Activist investor Mantle Ridge has acquired a stake exceeding $1 billion in Cognizant Technology Solutions, a prominent consultancy firm. This substantial investment reflects Mantle Ridge’s belief that Cognizant’s shares are currently undervalued.
Timing and Impact on Share Prices
Mantle Ridge initiated its investment in the latter half of 2022, during which Cognizant’s stock was trading between the high $50s and low $60s per share. Following the disclosure of Mantle Ridge’s stake, Cognizant’s shares experienced a rise of over 5% in extended trading, bringing the company’s market capitalization to more than $41 billion.
Engagement with Cognizant’s Management
Since mid-2024, Mantle Ridge has been privately engaging with Cognizant’s management and board, expressing support for the company’s leadership. This approach signifies a departure from typical activist strategies, as Mantle Ridge does not currently plan to nominate new directors to Cognizant’s board.
Cognizant’s Recent Financial Outlook
In February, Cognizant projected annual revenue below analysts’ expectations, citing economic uncertainties and elevated interest rates that have tempered client spending on IT services.
Mantle Ridge’s Investment Philosophy
Known for its selective investment approach, Mantle Ridge typically focuses on one or two significant positions at a time. This substantial stake in Cognizant underscores the firm’s confidence in the company’s potential for future growth.