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Morning Brief: Elliott Identifies New Activist Target
Health care company MEDNAX is now in the crosshairs of the multistrategy manager, which says the stock is undervalued.
Shares of MEDNAX surged 13.4 percent, to close at $51.76, after Elliott Management Corp. disclosed it owns 7 percent of the health care company, which specializes in neonatology, anesthesiology, maternal-fetal medicine, other pediatric services, radiology, and management services. In a regulatory filing, the multistrategy manager known for its activism said the stock is undervalued and it seeks a “constructive dialogue” with management and the board of directors regarding strategic options and operational opportunities to maximize shareholder value. Elliott added that it thinks there is “substantial upside” from the company’s stock price level of $43.37 as of November 3, the last trading day before Elliott boosted its stake and before news reports surfaced indicating private equity interest in the company. The company has a market capitalization of just $4.8 billion.
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Bill Ackman’s Pershing Square Capital Management said it closed out positions in Air Products and Chemicals and Nomad, telling clients they generated “substantial gains,” while freeing up capital for new investments. In its third-quarter letter the activist hedge fund firm said Air Products, which sells industrial gases, generated a 104.7 percent total return over a 4.5-year period, versus 69.9 percent for the Standard & Poor’s 500 stock index over the same period.
Pershing Square sold food company Nomad in September for $14.16 per share, a 35 percent gain over its average cost over a little more than two years. It was the third-largest contributor to performance this year. Pershing Square Holdings is down 4.2 percent for the year through November 14.
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Shares of Time Inc. surged more than 28 percent, to close at $16.20, on reports that the Koch Brothers may back a possible acquisition of the publisher by Meredith Corp. At the end of the third quarter, Lee Cooperman’s Omega Advisors was the fifth-largest shareholder. The stock is also his ninth-largest long position. This is surely a relief for Cooperman. Omega noted in its third-quarter letter that Time was its fourth-biggest-losing position in the first nine months of the year.