Tire maker and legendary motorsports-related company, Goodyear (GT.US) is trading up nearly 20% today as activist investor, Elliott Management fund has taken a 10% stake in it and is pushing for strategic changes in the business. The fund has expressed confidence that the tire maker's price could rise as high as $32 a share if the company meets the activist investor's expectations. The Goodyear brand is associated with the growth of motorsports, including F1, NASCAR and the LeMans race, whose 100th edition will take place this year, coinciding with the 125th anniversary of Goodyear's founding.
- Elliott Management is pushing the company to strengthen its financial position by, among other things, selling stores (close to 1,000), embarking on a broader review of its operations and changing its existing management, filling director positions with people selected by the fund.
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Create account Try a demo Download mobile app Download mobile appSlide from Elliott Management's presentation about Goodyear. Source: Elliott Managemnt
Despite its long history in recent years, Goodyear hasn't posted satisfactory profits and has fallen behind Michelin or Bridgestone making sentiment around the stock extremely negative. Elliott expressed confidence that after the changes, company will be able to beat the competition in the coming decades. With retail services and planned margin improvements. Elliott also cited weaknesses in the existing management and misguided sales deals.
- Elliott wants to put five experienced directors on Goodyear's board and has become one of the largest shareholders in the company
- According to the fund's publicized report, by selling stores the company could pay down debt, improve its balance sheet and overall financial capabilities
- The fund manages $55 billion and historically its appointed members have held senior positions at companies such as eBay and Twitter;
Elliott believes that once the changes are implemented, Goodyear could increase its share price by more than 100%, to more than $30 per share.
Goodyear (GT.US) shares opened today with a huge bullish gap, with the price overcoming key resistance in the form of the SMA200 (red line), on D1 interval Source: xStation5
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