Promises, Promises... Returns Flatten as Iron Mountain (IRM) Investors Move On

Last year Hedge-fund Elliot Management began a proxy contest to replace management at Iron Mountain (NYSE: IRM) and convert the document storage company to a REIT. Elliot argued that this could, in theory, double or triple the stock’s price. As a result shares spiked from $25 to $35. However, since then the stock has flattened and Elliot's position has declined from 8.5 million shares to zero.

This weekend Iron Mountain was profiled in an article in Barron's. According to the article, Elliot management wasn't the only smart-money investor interested in IRM. Davis Selected Advisors, a well-known investment firm, spent over $900 million on its 21% position. Since then Davis has halved its positions, and the $50 share price that was hyped by Elliot, Davis, and other new investors . . . well, it simply hasn't happen.

That's not to suggest that IRM is overvalued. At $33.30, the stock appears to have found its equilibrium in terms of valuation and expectations surrounding the final conversion to a REIT, which will help the company harness tax savings. Additionally, IRM's long term strategy has allowing it to carve out a space as a durable and long lasting traditional document storage business. This isn't as exciting as the suggested 100 to 200 percent ROI, but, hey, that's Wall Street promises for you.

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