NEW YORK (HedgeWorld.com)– The nickname “The Little Hedge Fund That Did” may have been prematurely won at Pembridge Capital Management, as it is now calling in reinforcements in a renewed battle with the makers of Bazooka gum.

Although Pembridge repeatedly asked Topps Co. Inc. to lose the chewing gum last year, it seems that management only stuck the bubblegum business underneath an expanding line-up of children’s novelty offerings.

Pembridge Value Opportunity Fund LP hopes to win seats on the company’s board of directors. With less than $25 million in assets and roughly a 1% stake in Topps Co., Pembridge President Timothy E. Brog has nominated himself and two others for election at the Topps shareholder meeting in July.

Another 12 hedge funds have purchased Topps shares also in recent months, creating a dramatic shift in the shareholder base, Mr. Brog said.

At issue is whether or not the Topps should sell off its struggling candy business, which in past year has had flat to negative earnings growth. Mr. Pembridge had been congratulating himself on forcing change at the company last fall after the Topps hired Lehman Brothers to help evaluate whether the confectionary business should be sold.

Topps said this month that it had reduced its overhead and recruited several senior-level executives to help implement growth initiatives and that the board had confidence the company’s growth strategy.

“In Confectionary, we began focusing on expanding our age demographic, developing new product formats, and employing a more systematic approach to new product development,” said Topps Chairman and Chief Executive Arthur T. Shorin in a statement in early April. The firm expanded its Baby Bottle Pop family overseas and has begun shipping 2DMax and Double Dunk candies.

On April 26, Mr. Brog announced his hedge fund’s nomination of himself, John J. Jones and Eric Newman to the Topps board of directors. Messrs. Jones and Newman are attorneys who are not affiliated with the hedge fund industry, but are both qualified to help turn around the company, according to Mr. Brog.

Pembridge also proposes two amendments to Topps’ bylaws. One would permit stockholders to remove directors and the other would let shareholders with more than 15% of outstanding common stock to call a special meeting of stockholders. The Pembridge pitch to shareholders is basically calling for a change in the management team that has been unable “to stem chronic declining revenue and earnings.”

Mr. Brog has fond childhood memories of Topps’ products, but now as the firm starts to launch “retro” entertainment items such as Wacky Packages he remains doubtful about the company’s future profitability as it hangs on to the confectionary business.

“This is an American icon with the Bazooka gum and trading cards. These guys are running it into the ground,” Mr. Brog said.

Topps management said in a press release today [April 28] that it is reviewing Pembridge’s proxy notification and will respond to it after appropriate consideration.

SBarreto@HedgeWorld.com

Contact Bob Keane with questions or comments at bkeane@investmentadvisor.com.