Activists target out-of-favour stocks

Article Excerpt

EAGLE MATERIALS INC. $87 (New York symbol EXP; Manufacturing sector; Shares outstanding: 45.9 million; Market cap: $4.0 billion; Takeover Target Rating: Medium; Dividend yield: 0.5%; makes cement, gypsum wallboard, recycled paperboard, concrete and aggregates, and oil and gas proppants (man-made sand for fracking) at over 75 facilities in the U.S. Texas house-builder Centex Corporation spun off Eagle in 2004. (Centex is now part of Pulte Group, New York symbol PHM). Following the split, activist investment firm Sachem Head Capital Management acquired 8.9% of Eagle Materials. It wants the company to sell its frack sands business, which has struggled in recent years as oil producers use brown sand from suppliers close to their wells. That’s cheaper than using white sand that comes from mines. Sachem feels Eagle Materials’ remaining cement and wallboard operations could be worth $130 a share. The activist may also push the company to borrow cash and buy back shares. As of December 31, 2018, Eagle’s long-term debt was $589.9 million, or a low…

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