Arik Hesseldahl

Recent Posts by Arik Hesseldahl

An Update on Ralph Whitworth, the Activist Investor Already on HP’s Board

Shares of Hewlett-Packard got a jolt yesterday on rumors that activist investor Carl Icahn, or someone like him, was buying its shares.

Having opened at $13.85, HP shares closed at $14.16, up more than 2 percent, on rumors that appear to have been sourced to Twitter. There has been to date no comment on the matter from Icahn, nor any confirmation of his interest in buying HP shares, and yet they continue to go up, fueled mostly on speculation. Today, HP shares are rising by more than 1 percent.

While Therese Poletti at Marketwatch has a good rundown of the Icahn-HP story, it’s worth remembering, and checking in on the activist investor who already sits on HP’s board, Ralph Whitworth.

Whitworth started buying HP shares in the spring of 2011. Knowing his tendency to break up companies whose shares he buys — examples include L3 Communications, ITT and Home Depot — HP appointed Whitworth to its board of directors last November.

Whitworth’s Relational Investors, LLC hasn’t accumulated any more HP shares since I first wrote about his holdings over the summer. But the value of those shares has fallen considerably.

As of Sept. 30, Whitworth’s stake in HP remained steady at 34,534,517 shares, amounting to a little less than 2 percent of the shares outstanding. It’s not quite enough to put Relational on the list of HP’s top 10 institutional holders maintained by Yahoo Finance, but it’s a fair amount.

Despite having bought most of its shares at prices north of $22 a share, HP has been trading in recent months at prices north of $12. All told, Relational has, since August of 2011, spent more than $790 million — or more than 13 percent of the funds it has under management — on HP shares that as of Monday’s closing price were worth $489 million. That’s a 38 percent drop in value.

As a condition of maintaining his board seat, Whitworth agreed not to seek the breakup or sale of HP or any of its major assets for two years. That was a year ago.

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