Beware: Activists get mixed results

Article Excerpt

Activist investors tend to target companies that can enhance shareholder value through asset sales or other moves. However, you have to evaluate these pressure campaigns on a case-by-case basis. Sometimes these moves succeed (see FedEx), but others seem poised to fail (Kohl’s). FEDEX CORP. $216 is a buy. The company (New York symbol FDX; Consumer sector; Shares outstanding: 259.2 million; Market cap: $56.0 billion; Dividend yield: 2.1%; Takeover Target Rating: Medium; delivers packages in the U.S. and 220 other countries. The stock gained 10% after FedEx settled a dispute with activist investor D.E. Shaw & Co., which wants it to cut costs and improve efficiency. Under that deal, the company will raise its quarterly dividend by 53.3%. Starting with the July 2022 payment, investors will receive $1.15 a share instead of $0.75. The new annual rate of $4.60 yields 2.1%. The company will also add three new independent directors to its board and adjust its executive compensation plan to better correlate executive cash bonus payments with shareholder…

You are trying to access subscriber-only content.

To read this article, you may subscribe or sign in.
If you are already a subscriber, log in here.

If you wish to become a subscriber, click here. Or you may enjoy access to all our publications when you become a Member of Pat McKeough's Inner Circle Pro.