Wave Systems Corp. (fka WAVXQ)

[Countryboy]

AWK.

AWM Investment co or Austin Marxe and David Greenhouse looks interesting. I believe they have a new postion in WAVX?

Here's a clip on them:

In other words, we try to always keep an eye on the movements of the real "smart money" on Wall Street – not the press-happy mutual fund managers that proudly parade their worn-out ideas around on CNBC.

So with this in mind, we were intrigued by a new 13D filing that hit the tape last week disclosing that Austin Marxe and David Greenhouse of the Special Situations funds had amassed a sizeable stake in a small software shop called Tarantella (TTLA). From a quick check I did earlier this afternoon, TTLA was delisted from Nasdaq earlier this year and is now trading on the lowly pink sheets due apparently to some accounting issues that knocked the firm off course.

Marxe and Greenhouse are well-respected for their eye at ferreting out, as the name of their investment fund implies, very profitable "special situation"-like investment opportunities. Thus, I'm not surprised to see them betting on a very speculative name like TTLA with seemingly lots of "hair" on it. It was Marxe and Greenhouse who bought a boatload of LiverPerson (LPSN) at a lowly 50-60 cents per share in the summer and fall of 2002 before the stock had its huge 2003 run off its lows, which they of course were selling into. LPSN closed today off -5 cents to $5.44 per share. We recently successfully shorted some LPSN for a quick 18% gain.

Based on this most recent 13D filing, Marxe and Greenhouse own 5.3 million shares or a commanding 38.6% stake in TTLA (assuming the full conversion of all of the TTLA warrants they own). TTLA shares closed today up 5 cents to $1.20 per share on light volume.

A quick check of the most recent news on TTLA shows that the struggling software shop named a new CEO and President, Frank Wilde, earlier this month (on December 11th) and also secured some new funding. Wilde was previously the CEO of Ravisent Technologies. According to the new corporate bio for Wilde on Tarantella's website, he grew Ravisent into "the eighth fastest growing business in the United States from funding to IPO in two years."

TTLA also announced at the same time as Wilde's appointment that it had raised $2.75 million in new capital by selling 2.75 million shares of TTLA common stock at $1.00 per share. Special Situations Technology Funds led the financing and new TTLA CEO Wilde invested in the round as well, along with "an additional private investor." The investors acquired warrants to purchase up to an additional 550,000 TTLA shares at an exercise price of $1.39.

Back at the start of October, TTLA had already raised $2.25 million in new capital in a separate private placement of TTLA common stock at a price of $1.15 per share. Special Situations and Vertical Ventures, the two funds that invested in this financing, also acquired warrants to purchase up to 1.95 million additional shares of TTLA at $1.39.

Needless to say, I'm intrigued that Marxe and Greenhouse are speculating in this name and I like the fact that the stock is still trading right around the price points of these recent financings. That said, I've taken only a very preliminary look at TTLA to date and am not fully up to speed yet on its business/products, capital structure or the size of its accounting issues and its status in getting current on its quarterly filings. If anyone has any insights or thoughts on any of these above topics on TTLA, we'd of course love to hear from you.


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