Why Novo Nordisk Stock Eked Out a Win on Monday
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Key Points
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A media report stated that an activist investor is accumulating a stake in the Wegovy maker.
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According to the article, that investor aims to influence the company's choice of a chief executive.
Wegovy and Ozempic maker Novo Nordisk (NYSE: NVO) saw its stock price tick up slightly on Monday, on a media report about the possible entry of an activist investor. Market players cautiously bid the shares a little more than 1% higher on the news. Although this wasn't a giant gain, it was sufficient to top the S&P 500 index's basically flat-line performance.
An active activist
Citing unnamed "people with knowledge of the details," the Financial Times reported Monday that London-based activist hedge fund Parvus Asset Management is accumulating stock in Novo Nordisk. The FT's sources said that the goal is to influence the company's choice of CEO, as its longtime leader Lars Fruergaard Jørgensen stepped down from the post last month. A replacement has not yet been found.
It wasn't immediately clear how much of a stake Parvus has managed to amass. Novo Nordisk is based in Denmark and listed on that country's main stock exchange. Per Danish securities law, a strategic investor need not disclose the size of a stake if its holding is below 5% of a company's equity.
While Parvus isn't a well-known activist investor to many Americans, it has been actively involved in European companies. Among the businesses in which it has taken a stake are discount airline Ryanair and storied Italian bank UniCredit.
Neither Novo Nordisk nor Parvus has yet commented on the FT article.
Watch for strategic shifts in the future
Activist investors often circle the water when a company is struggling and its share price sinks. That's been the case with Novo Nordisk, which has seen setbacks in its drug development activities lately while facing intensifying competition for weight-loss drug Wegovy.
I don't think investors should trade on the basis of whether an activist like Parvus will enter the company and begin agitating once it's there. The situation is worth monitoring, though, as a determined activist can indeed shape the strategy of a business.
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