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CDK Global Inc (CDK): Second Investor Initiates Stake in Post Spin-Off Company

CDK Global Inc (NASDAQ:CDKhas been recently added to the equity portfolio of Jeffrey Tannenbaum‘s Fir Tree. The fund disclosed a passive stake that amasses 14% of the company. CDK Global went public at the end of September, being spun-off from Automatic Data Processing (NASDAQ:ADP), and since its IPO, the stock gained around 17%.

Jeffrey Tannenbaum

Fir Tree has a diversified equity portfolio that is worth over $9.0 billion and comprises stocks from different sectors, such as technology, Basic Materials, Financial and Services. A couple of months ago, Fir Tree increased its position in Noble Corp plc (NYSE:NE), reporting ownership of 24.51 million shares, versus 14.41 million shares held earlier. However, in October, the investor reported reducing its position to 15.29 million shares. The stock of Noble Corp lost around 25% since the fund raised its stake at the beginning of September. Fir Tree also upped its exposure to CIG Wireless Corp (OTCBB:CIGW), after the company issued around 1.25 million shares to the company, and currently owns around 43.6 million shares of the company. CIG Wireless gained around 30% after Fir Tree received the additional shares, but the stock still is down by almost 80% year-to-date.

CDK Global Inc (NASDAQ:CDK) has been targeted previously by another investor. At the end of October, Scott Ferguson‘s Sachem Head Capital revealed holding 12.65 million shares of the company, the activist stake amassing 7.88% of CDK Global’s stock. The investor also owns 3.15 million shares under cash-settled total return swaps.

CDK Global Inc (NASDAQ:CDK) is engaged in technology and digital marketing and advertising solutions for the automotive retail industry. The company has reported recently its forecast for the fiscal 2015, stating that its revenue is expected to gain around 7%-8% from $1.97 billion for the fiscal 2014. The net earnings are also expected to appreciate between 6% and 8% on the year, in comparison to $1.29 per share for the last fiscal year.

In this way, Fir Tree has invested in a stock that has a potential to grow if the company follows its strategy and expects an increase in its financial results. Moreover, being a stock targeted by an activist investor makes CDK Global Inc (NASDAQ:CDK) also an attractive stock for passive investors. Anyway, with two big investors buying shares within the last couple of weeks should definitely raise some signs regarding CDK Global’s stock profitability.

Disclosure: none

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