Activist firm steps into First Advantage

Clarksville-based holding company recently delisted from Nasdaq

A New Jersey investment firm that specializes in financial services companies has in the past month bought almost 6 percent of First Advantage Bancorp and says it might push for changes "where necessary or desirable."

Various PL Capital entities began buying shares of Clarksville-based First Advantage on April 23, the day after company executives said they planned to delist their stock from the Nasdaq exchange to cut their administrative costs. First Advantage shares (Ticker: FABK) fell more than 10 percent that day. Since then, they have regularly scooped up blocks of the thinly traded name, which has recovered about half of that loss.

PL Capital principals Richard Lashley and John Palmer founded the firm in the mid-1990s after rising high in the financial services group of global accounting and advisory firm KPMG. They specialize in companies with market values of $50 million to $3 billion and have invested in banks across the country.

In their filing with the Securities and Exchange Commission — which has a relatively mild tone compared to many other activist filings — the PL Capital team said it believes First Advantage is undervalued and that it "intends to monitor the performance of the Company and the actions of the Company’s management and board, particularly as it relates to stock repurchases and other uses of the Company’s excess capital."

First Advantage has launched a number of growth moves of late and recently said its board has authorized its sixth share repurchase plan in the past five years. In addition to the new buyback, two other plans have yet to be completed.

First Advantage CEO Earl Bradley on Friday told that he has not heard from anyone at PL Capital but that he planned to reach out to the firm.

"We think it's pretty obvious that our stock price is a very good value," said Bradley, pointing out that his management team also has been buying up shares of late. "I'd like to think [PL Capital] and other investors recognize that value as well."

Asked if PL Capital's presence might force him to consider decisions that are more short-term than his plans to grow into Williamson County and beef up SBA lending, Bradley said he's not worried.

"I don't see that the game has changed — for us and for all our shareholders," he said. "It's our duty to produce a return and long-term value."