Colgate-Palmolive (NYSE:CL) stock is trending today on news that billionaire investor Dan Loeb has taken a position in the consumer products company.
Loeb operates the Third Point hedge fund, which is known for making big bets on stocks. According to multiple reports, Third Point has now taken a position worth about $1 billion in CL stock. That news has caught the attention of investors, who bid up the price of Colgate-Palmolive shares this morning. As of this writing, however, CL is treading slightly in the red.
Prior to today, CL stock was down 14% year-to-date (YTD) at $72.92 per share.
What’s Happening With CL Stock?
CNBC reports that Loeb has taken a sizable stake in CL stock because he sees value in the company’s fast-growing pet food subsidiary, Hill’s Pet Nutrition. Loeb reportedly feels that, as a stand-alone business, Hill’s could be worth $20 billion based on its 2023 financials.
Headquartered in New York City, Colgate-Palmolive makes a number of popular consumer brands, including Colgate toothpaste, Speed Stick deodorant, a variety of dish soaps and more. Yet, despite the success the company has had with Hill’s Pet Nutrition and its other products, CL stock has barely moved. Over the last five years, shares have gained less than 1%.
Why It Matters
The fact that Dan Loeb has acquired a big stake in Colgate-Palmolive via Third Point is a vote of confidence in CL stock. Loeb, who has an estimated net worth of $3.5 billion, specializes in value investing. Third Point currently has about $15 billion of assets under management as well.
Loeb is known as an activist investor. He has reputation for taking positions in troubled or poor-performing companies and boosting their profits. Investors might be assuming that Loeb plans to take an activist approach with Colgate-Palmolive — and that he could even try to spin off Hill’s Pet Nutrition.
It will likely take some time before any changes occur at Colgate-Palmolive. However, it’s interesting that an activist investor of Loeb’s stature has taken a position in CL stock. Judging by the initial movement of shares today, investors may see Loeb’s involvement as a positive development.
On the date of publication, Joel Baglole 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.
