Steer clear of private equity

Here's an odd one. Citadel, which is a huge hedge fund manager out of Chicago, has urged the board of L.A.-based Gemstar-TV Guide not to sell the company to what it calls a "financial investor." That means private equity firm, which Citadel says was unlikely to pay what Gemstar is worth - as opposed to, say, another media company that might make for a better strategic match. Now it should be said that Citadel owns 8.4 percent of Gemstar and would be very motivated to see this always-struggling company be sold. But they don't want to give it away either. "We believe any sale must adequately compensate all shareholders for the immense opportunity that lies before Gemstar-TV Guide," Citadel says in a letter to the board. Private equity has been known to buy companies on the cheap (it's trading today at $6.77). Here's more:

We do not believe the current market value of Gemstar-TV Guide common stock comes close to reflecting either 1) the current improved state of Gemstar-TV Guide’s operations or 2) the opportunity for independent value creation over the next several years as an increasing number of platforms take advantage of Gemstar-TV Guide’s unique intellectual property.

Of course Citadel has only limited leverage when it comes to any potential suitor. News Corp. owns 41 percent of Gemstar.