Jack In the Box (ticker: JACK) which has been the target of two activist investors (Jana Partners and Blue Harbour Group, both having filed 13Ds) is putting it self up for sale according to Reuters. The stock was up 6% today on the sale rumors. One analyst speculated that if JACK sells for the same multiple as Sonic fast food (sold to Arby's parent Inspire Brands a few months ago at 16x trailing EBITDA) it would result in a $115 share price, a nearly 30% premium to today's closing price of $88.54 per share. He goes on to say that this would be on the higher end of a potential sale price. 
See CNBC article here for more on the rumors.

Both Jana and Blue Harbour stated in their 13D filings (filed in February and November 2018 respectively) that they thought JACK was a undervalued or a good investment. Further they also mentioned they would be having strategic discussions with JACK board and management on ways to unlock shareholder value. It will be interesting to see how much JACK eventually gets sold for. 

Subscribers of 13D Alerts received email alerts when Jana Partners and Blue Harbour Group filed their schedule 13D filings. 

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Note that the writer of this post has a long position in JACK.
​Information provided here or in email alerts does not constitute investment advice nor an offer to sell securities. The information provided is for research purposely only and we do not take any responsibility for any loss or damage including and without limitation to any loss which may arise directly or indirectly from use of or reliance on such information.

​This question is slightly broad. You can almost think of it like “do CEO’s create long term value?” some do and some definitely don’t. It depends on many things. Generally speaking most of the actions activist investors push for are to create value and with the exception of some actions, it is to create long term value. Pushing for the below are generally good for long term value:

Changing bad management/board

• Disposing of under-performing assets to unlock capital for the performing business/assets
• Separating disparate companies from each other allowing them to be managed independently and to allow their performance to be measured independently
• Urging a company to sell it self to a strategic buyer which will create a more competitive successor company

Actions that can increase risk resulting in diminished long term value are usually related to increasing debt:

• Dividend/share-buyback (increasing debt load to pay a special dividends or large share buybacks to shareholders), there is usually no long term value creation for the company itself resulting from this action. This doesn’t mean it is a bad move. It does usually create immediate value for shareholders, whether it is through increase share price or increased dividends. A lot of times companies have room to add debt to the capital structure and pay shareholders back some of their money so the shareholders can use it for other investments to increase value in different asset (don’t forget it’s the shareholders’ capital and for a company to holding on to it is not always the best capital allocation decision) Apple is a good case for this action. That being said, if the company levers it self up too much for shareholder payouts, this can leave the company vulnerable to downturns in the economy or secular changes to it’s business.

If one is focusing on an event-driven investment strategy (waiting for the activist's actions to be executed and then exiting once the stock price has appreciated), then the question of long term value creation for the purposes of investment strategy don't apply. 

Carl Icahn and his affiliates have accumulated 18.5 million shares (or 9.3%) of Dell Technologies (NYSE: DVMT) as of November 1, 2018. 

Icahn's initial 13D filing was made on October 15th and shows his and his affiliates purchase price ranges between $93.47 and $97.65. DVMT closed at $92.10 on November 6th.
Icahn is currently in a legal battle to increase the merger consideration for shares of DVMT. Along with his 13D filing, Icahn released a letter to fellow shareholders emphatically arguing against the current merger agreement and claims the offer price significantly undervalues the company. You can read the full letter here where Icahn explains his view that the company is "on a pure mathematical basis approximately $144 per share" (with some assumptions made). We suggest you read the actual letter for the details. 

Subscribers of 13D Alerts received the below alert when Icahn's 13D filing was made with the SEC:

Today Legion Partners filed an SC 13D reporting an ownership stake of 5.19% in OneSpan Inc (NASDAQ: OSPN). The filing email alert (shown below) was sent to subscribers of 13dfiling.com.

Once you click on the either link in the email, you will be taken to the SEC site that has the 13D filing, shown below:

Clicking on the Document, highlighted, will take you to the actual 13D filing. 

A couple of interesting things to look for in the filings are:
1. Item 4: Purpose of transaction, this is where you might find part of the activist investor's investment thesis and intentions.

Some highlights in this particular "Purpose of Transaction" are Legion's belief that OneSpan is "undervalued" and "an attractive investment opportunity". We suggest you read the entire section which explains their reasoning and is a good example of what to expect while reading activist 13D filings. 

2. Schedules showing 13D filer's transactions, in this filing under Schedule A at the bottom of the document is a table of Legion's transactions. You have the benefit of knowing their purchase prices.  

Based on this table Legion's average purchase price is ~$17.71, while closing price on 11/1/2018 was $15.34, a 13.4% discount to Legion's average purchase price. 

It is usually a good idea to do some homework on the activist investor you are considering "co-investing" with. Legion Partners for example has a decent amount of info on their website, but you should also look for past activist campaigns and the outcomes. 

Do your own homework on the company - does the activist's investment thesis make sense? Will the activist be able to unlock the value? Is there value to be unlocked? 


Disclaimer:
This 13D filing (Legion Partners/OneSpan) was used for example purposes, we don't currently have positions in OneSpan, we may do more homework and determine it has potential and purchase some shares in the near future. This is not investment advise nor a recommendation to buy.