Miami Group Says 5% Stake in Alpha Micro Just a ‘Friendly Investment’

A Miami investment group that has acquired a 5% stake in Alpha Microsystems said Tuesday that no attempt will be made to acquire control of the Santa Ana computer maker, nor will the group seek any changes in management.

“This is a friendly investment,” said Edward Easton, a general partner in Fundamental Hopkins-Easton, the investment group.

In a filing with the Securities and Exchange Commission, Fundamental said it had acquired 159,000 shares of Alpha Micro common stock, or about 5% of the shares outstanding. The investment group paid $946,747, or about $5.95 a share.

Alpha Micro executives were unavailable for comment on the share purchases Tuesday. A spokeswoman, Peggy McCranie, said Alpha Micro chief executive Robert Hitchcock and other executives are “evaluating all the information.”

Easton said Alpha Micro appears poised for growth, has no debt and has successfully scaled back its operations after a troubled period in 1985 and 1986.

‘Stock Is Undervalued’

“We think the stock is undervalued,” Easton said. “Alpha Micro fits perfectly into our investment formula. This company has very wide profit margins, so all it needs to do is recapture some of its sales and it should do very well.”

Alpha Micro shares, which closed Tuesday at $6.875, down 62.5 cents for the day, had traded as high as $24 a share in 1983, Easton said.

Easton expressed confidence in Hitchcock and said Fundamental probably would not seek a seat on Alpha Micro’s board of directors.

Easton and other members of the investment group will be traveling to Santa Ana next week to meet with Alpha Micro executives, he said. According to Candice King Weir, a securities analyst with C.L. King & Associates, an Albany, N.Y., brokerage, Fundamental has made similar investments in a number of companies around the country.

Fundamental Management Corp, a related Miami firm, has accumulated 25% of the shares of Robeson Industries, a Mineola, N.Y., appliance manufacturer with about $50 million in sales, said Eric S. Matlin, Robeson’s treasurer.

2 Seats on Board

Matlin said the investor group has obtained two seats on the company’s board of directors, but it has not sought control of the company.

“Their record in the past has not been one of leveraged buyouts or hostile takeovers,” he said. “Their style is to take a position in a company and help it become profitable. They’re good partners, very savvy, and they have a wealth of knowledge.”

In its SEC filing, Fundamental Hopkins-Easton stated that it might recommend that Alpha Micro “explore the feasibility of a leveraged buyout or other corporate transactions.”

In a typical leveraged buyout, a company’s management borrows money from banks and other institutions to repurchase all of its stock. The company then uses cash flow from operations and sometimes the sale of assets to pay down the debt.

In the past, leveraged buyouts have yielded large profits for corporate managements and outside stock investors.

Easton said any leveraged buyout proposed by his group would not entail a change in management at Alpha Micro.

In June, Alpha Micro reported a profit of $672,000 for the quarter ended May 29, up from $98,000 for the same period a year earlier. Sales rose to $12.1 million from $11 million.