A Month After Separation CDK Global Attracts Activist Investor Sachem Head Capital

Less than a month after being spun off from Automatic Data Processing (ADP), CDK Global (CDK) has already attracted the interest of an activist investor. Sachem Head Capital Management, a firm led by Bill Ackman protege Scott Ferguson, has amassed a 9.8% stake in the company and is ‘seeking talks’ with management. This must be some type of record. The firm filed a 13D with the SEC, but it didn’t really reveal much of its thinking:

The Reporting Persons intend to engage in discussions with the Issuer, management, the board of directors, other stockholders and other persons that may relate to governance and board composition, management, operations, business, assets, capitalization, financial condition, strategic plans and the future of the Issuer. The Reporting Persons may also take one or more of the actions described in subsections (a) through (j) of Item 4 of Schedule 13D, including but not limited to, solicitation of proxies, and may discuss such actions with the Issuer, management, the board of directors, other stockholders and other persons.

Oh, there is also the obvious fact that Sachem Head believes CDK ‘is undervalued and is an attractive investment.’ I am sure that is intentional. Despite all of the recent headlines and hoopla, activists often work ‘behind the scenes’ with management in order to exact change and (usually) only go public and hostile after their ideas have fallen on deaf ears. The dealer services firm has slipped slightly since the spin was completed and is a name that many investors were excited about. Not much going on here right now, but definitely a situation worth watching more closely.

Disclosure: Author holds no position in any stock mentioned.