Shares of Pearson (NYSE:PSO) have popped today, up by 10% as of 12:45 p.m. EDT, after activist investor Cevian Capital disclosed that it had amassed a 5.4% stake in the company. Activist investors typically agitate for changes that they believe can maximize shareholder value, benefiting other public investors.
In a regulatory filing, Cevian revealed that it had bought over 40.6 million shares throughout June for a total of $266 million, representing 5.4% of total shares outstanding. Cevian believes that the stock represents "an attractive investment opportunity," and the institutional investor plans to "discuss numerous operational and strategic opportunities to maximize shareholder value" with the education company's board of directors.
"The company has a collection of leading businesses in attractive markets, but several of these businesses have yet to deliver on their full potential," said Cevian co-founder Christer Gardell, according to Reuters.
The U.K.-based publishing company has struggled to navigate the transition to digital learning, with sales falling 6% last year as students shifted away from buying physical textbooks in favor of digital alternatives.
Pearson CEO John Fallon announced last year that he would retire in 2020 after the company appointed a new chief executive. Gardell is optimistic that the company will name a new CEO who will be able to create shareholder value. Cevian suggests that Pearson should be able to beat its rivals and deliver strong returns to investors if it can improve its execution.