ESS Technology (NDAQ:ESST) shares rose over 8% this week after Riley Investment Management disclosed a 1.3m share stake in the company and expressed their concerns over the company's management and valuation. The company operates in the semiconductor industry and services the consumer electronics and digital media marketplace. These have been the subject of many recent takeover attempts and could be an industry for further consolidation.
Riley believes that the shares are undervalued and that the current
restructuring should be expedited with the ultimate conclusion being a
liquidation of the company. Ultimately, the activist hedge fund believes that a liquidation of the
company could result in a 100% appreciation of ESST shares; however,
that value deteriorates every day the company functions in its current
structure. The fund is also concerned that the company may make an acquisition that
will further deteriorate the remaining equity value. Consequently, Riley will issue one more letter to the company's board describing their position in greater detail while threatening to replace members of the board if no action is taken. Combined, this is great news for shareholders as it could mean a significant increase in value over the short term. This makes ESST a stock
worth watching!
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