What’s Next for Rolls-Royce Holding PLC (RR) after ValueAct Raises Stake to 5%?

Sequoia added that Rolls-Royce Holding PLC (LON:RR) earns more than 20% in return on invested capital in civil aviation. The investor also expressed its disappointment that the company was shifting its focus from the jet engine business, but also said that the stock price did not properly reflect the civil aviation business. Meanwhile, the stock has lost another 4% since the beginning of the year. With this in mind, it seems that investors would support ValueAct’s actions in splitting the company.

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ValueAct is a long-only fund that usually buys shares with a long-term focus. It had around $18.09 billion in equity portfolio (which consists of US-listed stocks). Its top picks at the end of March included Valeant Pharmaceuticals Intl Inc (NYSE:VRX), Microsoft Corporation (NASDAQ:MSFT) and Halliburton Company (NYSE:HAL). ValueAct also holds an activist stake in Baker Hughes Incorporated (NYSE:BHI) and was among the supporters of the merger between Halliburton and Baker Hughes. In addition, during the first quarter, the investor initiated a stake in Precision Castparts Corp. (NYSE:PCP), which similar to Rolls-Royce is an aerospace & defense company, which makes castings used in aircraft jet engines and power turbines.

Disclosure: none