Hedge Fund Report: Activists Don't Always Shout

Shares of Zoltek(ZOLT Quote), the St. Louis-based carbon-fiber manufacturer, declined sharply Friday after the company filed an S-1 registration form announcing that it would issue 7 million additional shares for the conversion of its convertible debt.

Investors reacted strongly even though the registration filing was expected. The 5.6% decline was "a sign that the market is weak in general," says David Edwards, an analyst at ThinkEquity Partners, a research and investment boutique firm, who has a buy rating on the stock. "I'm not concerned with the registration statement."

Hedge fund activist Dan Loeb, who runs Third Point and who is the largest shareholder in Zoltek, seems to believe in the long-term prospects of the stock in spite of the slide. Two weeks ago, he disclosed a 7% stake in the company in a 13-G filing. The filing was unusually quiet, with no letter attached. That's in contrast to the typical missives to management Loeb publicizes in his filings, which have earned him the reputation of being a bully. ...