Xyratex (XRTX) is a leading provider of data storage technology, including modular solutions for the enterprise data storage industry ("EDS") and hard-disk-drive capital equipment ("HDDCE") for the HDD industry. The company has ~50% market share in the OEM enterprise storage system category. In addition, Xyratex has been utilizing their storage expertise to create a new line of products for the growing high performance computing ("HPC") industry.
The investment thesis is simple and revolves around three key elements:
1) Depressed earnings due to elevated R&D expenses
2) Catalyst 1: Aligned Board and Management with an incentive to maximize value
3) Catalyst 2: Upside surprise from new HPC product line
While Xyratex' revenues have been cyclical...
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