Ive never really invested in a company by following an activist. I've found that I tend to place too much trust on them to unlock shareholder value.
What about yourself? If you have, how did you fare with such situations?
4:33 pm October 23, 2009
chiawei8312
Member
posts 18
2
According to the recently filling Steel Partners is still buying ADPT at the current price
7:56 pm October 21, 2009
compoundinglife
Seattle
Member
posts 11
3
One other note. I just looked at their patents and obviously like most technology companies they have a ton. They have a lot of storage and networking patents. They also make/made network interface cards. I remember way back when, they were one of the only companies that made dual port network cards for x86 based servers. Also did some stuff with port aggregation and load balancing.
Hard to say what/if someone else will see value in that. But if someone offered me the company for 390 million in it's state today and I had the cash, I would probably buy it just to get the patents for "free" after taking the cash.
The risk that Steel or the management fails to help the company realize that value is obvious. But just saying if I could buy the whole thing for market price today, I would.
7:43 pm October 21, 2009
compoundinglife
Seattle
Member
posts 11
4
FYI, Steel partners has bought approximately 400,000 more shares in the past week. Which I think puts them at around 1.3 million shares. Looks like they are going the distance.
I am a little unimpressed by their reported tactics in the boardroom, but that was also listening to the companies side of the story so it might be skewed.
On another note, I have worked in IT for a long time and used adaptec products many times. They are a dinosaur for sure now. It seems like they missed the boat on the storage area networks.
However, with all of their products and research over the years its makes me think their must be some valuable IP there. Which you are almost getting for free when you look at their cash.
6:16 pm October 7, 2009
Jae Jun
Admin
posts 395
5
Thanks for your input kai fann.
I agree with most of what you say but no.4 actually does work out quite often if you look into it.
Greenbackd has shown this as well as many other special situations. The trouble appears when the takeover is completely ridiculous, however even if Steel Partners was to try and liquidate, they would do so because they own a large stake in the company.
They would obviously want to fatten their pockets as well.
11:33 am October 7, 2009
kai fann
Member
posts 10
6
The more I read about the industry, i am less enthusiastic about the business for the following reasons:
1. ADPT is losing their product to LSI. Most OEM use and ship LSI controller for the storage. Why LSI? My IT manager thinks that it is the low cost producer. It means the product is commodity.
2. Look at LSI with spreadsheet. It is not profitable business.
3. while it is true that ADPT has a lot cash, I doubt thehedge fund managers will place shareholder interest in mind when they take over.
4. In my experience, investing in a business hoping someone will take over and give you cash ususally does not pay off. Like Warren Buffett said, "If you've been playing poker for half an hour and you still don't know who the patsy is, you're the patsy."
5. Putting money into ADPT is trying to revive the dead. You may have to wait for a very long time
4:36 am October 7, 2009
Jae Jun
Admin
posts 395
7
hey that's the type of news I like!
If Steel Partners is really trying to oust the current management and sell off the company, it may be a good opportunity.
Looks likes a hedge fund is salivating on adpt cash position and may want to take that cash to invest in a bank.
4:01 pm October 6, 2009
Jae Jun
Admin
posts 395
9
I like ADPT big equity position. It shows that they've probably had the cash for a while and don't plan to use it too quickly.
It also hasn't rallied as much which makes it more interesting.
The only thing I don't like is that as you mentioned, it's in a product transition. Rarely have I ever seen a business turnaround based on a new product. It usually flops, just like everything else they've sold.
Something to consider.
10:33 am October 6, 2009
kai fann
Member
posts 10
10
Reading through the 10Qs, it seems to me that ADPT is in product transition and LDIS is in business transition. I like ADPT. I have been looking for a cheap tech stock with upside potentional.
I did a bit research:
ADPT is working on the next generation of green data center with series 5z unified serial controller family. This new product is designed to reduce operating cost of the data center while provide maximum performance and data protection. The managmeent hopes that new products like these will help company to return profitability. However, the crucial question is when will this turn around occurs.
I do think that with stocks down to almost net-net working capital value, the downside is limited. This one may require patience for several quarters.
12:27 am October 3, 2009
Jae Jun
Admin
posts 395
11
Post edited 4:29 am – October 3, 2009 by Jae Jun
Got the list form cheap stocks. He originally listed 21 but a few were acquired.
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