Key Tronic Trading Eases A Bit Sudden Surge Linked To Buying By Large Institutional Investor

Trading in Key Tronic Corp. stock subsided Thursday, but activity remained well-above normal levels.

The closing price was unchanged at $13.62, with 108,900 shares traded.

Volume was triple the daily average for Key Tronic, but far below the numbers recorded Tuesday and Wednesday, when a total of almost 1 million shares changed hands.

Prices spiked to more than $15 Wednesday from a Monday closing price of $11.88. The previous high price had been $14.63 in 1986.

Key Tronic Vice President Ron Klawitter said trading activity Tuesday was apparently ignited by an analyst’s upgrade of the Spokane-based company’s stock.

Wednesday, much of the action was buying by PaineWebber on behalf of an unidentified East Coast institutional investor, he said.

“I don’t think it’s unfriendly,” Klawitter said, adding that a listing of institutional investors he receives each month should disclose the Wednesday buyer.

One possibility is BEA Associates, a New York-based investment adviser that on Monday filed an updated statement on its Key Tronic holdings with the U.S. Securities and Exchange Commission.

BEA held 1.2 million shares of Key Tronic as of Monday, or 14.7 percent of all company stock. Last September 27, the date of Key Tronic’s last proxy statement, BEA held just over 1 million shares.

Klawitter said he has not talked to BEA officials this week and does not know if they were adding to their position in Key Tronic.

BEA is a partnership 80 percent owned by a Swiss concern, CS Holding.

Klawitter said the shares sold this week were not those filed for registration in February by Hiller Key Tronic Partners, a group led by Key Tronic Chief Executive Officer Stanley Hiller.

The Hiller group wants to exercise an option to purchase some of the 1.1 million shares of Key Tronic held by company founder Lewis Zirkle.

The option, originally for 1 million shares at $4 per share, was trimmed in return for an extension of time, Klawitter said.

The SEC responded to the registration filing last week with some questions, which Klawitter said will keep the optioned shares off the market for at least another month.

Hiller has options from the company to buy another 2.4 million shares at $4.50. No other entity owns or has options on more than 500,000 shares of Key Tronic.

Thomas Friedberg, the analyst whose upgrade of Key Tronic lifted the stock Tuesday, said the company has positioned itself well to compete globally.

“They’ve shown that an American company can be a leader,” he said Thursday from San Francisco, where he works for Genesis Merchant Group Securities.

Friedberg said he has followed Key Tronic since Hiller took control three years ago and began restructuring the then struggling Spokane Valley maker of computer keyboards and other input products.

Although recent technological breakthroughs have put the company in the spotlight, Friedberg said Hiller’s management style is the key to Key Tronic’s turnaround.

“It’s fundamental blocking and tackling,” he said.

Friedberg described BEA as a high-quality money-management firm that has a buy-and-hold investment philosophy.

“It would surprise me if they sought an active role with (Key Tronic),” he said.

BEA officials could not be reached for comment.