stock bounced between $2 and $3. Chapman is head of Chap Cap Partners, an El Segundo, Calif., hedge fund that has previously pressured other companies into agreeing to buyouts or returning cash to shareholders.
In January, Chapman wrote a letter to Coleman, proposing the company launch a self-tender offer to buy back half of its outstanding shares for $4 a share in cash. The move would return $100 million in cash to shareholders.
Chapman also wants Stamps.com to use an additional $50 million for a standard repurchase program. That would leave the company with about $60 million to fund operations, which Chapman says is more than enough.
"They shouldn't have this much money, and they should have returned it by now, " Chapman says. Chapman doesn't buy the company's argument that the Pitney Bowes litigation needs to be resolved first. He doubts the company's liability would eat up much of its cash.
Chapman admittedly doesn't have much faith in Stamps.com's business model. "I think (Stamps.com executives) have a pipe dream that they can fix the business," he says.
But Coleman disagrees. "I think there's a fundamental business model there," he says. "I don't know how much it's going to grow yet, but there's a model where we can take in more then we spend...It can be a very good cash machine and a pretty predictable revenue stream."
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