Why Aramark Stock Popped Today

What happened

Shares of Aramark (NYSE: ARMK) were moving higher after an activist investor took a stake in the food-service giant. The stock was up 9.5% as of 11:18 a.m. EDT.

So what 

Aramark, best known for providing food service at institutions like prisons and universities, has been a historically sleepy stock, but shares awoke from their slumber today after activist investor Mantle Ridge revealed a 20% stake in the company, worth about $1.8 billion. Paul Hilal, who runs the fund, said he aimed to discuss strategic direction, governance, and the makeup of the board of directors and management team, among other issues.  A cafeteria worker serving food from a steam table

Image source: Getty Images.

In a brief statement in response to the news, Aramark said, "Aramark is focused on maximizing long-term value for all of our shareholders, and welcomes open communication and constructive dialogue with our shareholders toward that goal." 

Now what 

News of an activist investor taking a stake in a company often causes shares to spike. It's easy to see why in the case of Aramark. Shares are down since their peak in 2018, and the company seems to have the kind of attributes, including its size, brand/reputation, and relationships with a wide range of institutions, that could combine to form a sustainable competitive advantage.

Hilal likely sees a similar opportunity. The fund manager has said he's not angling for a sale of the food-service giant, but he'll likely agitate for a change in strategy, board seats, or a new management team. Investors should expect more volatility from the stock as Hilal makes his demands clear and Aramark responds.

10 stocks we like better than Aramark
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Aramark wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks


*Stock Advisor returns as of June 1, 2019


Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Latest Markets Videos

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More