Activist Hedge Fund Builds Its Stake in ESS Technology

| About: ESS Technology (ESST)

In June, chipmaker ESS Technology Inc. (ESST) said it was mulling strategic options in a process that might lead to an outright liquidation. We haven't heard the results of that review yet, as the company's banker, Needham & Co., is ostensibly still toiling away to figure out how to proceed. ESS may want to step it up -- the natives are getting restless.

Activist hedge fund Loeb Partners has amassed an 11.2% stake in the struggling maker of DVD and video chips, according to a 13-D filing this week. The filing landed the same day as another activist investor, Riley Investment Management Inc., said it has been selling off shares. The Los Angeles investment firm held 6.7% of ESS' shares in June, but it has reduced its stake to 5.3%, according to a filing this week.

Riley Investment president Bryant Riley in early June fired off a letter urging the company to shutter its remaining businesses, sell its investment and real estate assets, and return the proceeds to shareholders. Since then, the company has agreed to at least some of Riley's requests -- last month it agreed to sell its Fremont campus for $26.3 million.

It's not entirely clear at this point what Loeb is after. It didn't offer any details in its 13-D, nor did it return a call Wednesday morning. Shares of ESS were down .67%, at $1.49, in late afternoon trading Wednesday.

See Nov. 13 Loeb Partners filing from SEC.gov
See Nov. 13 Riley filing from SEC.gov
See June 19 story from TheDeal.com

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