Greenberg: Activist Stake May Make Clean Harbors Less Hazardous

(A version of this piece originally ran Thursday night on Herb Greenberg's Reality Check.)

SAN DIEGO (TheStreet) -- With Relational Investors taking a 9.08% stake in Clean Harbors (CLH), it would be absurd to keep it on the Watch List, where it has been red-flagged. (Activism and takeovers are always one way to make the red flags irrelevant.)

Clean Harbors would appear to be the perfect activist stock. One mistake after another, or, as I wrote in my original piece when I red-flagged Clean Harbors last November, it's a comedy of errors.

The company itself recognizes the problems. From its last earnings call, CEO Alan McKim:

...We're launching a broad strategic review of our operating structure, with a focus on how to better drive organic growth and improve our return on invested capital. We also have initiated a cost reduction program and are taking $75 million in additional costs out of the business and bringing our cost structure more in line with our current revenue profile. We are targeting areas ranging from our non-billable headcount, office consolidation, maintenance and logistics, with the goal of significantly reducing our overall expenses.

In its filing, Relation said:

During its fourth quarter earnings call on February 26, 2014, the Company announced a broad strategic review of its operating structure with a focus on driving organic growth and improving its return on invested capital. The Reporting Persons support such actions which may include divestitures or a tax free spin-off of assets that do not earn their cost of capital, do not directly feed waste streams to the Company's high return disposal assets or lie outside of the Company's core competency in waste disposal.

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