$100 Million Investment. Private Equity firms White Hat Capital and Magnetar Capital are investing $100 million into Comtech through the purchase of convertible preferred stock. The investment is a significant endorsement of Comtech's business, in our view.Strategic Growth Investment. According to management, White Hat has been a long-time shareholder of Comtech and discussions have been ongoing for a while. The investment significantly enhances Comtech’s financial flexibility and strengthens the Company’s ability to capitalize on its recent large contract awards and growing customer demand for its satellite communications technologies and next-generation 911 public safety solutions, in our view. Outerbridge vs White Hat & Magnetar. It is interesting to see Outerbridge's description of management, "questionable capital allocation decisions, a failed M&A strategy, poor executive succession planning, a lack of transparency and accountability, and troubling corporate governance practices..." and White Hat/Magnetar's "fully support Comtech’s strategy and the recently announced and well-thought-out leadership transition plan...applaud the recent actions taken by the Board and management to strengthen corporate governance, increase diversity of views, and enhance shareholder value." Significantly, though, both parties would seem to agree Comtech remains deeply undervalued.Capital Allocation. Comtech retains the ability to continue its annual dividend program as well as opportunistic share repurchases under its $100 million authorization.Maintaining Market Perform. Given expectations for difficult comparisons during the first half of fiscal 2022, we are maintaining our Market Perform rating. While we continue to believe in the long-term prospects of the Company, we think the shares will remain in a narrow range until positive operating momentum materializes. Read More >>