SCHEDULE: Lantronix Investors Reduce Stake Below 5%

Chain of Lakes Investment Fund and associated individuals have reduced their beneficial ownership in Lantronix Inc. to 4.26%, falling below the 5% threshold.

Summary

• Chain of Lakes Investment Fund, Christopher B. Woodruff, Haluk L. Bayraktar, and Emre Aciksoz (the "Reporting Persons") have filed Amendment No. 3 to their Schedule 13D.
• The Reporting Persons collectively beneficially own 1,691,425 shares of Lantronix Inc. common stock, representing 4.26% of the outstanding shares.
• On March 10, 2026, the Reporting Persons ceased to be the beneficial owner of more than five percent of Lantronix's outstanding common stock.
• Since January 30, 2026, the Reporting Persons have sold a total of 565,665 shares in open market transactions at weighted average prices ranging from $6.10 to $7.24 per share.
• The original acquisition was based on the belief that Lantronix shares were materially undervalued, leading to an intent to seek board changes and a potential sale of the Issuer.
• A Cooperation Agreement was entered into on June 24, 2025, to resolve differences with the Issuer, which impacts the voting of the shares.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a moderately negative signal, as a significant activist investor group has reduced its stake, potentially indicating a lack of further conviction in the company's upside or a strategic exit after a cooperation agreement.

Positives

• The Cooperation Agreement, established in June 2025, indicates a resolution of prior activist differences between the Reporting Persons and Lantronix management.

Negatives

• The significant reduction in beneficial ownership by the Reporting Persons, including Chain of Lakes Investment Fund, suggests a decreased conviction in the investment or a strategic exit.
• The sales occurred at weighted average prices between $6.10 and $7.24, which could indicate a lack of belief in substantial near-term upside beyond these levels.

Risks

• The reduction in a significant shareholder's stake could be perceived as a negative signal by the market, potentially impacting investor confidence and share price.

Future Outlook

The Reporting Persons intend to continuously review their investment in Lantronix Inc. and may take further actions regarding their investment as deemed appropriate, while adhering to the terms of the Cooperation Agreement.

Management Comments

• The Reporting Persons originally acquired the shares in the Issuer because they believed the Shares were materially undervalued and represented an attractive investment opportunity.
• The Reporting Persons considered taking one or more actions described in subjections (a) through (j) of Item 4 of Schedule 13D, and intended to seek to replace a majority of the current members of the Board of the Issuer with candidates that were committed to an expedited return of shareholders' capital through a sale of the Issuer by running a competing proxy statement at the Issuer's 2025 Annual Meeting of Stockholders.
• Subsequent to the filing of the Original Schedule 13D... the Reporting Persons engaged in discussions with the Issuer, and the parties have agreed to resolve their differences with respect to this matter by entering into a Cooperation Agreement dated June 24, 2025.

Industry Context

StockSavvy.ai notes that the reduction of a significant activist stake, particularly after a cooperation agreement, often signals either a successful partial realization of the activist's goals or a shift in investment strategy. While the filing doesn't detail broader industry trends, such a move by an investment fund can influence market perception of the company's near-term prospects, especially if the original thesis involved a strategic sale of the company.

Comparison to Industry Standards

• This filing primarily concerns changes in beneficial ownership and does not provide financial or operational results for direct comparison to industry standards or specific comparable companies.
• The original activist intent to seek a sale of the Issuer for an expedited return of capital is a common strategy employed by activist investors, similar to actions seen with Starboard Value or Elliott Management in various sectors, though the specific outcome here was a cooperation agreement and subsequent stake reduction rather than a full company sale.

Corporate Governance

Stakeholder Impact

• Shareholders: The reduction in a significant activist stake could be interpreted negatively, potentially leading to downward pressure on the stock price or a loss of confidence from other investors who might have aligned with the activist's original thesis.
• Management/Board: The Cooperation Agreement resolved a potential proxy contest, allowing management to focus on operations without immediate activist pressure, though the ongoing review of investment by the Reporting Persons suggests continued oversight.

Next Steps

• Reporting Persons intend to review their investment in Lantronix Inc. on a continuing basis.
• Reporting Persons may take further actions with respect to their investment in the Issuer as they deem appropriate, subject to compliance with the terms of the Cooperation Agreement.

Key Dates

Recommendation

While the reduction in the activist stake by Chain of Lakes Investment Fund and associated individuals is a negative signal, the existence of a Cooperation Agreement suggests a structured approach to their investment. The stock sales have occurred over a period, indicating a gradual exit rather than an abrupt divestment. Investors should hold to observe the company's performance post-activist pressure and assess if the current management can deliver value independently, especially given the prior belief of undervaluation.

Keywords

Lantronix, Lantronix Inc., LTRX, Schedule 13D/A, beneficial ownership, Chain of Lakes Investment Fund, shareholder activism, stock sales, corporate governance, investment fund