Yesterday, 3Com (COMS-NASDAQ) rallied close to 10% after Citadel (huge Chicago hedge fund) disclosed that it was holding an 8.4% stake AND a letter to the company requesting a meeting with the management team and board of directors to discuss the 3Com strategy. Shares are up close to 2% more today to $4.67. This stake has also re-added fuel back into the "buyout" fire in the name.
This is Ken Griffin’s fund if you are not familiar with Citadel, and he can swing a rather large axe if he wants to. Griffin and Citadel couldn’t help but note that the stock had slid almost 20% since 3Com’s purchase of the other 49% stake in the H3C-venture from Huawei Technologies. The letter expresses support for management after speaking with CEO Edgar Masri, although Citadel believes it can drive shareholder value. We noted that 3Com was in a position that it might not be able to fix itself on its own in the fairly recent past. The good news is that Griffin can probably make a MUCH better effort to help fix the company. He almost definitely wouldn’t hurt.
Since Griffin is a billionaire and since he cannot be faulted on most of his investment strategies, we aren’t going to pick any part of this apart. He’s a stud of an investor as far as Wall Street is concerned. The only suggestion would be to force Banhamou out once and for all out of the board room or at least replace him as Chairman of the Board. That will eliminate one of the last legacy issues and will allow for what is a truly clean slate.
Jon C. Ogg
May 9, 2007
Jon Ogg can be reached at [email protected]; he does not own securities in any of the companies he covers.
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