Web.com Group Inc (WWWW): Okumus Fund Management Raises Stake and Goes Activist

Ahmet Okumus‘ Okumus Fund Management has further raised its stake in Web.com Group Inc (NASDAQ:WWWW) and went activist on the stock. Okumus has recently purchased 480,000 shares of the company at a price of $15.69 per unit, raising the stake to 7.78 million shares. Following the increase, Okumus owns 14.8% of Web.com’s common stock and it has changed the nature of its stake to activist from passive.

Okumus first disclosed holding shares of Web.com Group Inc (NASDAQ:WWWW) at the beginning of August, initially owning some 5.0 million shares, which represented 9.6% of the company’s stock. As Web.com’s stock lost around 11% in the consecutive months, Okumus kept raising its position. In this way, Web.com currently represents the largest equity position in Okumus’ equity portfolio, the stake amassing more than 27% of the portfolio value. In addition, the fund is the largest shareholder of the company among the funds that we track. However, during the third quarter, Web.com has witnessed an increase in bullish sentiment from several other investors. For example, Craig C. Albert’s Sheffield Asset Management raised its stake by more than 50% to 3.25 million shares, while Israel Englander’s Millennium Management more than doubled its stake to 669,500 shares.

The small-cap provider of Internet Services has had a good year so far, posting growth in both revenues and profits. For the third quarter, Web.com Group Inc (NASDAQ:WWWW)’s revenue went up to $137 million under GAAP, from $125 million a year ago, while its net loss narrowed significantly to $0.07 per share, from $0.12. For the whole year, analyst expect further growth with non-GAAP revenue consensus estimate standing at $597 million, versus $534 million reported for the last year, while earnings per share are expected to amount to $2.46 per share, versus $2.13 per share for 2013.

In this way, since Okumus owns an activist position, it might come up with some proposals aimed towards correcting the stock’s underperformance. However, in its latest filing, the fund said that so far it has no plans or proposals, but it might engage in communication with Web.com Group Inc (NASDAQ:WWWW)’s board and management, as well as other shareholders of the company.

Disclosure: none