Castle Union LLC is eying a potential proxy fight at Procera Networks Inc. (PKT) if the communications equipment maker doesn't launch a public strategic review process by the end of January.
"All shareholders share the same frustration with the company," said Toan Tran, managing partner at Chicago-based Castle Union. The hedge fund, which first started investing in Procera early October, disclosed its 5% stake in an Oct. 28 filing with the Securities and Exchange Commission, in which it stated it planned to talk to management or the board about strategic alternatives, including a potential sale.
Subsequently, the investor increased its stake in the Fremont, Calif.-based company to 6.6%, according to a Dec. 5 filing.
The hedge fund purchased additional shares because the stock is cheap, Tran explained. Procera stock, which is down about 55% year-to-date, was trading at $6.80 mid-day Tuesday.
Given that the company has been performing poorly and has repeatedly missed expectations, it is time for the board and management to be held accountable, Tran said.
If Procera doesn't make a public announcement before Jan. 29, he said his firm will launch a proxy fight and nominate four directors to its board, which currently has seven members.
With last year's annual meeting coming up in the spring, Procera has a window of between 120 and 90 days prior to May 29, the date of last year's meeting, meaning Jan. 29 is the earliest it could send in nominations and Feb. 28 the latest.