Yum Brands has appointed Corvex Management founder Keith Meister to its board of directors. The company, known for its KFC, Pizza Hut and Taco Bell fast-food chains, also said it is close to concluding its review of strategic options, including those related to the company’s structure. Corvex, a New York-based activist hedge fund firm, owns nearly 5 percent of YUM’s stock.
“This is a company with multiple avenues for unlocking significant long-term value, and I look forward to working with the Board and management to expeditiously finalize a plan that we believe can deliver that value to shareholders,” Meister states in a press release.
The stock has been tumbling of late after it reported weaker economic conditions in China. Yum said in its announcement that fourth quarter same-store sales in its China division will likely come in between 0 percent and as high as 4 percent. It thinks same-store sales growth at KFC will be positive and while same-store sales at Pizza Hut will be negative. For the full year, the China division’s same-store sales are expected to be negative in the low-single-digit range, while profits are expected to be about flat.
The stock is down more than 15 percent since October 6 alone. It rose about 2.5 percent in after-market trading on Thursday.
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Boston-based Baupost Group has invested $125 million in Keryx Biopharmaceuticals in a private placement of convertible senior notes due 2020. The biopharmaceutical company is trying to develop therapies for people with renal disease. Under the deal, Baupost will have the right to appoint a director to Keryx’s board of directors by the end of 2015 as well as appoint an observer to Keryx’s board.
This is Baupost’s second big biotech bet in the past week. On October 9 the hedge fund firm, headed by Seth Klarman, disclosed it bought more than 25.8 million shares of Orexigen Therapeutics, or 17.17 percent of the biopharmaceutical company.
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Shares of Valeant Pharmaceuticals international took yet another big hit Thursday after the embattled drug giant disclosed late Wednesday that it is the target of federal prosecutors who are looking into how it prices its drugs and sells them to patients. The company said it received subpoenas from the U.S. Attorney’s Office for the District of Massachusetts and the U.S. Attorney’s Office for the Southern District of New York. Shares of the hedge fund favorite dropped 4.75 percent on Thursday to close at $168.87 on an otherwise very strong day for stocks in general.
The stock started to tumble when Hillary Clinton raised questions about soaring drug prices in general. As we have pointed out on several occasions, Jeffrey Ubben’s San Francisco-based ValueAct Capital is Valeant’s fourth-largest shareholder, although it sold nearly one-quarter of its position in the second quarter. It took its initial stake in 2006. William Ackman’s New York-based Pershing Square Capital Management took its initial stake of nearly 19.5 million shares in the second quarter, which made it the company’s third-largest shareholder. Other top shareholders include New York-based Paulson & Co. and two Greenwich, Connecticut-based Tiger Cubs: Lone Pine Capital and Viking Global Investors.
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Shares of Netflix tumbled 8.29 percent to close at $101.09 after the streaming video company reported earnings and other metrics that came in below analyst expectations. In response, Credit Suisse cut its price target from $130 to $124 after slightly trimming its earnings estimates. It also maintained its neutral rating, noting it remains on the sidelines regarding the stock. UBS is more bullish, maintaining its buy rating and $143 price target.
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UBS cut its price target on Yelp from $30 to $24 but maintained its neutral rating on the online listings and review company. Yet Yelp’s stock rose nearly 3 percent on the day.
