Napster Inc., the Internet music pioneer whose shares have plunged 95 percent in six years, has become takeover bait for hedge funds zeroing in on a cash hoard exceeding the company’s market value.
While Los Angeles-based Napster hasn’t posted a profit in four years, its $69.8 million in cash and investments as of March 31 eclipses the shares’ $52.1 million value. The company’s biggest investor, New York-based hedge fund Eminence Capital LLC, boosted its stake to 9 percent in the second quarter, according to regulatory filings.
Napster may be an attractive target for a buyer like JDS Capital Management Inc., the New York hedge fund that owns digital-music retailer eMusic.com, said Ken Smith, a portfolio manager at Munder Capital Management.
