Corvex Management Sells ADT Shares Back to Company ~ market folly

Tuesday, November 26, 2013

Corvex Management Sells ADT Shares Back to Company

ADT (ADT) recently announced that it has repurchased shares held by Keith Meister's activist hedge fund Corvex Management.  At the end of the third quarter, ADT was previously Corvex's 2nd largest position, worth over $454 million at the time.

We highlighted how Meister went activist on ADT over a year ago, as he was pushing for balance sheet optionality.  The company has headed in that direction by spending around $1.6 billion to shrink its share count by ~15%. 

It's a bit curious to see Corvex sell its stake so soon after the company has largely followed their lead.  Perhaps the hedge fund saw more compelling opportunities to allocate capital to, or maybe the company no longer wanted to deal with an activist, who knows.  Regardless, Corvex has exited its ADT stake.  ADT shares initially traded down around 8% on this news, before rebounding a bit that day.  However, they're down for a second consecutive day.

Per Google Finance, ADT is "a provider of electronic security, interactive home and business automation, and monitoring services for residences and small businesses in the United States and Canada. The Company’s products and services include ADT Pulse interactive home and business solutions, and home health services. ADT provides business security intrusion detection, which protect the business from burglary, robbery and intruders. Its electronic access control limits unauthorized entry and employee access to the business, as well as complete access. Its video surveillance views events in multiple areas of facility, which has control over loss and oversees business. Effective August 2, 2013, The ADT Corp acquired Devcon Security Services Corp, a provider of security protection services, from Devcon International Corp. In November 2013, Kastle Systems International announced that it had acquired Mutual Central Alarm Services and Stat-Land Security Systems from ADT Corporation."

You can view other recent portfolio activity from Corvex Management here.

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