FedEx (FDX) Runs Wild On Rumor It's Ackman's Latest Activist Target
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Since word hit Monday that hedge fund titan Bill Ackman has a new large-cap activist target, speculation has been rampant about the identity of said target. Well today speculators are narrowing in on a name - FedEx (NYSE: FDX).
In a letter sent to investors for a new special purpose vehicle, Ackman's Pershing Square described the targeted company as a large-capitalization, investment-grade U.S. corporation that principally operates in one business. Ackman also said the stock trades at a lower multiple than its closest competitor.
"The business is simple, predictable, and free-cash-flow-generative, and enjoys high barriers to entry, high customer switching costs and substantial pricing power," he wrote.
While the identity of the targeted company remains a mystery, the company Ackman is describing sounds a lot like FedEx. Specifically the discounted multiple Ackman cited. Interestingly, FedEx trades at 15x this year's earnings, while rival UPS (NYSE: UPS) trades at 18x. Hmmm.
Pershing Square, for its part, is not talking. StreetInsider.com received a 'no comment' response when reaching out to the firm.
While Ackman has seen big-bets on Herbalife (NYSE: HLF) and J. C. Penney Company, Inc. (NYSE: JCP) not go his way, he took a victory lap in Canadian Pacific Railway Limited (NYSE: CP) recently. The fund sold a large amount of CP shares after they tripled since the firm's initial investment. The position grew to approximately 26% of the combined assets of Pershing Square's funds.
Shares of FedEx are up 6.2 percent mid-day Tuesday.
In a letter sent to investors for a new special purpose vehicle, Ackman's Pershing Square described the targeted company as a large-capitalization, investment-grade U.S. corporation that principally operates in one business. Ackman also said the stock trades at a lower multiple than its closest competitor.
"The business is simple, predictable, and free-cash-flow-generative, and enjoys high barriers to entry, high customer switching costs and substantial pricing power," he wrote.
While the identity of the targeted company remains a mystery, the company Ackman is describing sounds a lot like FedEx. Specifically the discounted multiple Ackman cited. Interestingly, FedEx trades at 15x this year's earnings, while rival UPS (NYSE: UPS) trades at 18x. Hmmm.
Pershing Square, for its part, is not talking. StreetInsider.com received a 'no comment' response when reaching out to the firm.
While Ackman has seen big-bets on Herbalife (NYSE: HLF) and J. C. Penney Company, Inc. (NYSE: JCP) not go his way, he took a victory lap in Canadian Pacific Railway Limited (NYSE: CP) recently. The fund sold a large amount of CP shares after they tripled since the firm's initial investment. The position grew to approximately 26% of the combined assets of Pershing Square's funds.
Shares of FedEx are up 6.2 percent mid-day Tuesday.
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