Shares of The Advisory Board Company (NASDAQ: ABCO) were surging today after an activist investor filed a 13D form seeking to engage in talks with the board. As of 11:18 a.m. EST, the stock was up 13.8%.
Elliott Associates, the activist hedge fund run by Paul Singer, disclosed a position equivalent to an 8.3% stake in Advisory Board and said it believes the stock is significantly undervalued. The hedge fund seeks a constructive dialogue with Advisory Board in order to maximize shareholder value.
Singer's aims with Advisory Board are unclear, but the stock has lost significant value in recent years, down more than 40% over the last three years before today's news.
Activist positions often give stocks a jolt like this, especially for beaten-down shares like Advisory Board's. Management has not yet responded to Elliott Associates, but it will likely agree to talks. From there, Elliott may seek a board shakeup or any number of strategic changes. Advisory Board's profits have fallen significantly over the last five years so it's not a surprise to see an activist investor take such a stake. Expect volatility from the stock as negotiations between the two sides ensue.