Dollar Tree stock was on the rise today following news of a stake from an activist investor.
The stake in Dollar Tree (NASDAQ:DLTR) comes from Starboard Value LP. The activist investor notes that it now has a 1.7% stake in the company. Starboard is an investor that typically takes stakes in underperforming, or undervalued stocks, and pushes for changes in the companies.
This much is true for Starboard’s investment in Dollar Tree stock. The activist investors says that it believes there are changes that could be made by the management and Board of Directors to better benefits holders of Dollar Tree stock.
The first suggestion that Starboard has to increase the value of Dollar Tree stock is considering strategic changes at Family Dollar. The investor notes that this could go so far as to include a sale of the brand.
The next big change that Starboard is pushing for to improve Dollar Tree stock is major changes for the retailer. This includes introducing prices other than $1 at Dollar Tree brand stores. It argues that customer loyalty will keep the store profiting even with higher prices.
Starboard isn’t just lining out these plans and expecting Dollar Tree to take action on them. The investor is also pushing for multiple seats on the company’s Board of Directors to make these changes.
Dollar Tree has this to say about Starboard’s suggestions.
“Dollar Tree’s Board and management team welcome constructive input from shareholders about ways to further create value for all Dollar Tree shareholders. While we appreciate Starboard’s investment and will evaluate any suggestions they may have as we would with any investor, we note that Starboard’s nominations for a majority of the board were made without seeking any engagement or making any communication to the Company.”
DLTR stock was up 5% as of Monday morning.
As of this writing, William White did not hold a position in any of the aforementioned securities.
