What might be considered an activist investor is evidently pressuring medical center and pharmacy operator Cano Health (NYSE:CANO) today. Specifically, Owl Creek Asset Management is asking the company to “pursue strategic alternatives.” This basically means Owl Creek wants Cano to find a company to sell itself to. Whether this is good news or not is in the eye of the beholder. But, for today at least, CANO stock is surging higher.
There are various definitions of “activist investor.” The basic idea, though, is that activist investors are major shareholders that seek to influence a company’s policies and operations. Owl Creek Asset Management might possibly fit this definition in its recent dealings with Cano Health.
According to a press release, Owl Creek sent a letter to Cano Health “strongly encouraging the Company to pursue strategic alternatives by engaging with investment bankers and other advisors to pursue a sale to a strategic buyer.” What does “strong encouragement” sound like, though?
For Owl, it includes a critique of Cano’s business model and ability to execute. Then, it follows up with a push to “actively pursue […] strategic alternatives by engaging with investment bankers and other advisors to pursue a sale of the Company to a strategic buyer.”
What’s Happening with CANO Stock?
As of this writing, CANO stock is up 8% and trading around the $6 level. Hence, it appears that traders are fine with Owl Creek Asset Management pressuring Cano Health to seek a buyer.
Does Owl Creek have enough clout to put this kind of pressure on Cano Health? The firm reportedly holds 8.68 million shares of Cano Health, which equates to 3.745% of CANO stock. That’s a decent-sized stake and probably enough to exert some influence.
Is Cano Health really in need of a buyout? That’s hard to say. In the second quarter, Cano literally doubled revenue year-over-year (YOY) to $689.4 million. The company also increased its membership 80% YOY to 281,525.
Nonetheless, the trading community evidently decided that Owl Creek’s “strong encouragement” isn’t necessarily a bad thing. So, keep your eyes peeled. Cano Health may be undergoing a major transition soon, whether it wants to or not.
On the date of publication, David Moadel did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.