SiliconBeat

Many longtime investors in Sun Microsystems watched with alarm as the company’s share price plunged over the last few years. This week, as Sun announced a deal to be acquired by Oracle for $9.50 a share, one big investor decided it was time to get out.

Southeastern Asset Management, which had become Sun’s biggest investor after acquiring more than 22 percent of the company’s stock, notified the SEC today that it had sold almost all of its stake in the company.

The value investment firm, which is based in Tennessee, reported last October that it had spent more than $2.1 billion to purchase 160 million shares in Sun last year, for an average price of about $13.18.  It sold almost all of them on Monday, after Sun announced the Oracle deal, for an average of roughly $9.10 a share — meaning a loss of more than $500 million.

But the investment group could have done a lot worse. Sun’s stock, which once traded for over $250 back in the heady days of the dot-com boom, had fallen from above $25 two years ago to a low of $2.60 last November. It recovered a little, but never got back above $5 until reports surfaced last month that Sun was engaged in ultimately unsuccessful buyout talks with IBM. (The stock value rose, then fell again when those talks collapsed.)

Southeastern has said little publicly about its investment in Sun, and it declined comment this week. But it notified the SEC last fall that it planned to begin active discussions with Sun’s management about finding ways to “cause the company’s true economic value to be recognized.”

Those efforts helped lead the board to explore a sale, according to one knowledgable source. Southeastern had also won agreement last December to name two directors on Sun’s board. But only one new director, Rahul Merchant, had been appointed before the Oracle sale was announced.