What happened

Shares of Travelport Worldwide (TVPT) were up 12.1% as of 1:15 p.m. EDT Monday after activist investor Elliott Management Corp. took a significant stake in the travel commerce platform leader and suggested a potential sale.

More specifically, according to an SEC filing this morning, Elliott Management now owns a roughly 11.8% stake in Travelport (including both stock and options) worth roughly $237 million as of this writing.

Man in grey suit pants and black shoes holding a briefcase and walking to an airplane


So what

Elliott Management further revealed that it believes Travelport's shares are "undervalued and represent an attractive investment opportunity." In addition, Elliott intends to hold conversations with Travelport's board "about numerous operational and strategic opportunities to maximize shareholder value," and will urge them to initiate a strategic review that may include the potential sale of the company or its assets.

To that end, Elliott Management also stated that in the case of a sale, it may "seek to participate as a purchaser or investor."

Now what

For perspective, as of Friday's close Travelport shares were up just over 9% from the start of the year, helped by the company's strong fourth-quarter 2017 results announced late last month. But the stock was also still reeling from a steep sell-off in November 2017, which was spurred by a seemingly disappointing quarter in which Travelport missed earnings expectations and reduced its guidance for the rest of the year. 

However, that miss came primarily as Travelport invested in the implementation of both signed new business and several planned technology rollouts to support its burgeoning online channel.

"As our mix of business continues to pivot toward the fast-growing online channel," explained Travelport CEO Gordon Wilson, "I am confident that these investments will drive sustainable longer-term growth."

It's hardly surprising, then, that Elliott Management saw fit to take action given Travelport's most recent progress and still-depressed share price. And I can't blame the market for bidding up Travelport stock to a fresh 52-week high in response.