Mention the name Richard M. Osborne to a roomful of Cleveland-area executives and he will be described as everything from a shrewd investor to a corporate raider to a downright annoyance.

But the Mentor, Ohio, banker and fund manager, known for buying large stakes in beaten-down public companies and then agitating for management changes, says they’re all off the mark. He prefers the description “shareholder advocate.”

“My basic assumption is that what serves my best interests serves the best interests of shareholders,” says Mr. Osborne, 53, who currently is in a tussle with a Florida health care company. “And I think that’s been proven over time.”

It’s an assumption that has earned Mr. Osborne, who is also vice chairman of GLB Bancorp in his hometown, his share of enemies. In his “defense of shareholders,” as he calls it, Mr. Osborne doesn’t hesitate to criticize management, to bring in potential acquirers and to pursue prolonged proxy battles.

“The difference with Richard Osborne and most other fund managers is that he is not afraid of investing (in companies) where he’s not welcome,” says Robert McCreary III, partner and co-founder of Short Vincent Partners LP, a new partnership formed to invest in struggling public companies. “And that can be the source of some nasty disputes.”

Just ask NuMed Home Health Care Inc., a publicly traded home health care provider in Clearwater, Fla. Last November, NuMed learned via a filing made with the Securities and Exchange Commission that Mr. Osborne had created a committee of shareholders that wanted to replace all five of NuMed’s directors.

job for lawyers

NuMed spent the next three months entangled in a complex legal battle over control of the company.

“What was shocking was that (Mr. Osborne) never bothered to call us and tell us what his plans were until he made this filing (with the SEC); he just does things and leaves the details to his lawyers,” says Jugal Taneja, who stepped down as NuMed’s chairman in January.

Though the antagonists reached a settlement — agreeing in January to a combined slate of board members — bad blood lingers. Mr. Taneja insists that Mr. Osborne has failed to fulfill a contract to buy 744,680 NuMed shares for $350,000.

Mr. Taneja says Mr. Osborne’s inaction has deprived NuMed, which has watched its stock fall to 18? cents a share last week from $1.75 a year ago, of some “badly needed capital.”

When asked about NuMed, Mr. Osborne is unapologetic. He says the company was poorly managed and had passed up several merger opportunities that might have rescued its stock.

What’s more, he says he agreed to buy the stock only if NuMed hired a Big Five accounting firm to audit its books — which the company hasn’t done.

“I don’t have the time to micromanage every one of my investments,” Mr. Osborne says. “When they (NuMed management) live up to their end of the bargain, then I’ll live up to mine.”

While not a micromanager, Mr. Osborne does invest aggressively using both his own money and his $25 million equity fund, the Turkey Vulture Fund XIII.

Mr. Osborne estimates that he has been involved in at least a dozen proxy battles in five years. In some cases he has won, gaining the right to appoint directors — often including himself — to a company’s board. In other cases, lawsuits start flowing and he chooses to sell.

Either way, Mr. Osborne makes his presence felt.

“People will invest in companies precisely because they may see Rick’s name in a public filing,” says Peter Nauert, chief executive of Ceres Group Inc., a medical and life insurance company in Strongsville, Ohio.

Mr. Osborne owns 15% of Ceres Group, both personally and through the Turkey Vulture Fund.

“He can create a following for companies that had no following,” Mr. Nauert says.

Though Mr. Osborne may be perceived as the ultimate insider — he sits on the board of six publicly traded companies — it would be hard to imagine an executive further removed from modern corporate culture.

For example, he regularly wears hiking shoes and corduroy pants to work.

Mr. Nauert still remembers being surprised at Mr. Osborne’s appearance when they met in the spring of 1998.

Mr. bluejeans

“He walked in wearing a pair of jeans and a ‘West Virginia Mining’ jacket. It was a little bit off-putting at first,” says Mr. Nauert, who later persuaded him to support a new group of investors in Ceres.

Mr. Osborne’s office carries out the down-home theme. The walls are lined with photos of fishing expeditions, hunting trips and his son’s football games.

Not only does he say he never has used the Internet to buy stock or research investment opportunities, he doesn’t even own a computer.

“I wouldn’t know how to use the Internet if someone placed a computer on my desk and turned it on,” he says, laughing.

Mr. Osborne invests the old-fashioned way — by reading the daily stock pages and hitting the telephones.

“I look at the highs and lows. If I see a stock that’s trading near its 52-week high, I’m not interested,” he says. “If I see one trading at or near its 52-week low, then I might order a ‘Q’ (a quarterly performance report).”

He is candid about his short-term investment horizon.

“I like what Will Rogers once said: ‘I’m not so much interested in the return on my money as the return of my money,” ‘ he says, chuckling. “Believe me, no truer words have ever been spoken.”

But Mr. Osborne’s push for short-term returns can make life difficult for executives at listed companies.

sudden blockage

William Valerian, director of the Edward Muldoon Center for Entrepreneurship at John Carroll University, still remembers when Mr. Osborne announced that he had bought a large block of shares in Haverfield Corp., a savings and loan holding company that ultimately was sold to Charter One Financial Inc. in 1997.

“It put a real clamp on things,” recalls Mr. Valerian, who was CEO of Haverfield at the time.

“As soon as people knew that he had bought shares, there was a perception that we were in play, and that created a lot of nervousness. Employees left. The stock started jumping all over the place. And we had a difficult time hiring people.”

What really bothered Mr. Valerian, however, was a filing Mr. Osborne made with the SEC.

In it, Mr. Osborne hinted that he was taking an active role in Haverfield.

“That was never the case,” Mr. Valerian says. “He was more an aggravation than anything else.”

Mr. Osborne still lists his investment in Haverfield as one of his “proudest accomplishments” of the past decade.

He says he bought stock in the company in 1995 for between $10 and $11 a share. He eventually received $26 a share by selling the stock just before Haverfield was acquired.

“I made money,” he says. “I can’t be responsible for what people think of me.”

For now, however, Mr. Osborne says he plans to devote more of his time to GLB Bancorp, the holding company of Great Lakes Bank of Mentor, and less time bottom-fishing for stock buys. GLB is expected to complete its merger this month with Maple Leaf Financial, the holding company of Geauga Savings Bank of Newbury, Ohio.

His recipe for growing Great Lakes Bank is simple.

“We’ll be a $250 million (in assets) bank by the end of this year. Then we’ll merge with another $250 million bank and we’ll be a $500 million bank. Then we’ll merge again and we’ll be a $1 billion bank,” he says. “After that? Who knows. Maybe I’ll sell.”

Crain News Service