LIVE MARKETS-Activists at the gate: Can fintech's undervalued stars be rescued?

Reuters
Oct 13
LIVE MARKETS-Activists at the gate: Can fintech's undervalued stars be rescued?

Three major US stock indexes up about 1% each

Tech leads S&P 500 sector gainers; cons staples sole decliner

European stocks up 0.3%

Gold up 2%; crude, dollar higher; bitcoin dips

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ACTIVISTS AT THE GATE: CAN FINTECH'S UNDERVALUED STARS BE RESCUED?

In the bruised corners of the payments sector, activist investors are making their presence felt. With valuations at multi-year lows, companies like Global Payments GPN.N, BILL Holdings BILL.N and WEX Inc WEX.N are being sized up not for their current performance, but for what they could become under new pressure.

But is this wave of activism a catalyst for real change or just a temporary jolt?

KBW analysts caution against expecting miracles. "We see no obvious silver bullet for activists at BILL, GPN, or WEX," they write, noting that past campaigns offer mixed results.

Activist investors aren't miracle workers - but they are catalysts. Their campaigns often inject optionality into stagnant stocks, forcing strategic reviews, leadership changes, or asset spin-offs that can unlock value, even if temporarily.

For BILL, the dilemma is stark, cut costs or invest in tech to close its perceived gap.

KBW notes that this tension "could make strategic alignment with management a potential challenge." At WEX, spinning off its healthcare unit remains a complex but tempting option, though management still views it as a key growth asset.

And for Global Payments, the most likely activist lever is execution oversight. Elliott Investment Management has already influenced board changes to enforce discipline.

Looking back, Elliott's push at PayPal Holdings PYPL.O led to cost cuts and a CEO shake-up, but "PYPL's stock price has not recovered above 2023 levels," reflecting deeper structural issues.

At Fidelity National Information Services FIS.N, D.E. Shaw's involvement triggered the sale of Worldpay, briefly lifting shares before they slid again. Meanwhile, ValueAct's bet on Clover at Fiserv Inc. FI.N stands out as a success, with "a significant re-rating in the stock over a multi-year period."

(Rashika Singh)

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EARLIER LIVE MARKETS POSTS

EARNINGS TO GIVE INVESTORS SOME CLUES ON THE US OUTLOOK THIS WEEK CLICK HERE

WALL STREET EYES BRIGHT START AFTER FRIDAY'S BRUISING CLICK HERE

WHAT COULD SEND THE DOLLAR HIGHER AGAIN CLICK HERE

AI CIRCULARITY CONCERNS PREMATURE; PRIVATE CREDIT JITTERS IDIOSYNCRATIC - JPM CLICK HERE

U.S. MARKET CORRECTION RISKS GROW AMID SINO-U.S. TRADE FLARE UP CLICK HERE

EUROPE STARTS THE WEEK SOLIDLY CLICK HERE

EUROPE BEFORE THE BELL: SEE DIP, CLICK BUY CLICK HERE

MORNING BID EUROPE: EVERY TRADE CLOUD HAS A TACO LINING CLICK HERE

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