Activist Investors Have Created A Buying Opportunity In This Energy Stock
Activist Investors Have Created A Buying Opportunity In This Energy Stock | OilPrice.com
Activist Investors Have Created A Buying Opportunity In This Energy Stock By
Editorial Dept- Jun 23, 2023, 9:30 AM CDT
Under normal circumstances, I don’t like to see activist investors getting involved in companies whose stock I own or am considering buying. Almost by definition, the hedge funds and investment firms that constitute the kind of investor who believes that a minority stake in a company entitles them to set the agenda have short-term goals, and focusing on the next quarter rather than the next decade is, I believe, a plague that has negatively impacted corporations worldwide. There are, however, exceptions to my distrust of stocks with activist involvement, and NRG Energy (NRG) is one of them.
News broke on Thursday morning that Elliot Investment Management, who in May disclosed a roughly $1 billion “economic interest” in NRG, is seeking to oust the company’s CEO, Mauricio Gutierrez, and other top executives after having sent a letter to the company a month ago requesting that they make some strategic changes. Clearly, Elliot feels that that request for change fell on deaf ears and is now taking a more aggressive approach.
The market’s view of the desirability of some change is clear. By lunchtime on Thursday, NRG was the day’s best performing stock in the S&P 500, up more than 4% from Wednesday’s close. The thing is, though, it looks as if the chances of any major personnel change being forced at the executive level are slim. It isn’t known how much of that $1 billion interest, if any, is in stock, but even…
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