Player Avatar TMFDeej (99.22) Submitted: 1/23/2013 4:38:07 PM : Outperform Start Price: $9.41 XRTX Score: +2.00

I'm adding XRTX to my CAPS portfolio to track the effectiveness of an activist investor that I have not followed in the past, Baker Street Capital Management.According to the great Barron's 13D column, Baker Street recently sent to the company stating that it should stop piddling investors' money away on worthless growth initiatives and circle the wagons around the company's profitable core business...OK I paraphrased a little there.Finding companies with profitably core businesses that are wasting money in their other divisions is a common practice amongst activists. Let's see how successful Baker Street is.Deej

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Member Avatar NovaTodd (< 20) Submitted: 1/24/2013 10:34:29 AM
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Interesting. Sounds like they have quite a struggle on their hands. From Baker Street's letter:

"We were disappointed that the Board very recently failed to capitalize on a highly accretive opportunity to repurchase a significant amount of Xyratex stock at a deep discount to Tangible Book Value, and an even deeper discount to intrinsic value. A Board member explicitly told us that the Board decided to forgo this attractive transaction to avoid increasing Baker Street’s percentage ownership in the Company. This decision was made even after we had clearly communicated our willingness to limit our voting rights if it would allow the Company to proceed with this value-enhancing transaction."

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Member Avatar nrutman (< 20) Submitted: 1/24/2013 1:57:32 PM
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Baker Street is completely wrong. Circling the wagons around an old school, declining-margin core business is not the way to achieve any kind of share price growth. What this "activist" really wants is to slash and burn, bump the price up short term, exit, and leave the company for dead. The growth initiatives are signifcant, and do take money to fund, but this is a company investing in its future.

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