Friday, September 29, 2006

Pirate Capital Raises Stake in PW Eagle (PWEI) In Midst of Fund Shake-Up

In an amended 13D filing on PW Eagle, Inc. (Nasdaq: PWEI), Pirate Capital disclosed a 22.4% stake (2.8 million shares) in the company, this is up from the 20.5% stake (2.54 million shares) the firm disclosed in a past filing.

The filing comes after word spread through the market yesterday that half of Pirate's staff left or were dismissed. The news of the shake-up at the fund comes just weeks after Pirate came under SEC scrutiny for failing to promptly disclose changes in material holdings, including OSI Restaurant (NYSE: OSI) and FreightCar America (Nasdaq: RAIL) - position the hedge fund closed out.

The filing on PW Eagle is interesting because it shows that Pirate bought about 53,855 shares yesterday, in the midst of all the reported chaos at the fund.

Yesterday, rumors of liquidations hurt many of the stocks in Pirate's portfolio. Some of the analysts that left the fund are on the boards of companies in Pirate's portfolio. Brink's (NYSE: BCO) was down 3.86%, CEC Entertainment Inc. (NYSE: CEC) was down 2.74%, CEC Entertainment Inc. (NYSE: CEC) was down 2.5%, The Pep Boys (NYSE: PBY) was down 5%, among others.

PW Eagle was down 4.17% yesterday, but today's disclosure indicates PWEI is a position Pirate, in its current state, may maintain.

In a letter to customers, Pirate Capital founder Thomas Hudson said he will refocus the fund and close it to new investors as of October 1st. Hudson said he is targeting 20% in annual returns.

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