly for the compensation committee to conduct its review regarding the “achievement of corporate goals” in a year which saw the stock drop 50% and in which the value of the company’s pipeline evaporated and determine that top executives are entitled to bonuses of 100%-140% of their target levels.

One can only imagine what the bonuses would have been had the trial been successful.

Disclosure: I hold a position in NUVO