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Sydnee Gatewood
Sydnee Gatewood
Articles (282) 

After 2-Year Run, Bill Ackman Cuts Ties With Nomad Foods

Activist investor exits stake in packaged foods company

September 13, 2017 | About:

Pershing Square leader Bill Ackman (Trades, Portfolio) exited his 19.34% stake in Nomad Foods Ltd. (NYSE:NOMD) on Sept. 7.

Having established the 33.3 million-share stake in 2015 for an average price of $11.72 per share, the well-known activist investor has held onto the position without adding to or reducing the holding. The divestment had an impact of -7.82% on the portfolio.

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Nomad’s shares fell more than 4% on Sept. 6 after the company and Pershing Square announced a secondary offering for the hedge fund’s stake, which is worth approximately $497 million. Based on the offering price of $14.30 per share, the company will repurchase about $100 million worth of Pershing’s shares but will not offer any additional ordinary shares nor receive any of the proceeds.

The U.K.-based frozen foods company, which produces Birds Eye fish fingers and Iglo vegetables, posted a 0.5% increase in revenue to 458 million euros ($544.4 million) in its second-quarter earnings report on Aug. 24. Adjusted EPS increased 21% to 0.23 euros.

Nomad also announced Brian Welch, a partner at Pershing Square, resigned from the board to focus on one of the firm’s new investments. He joined the board as a director in June 2015.

In his second-quarter 2017 letter to shareholders, Ackman noted Nomad “continues to make significant progress with its ‘focus on the core strategy’ under CEO Stefan Descheemaker” and “delivered its first quarter of positive top-line growth and the sixth consecutive quarter of sequential improvement in sales trends” in the first quarter of the year.

Despite the company’s progress, however, Ackman said in his first-quarter letter he believes the stock continues to trade at a modest valuation.

With a market cap of $2.62 billion, Nomad Foods was trading around $15.21 per share on Wednesday with a price-book (P/B) ratio of 1.07 and a price-sales (P/S) ratio of 1.42.

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During the second quarter, Paul Singer (Trades, Portfolio), Pioneer Investments (Trades, Portfolio) and Jim Simons (Trades, Portfolio) established positions in Nomad. George Soros (Trades, Portfolio), Chuck Royce (Trades, Portfolio), Murray Stahl (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio) are also shareholders.

Disclosure: I do not own any stocks mentioned.

About the author:

Sydnee Gatewood
I am an editorial assistant at GuruFocus. I have a BA in journalism and an MA in mass communications from Texas Tech University. I have lived in Texas most of my life, but also have roots in New Mexico and Colorado. Follow me on Twitter! @gurusydneeg

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