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Hedge fund buys 5.3 percent of RadioShack stock

Date: Tuesday, July 29, 2008
Author: Barry Shlachter, Star-Telegram.com

Citadel Investment Group is bullish on RadioShack, buying 6.9 million shares, or 5.3 percent of the electronics retail chainís stock, according to a federal filing Monday.

With the purchase, the Chicago-based hedge fund becomes the fourth-largest holder of RadioShack stock ó but the only one of the top seven that has been buying, not selling.

Why RadioShack, which is attempting a turnaround?

Citadel wouldnít say. "We donít comment on positions," spokeswoman Katie Spring said.

The filing with the Securities and Exchange Commission indicated that Citadel was not contemplating a takeover. Rather, reports described the purchase as a passive investment with no intent of influencing the company.

Privately held Citadel has assets totaling $22 billion and employs 1,300, Spring said. A major hedge fund, its trading accounts for as much as 2 percent of daily activity on the New York Stock Exchange and the Nasdaq Stock Market, said Hoovers, a company information service.

It was founded with $4.6 million in investment capital in 1990 by Kenneth Griffin, who graduated the year before from Harvard, where he reportedly dabbled in convertible-bond arbitrage trading from his dorm room using a computerized trading program.

From 1998 through 2007, Citadel reportedly rung up annualized returns in excess of 22 percent by merging stables of young workaholic traders and computer geeks.

Citadel has holdings of 5 percent or more in such companies as Freightcar America, Morgans Hotel Group, Informatica, Titan International and W.R. Grace.

Shares in Fort Worth-based RadioShack (ticker: RSH) closed down 36 cents, or 2.2 percent, at $15.90 on the New York Stock Exchange on Monday.

On Thursday, RadioShack announced that sales in stores open at least a year rose 6.9 percent in the second quarter. Profit, although lower, beat analystsí expectations.

BARRY SHLACHTER, 817-390-7718