Riley Investment To Silicon Storage (SSTI): "Your Stock Stinks - Do Something Or We Will"

In a 13D filing this morning on Silicon Storage Technology Inc. (Nasdaq: SSTI), Riley Investment Management disclosed a 4.9% stake in the company, noting that they believe the shares are "significantly undervalued."

The firm said they hope management shares their 'sense of urgency' related to the share under performance saying, "If they do not, it will force RIM to take a more proactive approach, one which will include, among other things, the nomination of new directors."

From the filing:

"RIM believes the shares of the Issuer to be significantly undervalued. RIM believes the sum of the parts of the Issuer, including cash of $168 million, equity investments which RIM believes are worth in excess of $100 million, annual licensing revenue of over $35 million, existing NOR flash business and robust pipeline of non-commodity products are worth significantly more than the Issuer’s current market capitalization of $321 million. In fact, when one backs out cash and investments, the market is valuing SST’s NOR flash business, product pipeline and licensing revenue stream at only $60 million—which RIM believes to be an extremely low valuation by any measure. RIM has communicated this view to the Issuer’s management. Although the current options investigation seems to have clouded investors’ view of the Issuer, RIM believes that recent data points appear to be encouraging. For example a September 10th article in DIGITIMES suggests the Issuer’s capacity is fully booked and that the Issuer may have difficulty meeting demand from motherboard manufactures. The article goes on to suggest that this tight environment may persist for some time. RIM’s desire, at this point in time, is to work assiduously and aggressively with the current management team on behalf of all shareholders. RIM’s sincere hope is that management and the Board of Directors share its sense of urgency. If they do not, it will force RIM to take a more proactive approach, one which will include, among other things, the nomination of new directors."