Shares of unmanned aerial vehicle specialist-cum-battery fast-charger equipment maker AeroVironment (AVAV 5.65%) surged in early Wednesday trading, helped by kind words from a new investor that's just taken a substantial stake in the company.
This morning, activist investor Engaged Capital announced that it has taken a 5.1% equity stake in AeroVironment. Simultaneous with announcing its interest in the stock rising, Engaged explained why it thinks the stock will rise.
Specifically, Engaged argued that AeroVironment is "undervalued" because of a combination of "poor corporate governance ... financial disclosure ... capital structure, and ... capital allocation." The company hopes, however, "to work constructively with the Company's board of directors and management" to improve governance, enhance disclosure, and optimize capital allocation, all with the aim of achieving "fair valuation for AeroVironment."
Praising the company's products and technology as "impressive," Engage says it will be urging AeroVironment management "to implement strategic initiatives to enhance the Company's equity valuation and maximize value for all shareholders." Whether such initiatives will be limited to simply improving the quality of the business, or perhaps to selling it or spinning off its disparate parts to focus in on one line of business -- batteries, or robotic airplanes -- remains to be seen.
