The share price move of the last 48 hours has been a massive move for a DJIA component. This is a chance for our readers to play arm-chair activist by taking our ‘activist investor poll’ here. After a 1.7% gain so far on Friday morning (on Friday the 13th nonetheless) we have shares up 1.7% at $64.81 against a 52-week range of $57.56 to $67.95. Thomson Reuters has a consensus price target of $67.13 but that may not reflect the latest gains as the move so far this week of 6.6%.
Here is the poll, with other data on consumer products giants behind it:
[polldaddy poll=6385563]
Kimberly-Clark Corporation (NYSE: KMB) and the much lower yielding Colgate-Palmolive Co. (NYSE: CL) have both significantly outperformed P&G’s share performance. We think a yield-bubble is forming in Kimberly-Clark as its yield dipped under that of P&G.
Another note we cannot ignore is that the giant activist investor Carl Icahn went after The Clorox Company (NYSE: CLX) before trying to sniff out a buyer for it. That did not work out even if the $73.24 price after a 1.1% gain so far today compares to a 52-week range of $63.06 to $75.44. Clorox’s market cap is now $9.5 billion, which is actually small compared to $33.2 billion at Kimberly-Clark, $50 billion at Colgate-Palmolive, and what is now over $177 billion at P&G.
The lesson is simple: if Carl Icahn cannot move the needle at a boring $9.5 billion company, how can Ackman make that much change at P&G? Anything is possible, but even a 5% stake would require an investment of more than $7.5 billion at this point. So, while we think the move has been exaggerated we do think that it can continue. If analysts believe that Ackman and others can really make a difference then that $67 target could easily go to $70… or even higher.
Again, we are looking for our readership’s help here on how best to help fix P&G. Taking that poll will help in determining what to do.
JON C. OGG
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