Struggling telecom Frontier Communications Parent's (NASDAQ: FYBR) stock was hardly struggling on the market in recent days. In fact, it was on the rise with a 13% week-to-date improvement in share price as of early Friday morning, according to data compiled by S&P Global Market Intelligence. Investors eagerly lapped up news about an activist investor's new stake in the company.
Jana Partners is an active activist
Said investor is Jana Partners, whose managing partner Scott Ostfeld divulged on Tuesday that it held shares of Frontier (although Ostfeld did not specify how many). He added that a large telecom had invested alongside Jana, but didn't identify this partner.
The activist investor's leader called on Frontier to sell itself, adding that its notable presence in the fiber broadband segment of the telecom industry, combined with currently low valuations, makes it an attractive target to a buyer. Presumably Jana's telecom co-investor would willingly make a play for the company.
Fiber internet is a hot item with businesses and individual consumers. However, it is very expensive to build out a network based on the technology. Frontier is heavily indebted, a situation that badly affects its finances.
Frontier's reaction was guarded and neutral
Frontier's reaction to the news was, understandably, guarded. Reuters quoted a company spokesperson as saying, "Our board of directors and management team are focused on driving long-term value for our shareholders, employees, and customers and continue to take actions that enable us to deliver on this objective."
She also said Frontier is looking "forward to understanding [Jana's] views."
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
