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We added Bob Evans Farms (BOBE) to our Best Ideas list on 05/02/2014 at $47.21/share, as we believed Sandell had identified feasible opportunities to enhance shareholder value.  Unfortunately, recent developments have fallen well short of our expectations.  With this note we are removing Long BOBE from both our Best Ideas list and Investment Ideas list.

In our view, Bob Evans is in much better shape today than it was when we initially added it as a long idea.  Our thesis, however, was predicated on one or two of several potential catalysts coming to fruition: including: a sale of BEF Foods, a real estate transaction, and substantial SG&A cuts. 

Yesterday, we learned that the company has no plans, at this time, to pursue a separation of the BEF Foods business and that it has identified $35 million of potential annual cost savings that will be realized over a three year time frame.  Both of these announcements are, in our view, disappointing.  The company also announced that is currently reviewing the potential for real estate transactions and other changes to its capital structure, but gave us little clarity on the possibility or timing of these events.

Given 3Q15 results, it’s clear that the stock has gotten far ahead of the fundamentals of the underlying business and the path to unlocking shareholder value will be more painful than originally anticipated.