Larry Robbins (Trades, Portfolio)’ Glenview Capital Management has increased its position in Newell Brands (NWL, Financial), a company in which Carl Icahn (Trades, Portfolio) has also taken a stake, to 5.56%, the firm said Monday.
The $11.5 billion hedge fund purchased 9,956,055 shares of the company on March 16, boosting the holding by 58.52% to a total of 26,968,987 shares. Glenview had started the stake in the fourth quarter.
Shares of Newell Brands rose 2.84% in Monday afternoon trading to $26.06 per share. They remain down roughly 47% over the past year.
Newell Brands, the maker of Sharpie and Rubbermaid, is currently facing an activist campaign launched by Carl Icahn (Trades, Portfolio), who took a 7% stake in the company several weeks ago. Last week, he secured four board seats at the company, including a new board chairman. Another of his nominees is set to stand for election at the annual shareholder meeting.
Newell is continuing the implementation of its accelerated transformation plan that will include selling off some of its businesses.
“This company has a great stable of brands, and I believe a streamlined consumer-facing portfolio will help the company focus on the most important businesses and reignite the performance in their core businesses,” Icahn said in a statement. “The company is significantly undervalued today, and I believe this new Board will help the management team generate significant value for shareholders, first through an expanded transformation plan and then through strengthened underlying performance.”
Despite a solid five-year growth rate of 11.8% for revenue and 20.3% for earnings per share, Newell Brands has a low price-earnings ratio of 4.62, suggesting it is undervalued. It gives the company the lowest price-earnings ratio among its competitors such as Spectrum Brands (SPB, Financial) and Church & Dwight (CHD, Financial).
Newell Brands’ price-book ratio of 0.9 and price-sales ratio of 0.86 also both hover near their five-year lows.
Icahn has taken board seats and pushed for change at a long list of companies, such as Herbalife (HLF, Financial) and eBay (EBAY, Financial).
Robbins has also been an activist investor, recently calling for the CEO of Dow Chemical to retire and for changes to the company’s plan to split into three parts last year. That company was also experiencing pressure from another hedge fund, Daniel Loeb (Trades, Portfolio)’s Third Point, who agreed with some of Robbins’ criticisms regarding its merger with DuPont Co. (DD, Financial).
Newell is the only move Robbins has made to increase a stake to more than 5% of a company this year. It is also a step outside his usual playbook in health care, where he has invested 44% of his fund’s total long holdings, and the only position he owns in the consumer packaged goods sector.
Several other bargain-hunting investors found Newell attractive in the fourth quarter. Robert Olstein (Trades, Portfolio) of the Olstein Funds upped his position by 74%, taking 0.95% of the company’s shares. Richard Snow (Trades, Portfolio) of Snow Capital started a 0.5% position.
See Larry Robbins (Trades, Portfolio)' portfolio here.
