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Crescendo Win Resounds for Computer Horizons

This column was originally published on RealMoney on Sept. 6 at 2:00 p.m. EDT. It's being republished as a bonus for readers.

Often when activist shareholders get what they want, share prices immediately reflect it, which is why I like following these stories.

The latest example comes from Computer Horizons' (CHRZ) planned merger with Analysts International (ANLY) -- a deal I wrote about last week .

The battle is heating up between the company and Crescendo, the activist fund, led by Eric Rosenfeld, that is opposing the merger. Encouraged by Crescendo, shareholders voted Friday to block the merger. Shares of Analysts International subsequently fell 50 cents, and shares of Computer Horizons rose 64 cents to close at $4.20, perhaps inspired by Crescendo's efforts and the hope that those efforts will further unlock value. The 52-week high for Computer Horizons is still 10% higher than the closing price, at $4.64.

During the week before that, Computer Horizons came out with a press release further detailing its strategy in conducting the merger, and one of its investors, the Al Frank Fund, led by value investor John Buckingham, came out in support of the merger.

On Friday, Crescendo issued a press release and filed a DFAN14 with the SEC commenting on the press release. Specifically, it raised these issues that the company did not discuss in its press release:
  • A high price is being offered for Analysts.
  • Analysts' business is deteriorating.
  • If Computer Horizons stock is undervalued (as management has claimed), why isn't the company buying back its own shares? Seems like a less risky way to create shareholder value than overpaying for Analysts.
  • The company has a history of missing guidance. Is the $15 million cost-cutting achievable?
  • The company didn't look at all available options.
  • Management and board own very little shares and bought very little in open-market transactions.
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