Shares of Hain Celestial surged 8.6 percent, to close at
$38.82, after activist hedge fund firm Engaged Capital disclosed a 9.9 percent in
the organic foods company and said it submitted seven
candidates to be elected to its board at its next annual
meeting. The hedge fund firm also warned it may take some other
undefined action in the future to boost the
company’s stock value. On June 22, Hain finally
filed four financial reports that were past due after
completing an internal accounting review and audit process for
the fiscal year that ended on June 30, 2016.
"The accounting review is complete, and we are pleased to
report our financial results, which reflect no material changes
to any prior reported period," said Irwin Simon, founder,
president and chief executive officer, in a press release. "We
have also implemented greater and more effective internal
controls and enhanced oversight for our financial reporting and
In a note to clients sent Friday, UBS points out that
earlier, Engaged Capital’s 9.6 percent stake in
Boulder Brands quickly resulted in the company being acquired
by Pinnace Foods. "We are not surprised to learn of activist
involvement in Hain given the company’s audit
review/SEC investigation, execution missteps and portfolio
complexity of non-synergistic businesses," UBS states. It adds
that Hain’s fiscal 2018 cash flow guidance "is a
stretch amid price gaps, industry consolidation and rising
private label risks."
On the other hand, it acknowledges that Hain has a handful
of differentiated brands that could grow to become more
lucrative multi-faceted brands under strong stewardship. Even
so, it maintains its sell recommendation and its $31 price
target. It says its upside case brings the valuation to $46,
while its downside case is $25 per share.
Separately, Hain named James Langrock chief financial
Maverick Capital participated in the $28
million Series C funding of Science Exchange, a private
research and development outsourcing marketplace. In March
2016, Maverick also led a $25 million funding round.
Former hedge fund manager Jeffrey Vinik and the owner of the Tampa
Bay Lightning hockey team participated in the $15 million
Series C financing of Super League Gaming, which hosts
recreational video game league events in movie theaters.
UBS raised its price target on hedge fund favorite
Constellation Brands from $183 to $198, noting that the
distilling giant’s first quarter results included
"surprisingly strong gross margin performance." The bank adds
that it expects less cash flow margin expansion over the
balance of the fiscal year for a variety of reasons, including
the recent appreciation of the peso and increasing plant
headcount. However, UBS stresses that Constellation has been
conservative "in framing these margin headwinds."
At the end of the first quarter, several hedge funds ranked
among the top-ten holders, including Lone Pine Capital, which counted the stock
as its fourth-largest U.S. long; Soroban Capital Partners; and Third Point, which reported the stock as
its third-largest U.S. long. The stock was also the largest
long of Valinor Management and Samlyn Capital. Shares of
Constellation rose 0.5 percent, to close at $193.73.