By Southwest Gas Holdings (SWX)
Corvex Management, an activist investor, has significantly increased its position in Southwest Gas Holdings, an energy-infrastructure holding company. Corvex now holds 4,153,717 shares of Southwest Gas, representing 5.8% of the company’s outstanding stock. This increase in holdings was made through the purchase of 1,244,696 shares between Aug. 24 and Oct. 23, at prices ranging from $57.18 to $63.95 each.
In addition to the shares, Corvex also has a 0.75% economic exposure to the gas utility through cash-settled swaps. Corvex plans to engage with Southwest Gas’ board to explore ways to unlock the value of Southwest Gas Corp., the regulated gas unit. They are supportive of the spinoff of Centuri, Southwest Gas Holdings’ infrastructure business.
However, Corvex believes that the gas utility is undervalued compared to its peers and recent transactions in the sector. They argue that Southwest Gas’ $2 billion capital plan is not justifiable if it results in a market valuation lower than its cost. Therefore, Corvex will seek to discuss with Southwest Gas strategies to enhance returns on capital, potential restructuring, and even the sale of Southwest Gas Holdings.
It’s worth noting that Southwest Gas shares have declined approximately 8% year-to-date.
Increases in Holdings
Algonquin Power & Utilities (AQN)
Starboard Value Increases Stake in Algonquin Power
Starboard Value, a prominent investment firm, has raised its interest in Algonquin Power, a Canada-based electricity utility. The firm acquired an additional 7,393,000 shares of Algonquin Power between August 30 and October 18, at prices ranging from $5.30 to $7.56 per share. As a result, Starboard now holds a 8.8% stake in Algonquin Power’s tradable stock, amounting to a total of 60,939,000 shares.
In July, Starboard sent a letter to Algonquin’s board and management, urging them to consider selling their renewable-energy unit. Starboard suggested that the proceeds from the sale could be used to reduce debt and repurchase shares. Additionally, Starboard identified a “hidden gem” within Algonquin’s operations – its water utility subsidiary. According to Starboard, water utilities have the potential to trade at significant premiums compared to electric or gas counterparts. Therefore, Starboard believes that Algonquin should receive higher valuation multiples due to the presence of its water utilities. If Algonquin fails to realize this premium, Starboard proposed that the company could sell its water utility to generate extra liquidity for the proposed share repurchases.
Unfortunately, Algonquin Power’s shares have experienced a decline of approximately 25% in value over the course of 2023.
Anson Funds Management Increases Stake in Nano Dimension
Anson Funds Management, an investment management firm, has acquired an additional 2,002,000 American depositary receipts (ADRs) of Nano Dimension, a leading industrial 3-D printing technology firm. This purchase has raised Anson Funds Management’s stake in Nano Dimension to 7.6%. The acquired ADRs were bought between August 25 and October 24, at prices ranging from $2.73 to $2.85 per ADR. In total, Anson Funds Management now holds 17,926,063 ADRs of Nano Dimension.
Earlier this year, Nano Dimension attempted to acquire Stratasys (SSYS), but was unsuccessful. The company also faced pressure from activist investors to overhaul its board. Despite the challenges, Nano Dimension’s shareholders re-elected all of the company’s existing directors in September, although the roles of CEO and chairman were separated. Overall, Nano Dimension’s shares have witnessed a gain of approximately 15% since the beginning of the year.
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