A prominent activist has reportedly taken a position in Johnson Controls International (NYSE: JCI), which could be the first step toward pushing for change at a company that has underperformed of late.
Investors are intrigued, sending shares of Johnson Controls up as much as 5.8% on Monday morning and up 3% as of 11 a.m. ET.
An underperformer catches the eye
Johnson Controls is a maker of climate-control, security, and other building products. The stock has underwhelmed of late. Shares of Johnson Controls are up just 12% over the last 12 months, including Monday's jump. By comparison, rivals Lennox International and Carrier Global are up 72% and 55%, respectively, over that time span.
Late Sunday, Bloomberg reported that activist Elliott Investment Management has built a position worth more than $1 billion in Johnson Controls.
Although Elliott's intentions are unknown, the activist has a long history of pushing for change at companies including Sensata Technologies Holdings, Crown Castle, and NRG Energy. Investors are buying in to Johnson Controls in expectations that Elliott has a plan to try to boost the share price.
Is Johnson Controls stock a buy?
Johnson Controls CEO George Oliver, who joined the company as part of its 2016 merger with Tyco International, has already been active in trying to reshape the portfolio. Johnson Controls is seeking buyers for its $5 billion heating and ventilation business, and reportedly is considering putting its ADT security assets on the block as well.
It's too soon to say what Elliott might want to do, but any turnaround will likely take time. Johnson Controls has a solid set of assets, and the stock has the potential to climb higher from here, but those buying in today should not expect a turnaround overnight.
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Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Crown Castle. The Motley Fool has a disclosure policy.
