4 months ago • 2 mins
What’s going on here?
Activist fund ValueAct Capital has been building a major stake in Disney, according to news out on Wednesday.
What does this mean?
When activist investors buy a hefty chunk of a company, it’s because they plan to pressure the firm into changing its ways. So boy, Disney’s about to feel some force. Trian Fund Management bought a $2 billion-plus stake in the kingdom last year. And it turns out that while Disney’s stock was hanging around $80 this summer, ValueAct picked up an undisclosed stake that is suspected to be one of the fund’s biggest. The two outside influences could be just what the house of Mickey Mouse needs: streaming service Disney Plus has struggled to win over customers, leaving Disney’s stock stuck on pause. So despite former CEO Bob Iger recently returning to the hot seat, investors celebrated ValueAct’s involvement by giving Disney’s stock a lift.
Why should I care?
For markets: Let’s get straight to business.
Since reclaiming the throne, Iger’s dropped hints about selling channels like ABC and finding a strategic partner for ESPN – a major sports league, for example. Plus, he recently bumped up Disney’s annual cost-cutting goal from $5.5 billion to $7.5 billion. But ValueAct has a track record of reworking companies including Salesforce, Microsoft, Spotify, and the New York Times. So even if Iger’s plans start panning out, ValueAct’s expertise may be more than welcome in the boardroom.
The bigger picture: The ultimate Disney adult.
ValueAct believes Disney’s theme parks and consumer products alone are worth the price it paid, since the duo brings in around $10 billion a year. But the activist reckons that if you iron out the creases in the media segment and make the company a little more slick, Disney’s shares could be worth up to $190 each. If ValueAct can realize that potential, the stock will have more than doubled since the activist arrived.
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