When an activist investor in a company starts making noise, the clatter can help move the stock higher. That was the news that moved Forward Air (NASDAQ: FWRD) stock on Monday. Intrigued by the possibility of a sale at a premium price, investors piled into Forward's stock and sent its value more than 6% skyward on the day. That made it a standout on a session where the S&P 500 index landed in the red with an almost 1% decline.
An activist investor called for change...
That activist is a firm called Alta Fox which, as is typical of such enterprises, has a small (3%) shareholding. On Monday, Alta Fox sent a letter to Forward Air's board of directors calling for change at the company. Specifically, it is insisting on an outright sale of the business.
Taking the adversarial tone common for activists, Alta Fox wrote that "We view your disastrous track record of ignoring shareholders' views as abhorrent. However, you have an opportunity now to do the right thing by listening to resounding investor feedback and executing a formal sales process that maximizes value for all shareholders."
While Alta Fox has a very limited stake in Forward, it claimed in its letter that other, unnamed investors currently owning roughly 25% of the company have indicated support for "exploring strategic alternatives" -- a phrase that often implies a sale. The firm added that a number of private equity firms with stakes also support such a move.
...and the company was quick to respond
For some time now, Alta Fox has been banging the table about Forward's recent deal to acquire peer transportation specialist Omni Logistics. That arrangement, which closed in January, put a heavy weight on the acquirer's finances.
Forward Air wasted little time responding to Alta Fox's missive, although it did not directly address the activist investor. In a tersely worded and fairly neutral statement, the company wrote that "The refreshed Board and management team are actively analyzing the business and strategy to ensure the company pursues the best path forward to enhance shareholder value."
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Eric Volkman 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.
