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Investing.com -- Shares of Cognizant Technology Solutions (NASDAQ:CTSH) climbed 4.1% Monday following Friday’s news that Mantle Ridge, an activist hedge fund, has taken a significant stake in the company, exceeding $1 billion. The Wall Street Journal reported on Friday that the hedge fund believes Cognizant’s shares are undervalued, a sentiment that has been reflected in the company’s recent stock performance.
Cognizant’s stock has seen an uptick, boosting the company’s market valuation to over $41 billion. Mantle Ridge began accumulating shares in the second half of 2022 when the stock price fluctuated between the high $50s and low $60s. Despite the recent rise, Mantle Ridge contends that the shares still hold more value than their current market price indicates.
The investment firm has been in private discussions with Cognizant, focusing on strategies to further enhance the company’s share price, particularly following the appointment of Ravi Kumar as CEO and chair in January 2023. Mantle Ridge is recognized for its activist strategies but has chosen a less confrontational approach with Cognizant, opting to work with the company’s management rather than seeking a public battle or board representation.
This strategic move by Mantle Ridge reflects its confidence in Cognizant’s potential for growth and its belief in the intrinsic value of the company’s shares. The firm’s significant investment and ongoing engagement with Cognizant’s management underscore its commitment to realizing this potential value.
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