Barry Rosenstein, founder of JANA Partners.
Adam Jeffery | CNBC
Callaway Golf increased Thursday trading after activist investor Jana Partners revealed a 9.2% stake in the company.
Jana, founded by Barry Rosenstein in 2001, said it plans to discuss with Callaway that sells all or part of golf equipment and appliance maker despite the activist's recognition as a successful innovation and durable market share in its core golf business.
The activists' position would make it the company's second largest shareholder based on the latest governments.
Shares are "undervalued and represented an attractive investment opportunity," says Jana in an archive with the Securities and Exchange Commission.
Jana "intends to have discussions with the board and management of [Callaway̵
"It is not our practice to discuss some shareholders. However, the Board and Mgmt's practice is to meet with the shareholders to discuss the company's strategy under the SEC rules," says a Callaway spokesman CNBC.
Despite Thursday's strong rise, Callaway shares have dogged the broader stock market in recent months, with much of the downturn due to the company's acquisition of outdoor clothing brand Jack Wolfskin earlier this year, although CEO Chip Brewer praised the acquisition at $ 476 million in January as an opportunity to offer "an innovative product offering with long-term synergies, investors have proved tougher to convince.
A quick glance at the stock shows an approximate 20% decline over the last 12 months through Wednesday's proximity, although a closer look shows that the golf supplier actually exceeded S & P 500 in 2018 with a 9.8% climb . But since November 2018, Callaway's bid for Jack Wolfskin was announced, S & P has returned 6.5% against Callaway's 27% drop.
Although the company reported record high net sales of $ 516 million last year, investors were not thrilled with the company's reduced sales outlook for Jack Wolfskin, which Brewer said in May, was the result of "widely reported softer market conditions in Central Europe and China. "As a result, the company said it expects Jack Wolfskins net profit for the entire 2019 to be 4% to 6% below a previous estimate of $ 382 million.
The company also reported non-GAAP earnings per share of 63 cents in the first quarter of 2019, a decrease of 2 cents compared to the first quarter of 2018. It said that sales in the US increased by 5.9 percent in the first quarter of compared to the previous period.
Nevertheless, the acquisition discovered a key component behind Callaway's and Brewer's long-term strategy. A leader in global sales of golf equipment, the company has in recent years started a branding sprint, including X Hot and X2 Hot line of fairway woods and a reintroduction of Big Bertha driver.
It is also attempted to strengthen It is in the golf ball segment with its Triple Tack Technology and the new ERC golf ball, which runs into fierce competition from Head Titleist.
"Our US market shares continue to record records," Brewer said during the company's first quarter earnings call on May 9. "On the label side, we have had a strong start to the year at the Tour with several golf balls and drivers winning all over the world. And as part of a new strategic initiative, we have been required to be the new number one driver of major worldwide tours, and we continue to be number one putter on tour. "