Just days after raising their stake in Investors Bancorp, Inc. (NASDAQ:ISBC), Blue Harbour Group has shed just over 2 million of those shares to fall back to 24.60 million shares, leaving them with an activist stake of 6.9% in the Investors Bank holding company, whose assets total $17.83 billion.
As we reported on January 9, Blue Harbour had increased their stake in Investors Bancorp from the 22.34 million shares they reported in their September 30, 13F filing, to 26.62 million shares, an increase of 4.28 million shares. At the time, that gave the Clifton S. Robbins-managed fund a 7.3% activist stake in the company. The newest move is unlikely to have been influenced by any specific events, but more likely represents the fact that Blue Harbour simply took on more shares for a short time than they ever intended to keep at the moment.
Regardless, Blue Harbour, which often takes short positions, is still in the unique position of being an activist investor in a bank, a position they’ve held since August, 2014, and one which is rarely seen. One of the few other notable examples is the activist battle being waged against Bank of New York Mellon Corp (NYSE:BK) by Nelson Peltz‘s Trian Partners, and Richard Mcguire’s Marcato Capital.
In the case of Investors Bank, the New Jersey-based bank was founded in 1926, and was re-organized into a two-tier holding company in 1997 before going public in 2005 as Investors Bancorp, MHC (which has since ceased to exist). It wasn’t until May of 2014 that the company restructured into a fully public company. After the restructuring, the bank raised capital, which it plans to use on short-term investments, while also continuing its expansion into New York state, which should further fuel growth. Trading at just 1.1 times book value, Investors Bancorp is seemingly an attractive investment, certainly compared to its peers.
Analysts tend to agree, as Investors Bancorp is widely considered by analysts as an undervalued stock, despite its rather tepid performance since its inception in its current iteration eight months ago. The stock is up 2.8% since its IPO, but down 4.5% thus far in 2015. Analyst consensus is that the stock is a buy, with a consensus price target around $12.60, 17.5% below its Thursday closing price of $10.72.
Investors Bancorp, Inc. (NASDAQ:ISBC) is a major investment for Blue Harbour, now representing about 10% of their equity portfolio, and they likely want some say in how the bank spends its newly gained capital. In their statement of purpose filed with their initial 13D in August, they expressed intent to engage the bank’s management in discussions regarding the stock, and how best to increase shareholder value.
Blue Harbour currently holds an activist position in Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) as well, having increased their stake in that company to 12.64 million shares in October of last year, a total of 7% of all common shares. In terms of value, their largest investment is in Akamai Technologies, Inc. (NASDAQ:AKAM), as they held 4.98 million shares in that company as of September 30, which were valued at $297 million at the time. Akamai has since shed nearly 2% of that value, but is still up over 20% for the past 12 months.
Other major shareholders of Investors Bancorp, Inc. (NASDAQ:ISBC) include Jonathon Jacobson’s Highfields Capital Management with 9.29 million shares as of September 30, and Jim Simons’ Renaissance Technologies with 7.93 million shares. The latter cut their exposure to Investors Bancorp by over 2 million shares during the 3rd quarter of 2014.
We’ll continue to monitor Blue Harbour’s interesting activist position in Investors Bancorp, as it could herald a new wave of activist investing in publicly-traded banking stocks, which would be a good thing for all shareholders of those stocks.