January 29, 2013
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of energy company Hess (NYSE: HES ) jumped as much as 13.3% today after an activist investors made suggestions to unlock value.
So what: Hedge fund Elliott Management, which currently owns 4% of the company, has nominated five executives to the board of directors in an effort to break up the company. The fund thinks Hess should sell its Bakken assets, retail assets, and other businesses and move its infrastructure assets into a master limited partnership.
Now what: According to the fund, the stock could be worth $126 per share, more than double its closing price yesterday if these moves are executed. Activist moves can be risky for investors to bet on, because management has the power to freeze them out or not act on proposals. I wouldn't buy on this move alone, but it is a time to take a fresh look at your investment thesis. This could bolster a bullish thesis, because it may force management to move more quickly to unlock value.
Interested in more info on Hess? Add it to your watchlist by clicking here.