Glenayre Technologies' (NDAQ:GEMS) management may be in for some serious trouble after activist investor Robert Chapman disclosed a 10% stake in the company and voiced his support for fellow-activist Daniel Loeb, who demanded that the company put itself up for sale last week (read article).

Chapman Capital has been involved with the company for some time now. First, the hedge fund voted to withhold all of its votes in protest against all directors for the company's May 22, 2007 election. Secondly, they are currently suing the company's CEO over an illegal EDC equity option exchange. And now, in a vocal letter to the company, the hedge fund is bringing its fight public while voicing support for fellow-activist Daniel Loeb.

Chapman noted that last week's filing by Third Point was Glenayre's first official warning that its continued siphoning off of value from the company had forced yet another large owner to defend its investment via activist, corporate warfare. It is here that Chapman also said it shares the four stated concerns listed in Item 4, having concluded that what is "clearly best for shareholders" is to "put the company up for sale". He also added, "if by now you have not realized the days of your being paid an annual compensation exceeding $1.8 million for the service of driving Glenayre's owners' collective investment into the ground, it's high time for a reality check."

Chapman also suggested that the company's board of directors read Alan Murray's Revolt In The Boardroom: The New Rules of Power in Corporate America saying, "you may want to take a break from admiring your 2007 Grammy after-party photos to read the entire book, start-to-finish, and then re-read it. Given that Mr. Thomas Costabile, EDC's high paid COO, is carry nearly the entire operational load at EDC, I doubt you lack the free time to read this book cover to cover".

The two activist investors own a combined 17% stake in the company at this time and may increase it before Glenayre's annual meeting. Many investors are hoping that two large, activist investors will be enough to draw a response from management and ideally a move to put the company on the auction block to unlock value. Combined, these factors make GEMS a stock worth watching!

For more background information on Chapman's legal arguments and demands, checkout their Schedule 13D/A filing with the SEC today.

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