CSPI

CSP Inc. ($CSPI) Major Shareholder Continues Buying Spree Following Take-Private Proposal Disclosure

05/29/2025 19:46

CSP Inc. ($CSPI), a Lowell-based IT solutions company, is drawing significant market attention as major shareholder Joseph Nerges continues his aggressive stake-building campaign throughout 2025. Between May 27-29, Nerges purchased an additional 1,700 shares for approximately $24,926, demonstrating renewed confidence in the company's prospects. This latest buying spree represents a continuation of Nerges' systematic accumulation strategy that began in June 2024. SEC filings reveal he has purchased shares almost monthly over the past year, particularly during price weaknesses. This pattern was most pronounced during September 2024 when shares traded in the $11 range and again in April-May 2025 at $13-14 levels. Most significantly, Nerges isn't merely expanding his stake—he's considering taking the company private. An August SEC filing disclosed his 14.13% ownership position alongside his "intention to enter into talks with other individuals/investment groups with intention of making take-private proposal for CSP." This signals his belief that the current share price substantially undervalues the company's intrinsic worth. Founded in 1968, CSP specializes in IT integration solutions, cybersecurity products, and managed IT services serving both commercial and defense markets. The company operates through Technology Solutions (TS) and High Performance Products (HPP) segments, with its cybersecurity product AZT PROTECT gaining significant traction in the operational technology market. Recent contract wins include a multi-year cell tower protection deal in South Africa and a major Microsoft Azure cloud migration project for a Florida healthcare provider. Financially, CSP maintains a fortress-like balance sheet. The company ended Q2 2025 with approximately $29.5 million in cash and cash equivalents while carrying minimal debt—a debt-to-equity ratio of just around 1%. This near debt-free structure provides exceptional financial flexibility, with a current ratio of 3.34 indicating strong short-term liquidity. However, recent operational performance has been mixed. Q2 revenue declined 4.1% year-over-year to $13.1 million, with the company posting a net loss of $108,000 due to higher component costs and the absence of high-margin contracts. Despite near-term headwinds, the company's long-term trajectory appears promising. Management reports that AZT PROTECT's sales pipeline has expanded approximately fivefold recently, supported by strengthened reseller partnerships with Rexel USA and Orex Industries. The cybersecurity segment represents a key growth driver as enterprises increasingly prioritize operational technology security. Shares have exhibited considerable volatility this year, peaking above $20 in early February before settling in the $14-15 range—approximately 30% below the 52-week high of $21.95. For Nerges, this correction likely represents an attractive accumulation opportunity ahead of potential privatization discussions. Industry analysts note increasing private equity interest in small-cap technology companies, particularly those with niche market positions trading at discounted valuations. CSP fits this profile perfectly—a specialized player with competitive moats but a market capitalization of only around $152 million. Key catalysts ahead include earnings results scheduled for August 11-12, potential AZT PROTECT contract announcements, and most importantly, any concrete developments regarding Nerges' privatization plans. Given CSP's modest size and strong insider ownership approaching 31%, a take-private transaction represents a highly feasible scenario that could unlock significant shareholder value.

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