Ampex Corporation (NDAQ:AMPX) may find itself in hot water soon after ValueVest disclosed an 8.9% stake in the company and encouraged the company to explore ways in which it could unlock shareholder value. The hedge fund first began acquiring shares in the company back in October of 2005 and continued accumulating shares for over a year before making a buyout offer for the company last month, which was immediately rejected by the board of directors. ValueVest now appears to be seeking other ways in which the company could commercialize its intellectual property rights that it has been sitting on for so long.

According to the most recent 13D/A filing:

"On November 28, 2006, Messrs. Bakar and Cariani of the Investment Manager and David Martin, the chief executive officer of MoCAM, met with Messrs. Bramson and McKibben, the Issuer's chief executive officer and chief financial officer, respectively, at the Issuer's offices in New York. At the meeting, the Investment Manager expressed its continuing belief that the market price of the Company's Shares does not fully reflect the underlying value of the Issuer's assets and businesses.

The Investment Manager indicated that it has identified specific actions and possible strategic relationships that could materially increase the Company's revenue stream from its intellectual property assets. Such plans could involve the consulting and advisory services of M.CAM and Dr. Martin. In addition, the Investment Manager indicated a need to consider the management team and possible changes to the composition of the Board of Directors. The Issuer agreed to discuss these matters with its Board of Directors and is prepared to work with the Investment Manager on exploring a new strategic plan for the Issuer along the lines outlined by the Investment Manager. The parties agreed to meet again in December to review possible nominees for the Board of Directors and to discuss in detail ways to further monetize the patent portfolio." (Read More)

The hedge fund has consulted with M.CAM and other IP professionals and determined that the value of the company's intellectual property assets are far greater than what is reflected in the current market price. These consultants produced the following report, which was attached to ValueVest's original 13D filing with the SEC:

"Licensing stream securitization: M.CAM to attempt to perfect the interests in the royalty streams that are current in Ampex and build a cash-backed securitization This has an opportunity to infuse NPV working capital into Ampex
for strategic use in IP enforcement and could be pooled with 3rd party licensing revenue for larger investment banking opportunity returns.

Immediate Notice: M.CAM to oversee and coordinate the sending of infringement notice letters on both the Ampex patents as well as the operating code to all existing licensees as well as the over 190 companies and entities identified as currently encroaching on the Ampex portfolio. The near and long term intents
are:

• Capture greater value from existing licensees by migrating from a patent-only model to a patent and copyright model;
• Build the basis for a transferable and poolable licensing consortia on digital image capture, transmission, storage, and reconstruction (for internal leverage or for partnership leverage with Kodak, Sony, Samsung, etc.);
• Begin capturing revenue for non-aligned sector deployment; and,
• Construct a template for more assertive licensing value expectations with licensees.
  

Company to pay a 10% commission on all renegotiated and re-priced licenses and a 25% commission on all new licenses from currently un-licensed principal patents.

Public Sector Realignment: An immediate review of all existing long-term government contracts to assess their viability for migration to data form a homogenization services in addition to, or in lieu of, existing technology
supply contracts. Insofar as this exercise is successful, M.CAM would propose taking an OS standard approach to building future value. Commissions would be negotiated as above.

Teaming: M.CAM has identified and qualified one third party with whom it may be able to create significant patent licensing pools. This third party has considerable financial interest in parties known to, but not doing business with Ampex. M.CAM proposes the immediate entrance into dialogue with this party to arrange a licensing pool structure (with pari pasu revenue sharing) between the parties. This licensing pool could roll into the securitization model above or simply add cash flow to Ampex." (Read More)

Clearly, there is additional shareholder value that could be realized here, it is simply a matter of convincing management to implement measures to take advantage of their IP assets. Moreover, ValueVest's initial offer to purchase the company outright illustrates a strong belief that these assets are indeed worth a significant amount of money. This stock is definitely one to watch closely as ValueVest works closely with management to unlock shareholder value.

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