Gyrodyne Company of America, Inc. (NDAQ:GYRO) may soon find itself in hot water after activist hedge fund Opportunity Partners LP disclosed a 17.58% in the company and announced that it would be nominating three of its own directors to the Board and eliminating the poison pill at the upcoming annual meeting. In a 13D/A filing, Opportunity Partners furnished a letter stating:

"As you know, Full Value Partners L.P. is a major shareholder of Gyrodyne Company of America, Inc. and is a member of a group that is Gyrodyne's largest shareholder. Please be advised that Full Value Partners intends to (1) nominate three persons for election as directors at the annual shareholder meeting to be held on December 7, 2006 [Phillip Goldstein, Timothy Brog, and Andrew Dakos] and (2) present a proposal to terminate Gyrodyne's poison pill.

The purpose of this letter is to respond to the material developments set forth in Gyrodyne's recent press release, specifically that Gyrodyne (1) has expanded the size of the board and (2) intends to acquire ten buildings in the Port Jefferson Professional Park in Port Jefferson Station, New York. We believe these actions are  nconsistent with Mr. Maroney's public statement of April 21, 2006:

'Our goal is to put the maximum amount of cash or marketable securities in the hands of our shareholders in a tax-efficient manner.  Any offer will be measured against our corporate strategy as outlined at the December 2005 shareholders meeting.  That strategy includes the repositioning of the Company through conversion to a REIT, and the disposition and redeployment of assets to achieve one or more shareholder liquidity events in a reasonable period of time.'" (Read More)

To date, there have been no significant shareholder liquidity events, which was probably one of the reasons Opportunity Partners was involved in the company (given their history). With the company expanding the size of the Board and acquiring ten new buildings, they are increasing their cash burn and obviously not "redeploying their assets" to acheive a shareholder liquidity event. If the hedge fund is successful in taking over the Board and eliminating the poison pill, it could mean that this goal to "put the maximum amount of cash or marketable securities in the hands of shareholders" may actually get implemented. This makes GYRO a stock definitely worth watching.

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