DepoMed Inc (NASDAQ: DEPO)
DepoMed is having an incredibly strong start to the trading day today, and for a very good reason. It was announced this morning that smart money is investing in the company in a big way. Today, we’ll talk about who’s investing in DEPO, how the market is reacting to the news, and what we can expect to see from the stock moving forward. So, let’s get right to it…
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Starboard Takes A Large Stake In DEPO
As mentioned above, it was announced early this morning that smart money is starting to get involved in DepoMed. An activist investing firm known as Starboard has taken a large stake in the company. According to today’s announcement, Starboard now owns 6.8% of the company. As a result, the hedge fund is now the third largest shareholder in the company and is working on nominating a new crop of directors to be added to the company’s board. According to a statement from Starboard, the firm believes that DEPO is currently undervalued making the stock an incredibly strong opportunity. In a statement, a DepoMed spokesperson had the following to offer:
“DepoMed notes that Starboard has not communicated with the company prior to filing the 13D and has not attempted to hold any discussions with the company…”
Recently DepoMed stated that it has noticed that the company has taken a series of shareholder-unfriendly steps recently. One of the biggest of these shareholder-unfriendly steps the company has made was the rejection of an offer from Horizon Pharma that would have given shareholders a cash payment of $32.50 per share. Considering that the stock has fallen by more than half of its value as of late, Starboard believes that there is much to be done to improve the conditions for the company and its investors.
How The Market Reacted To The News
As investors, one of the first lessons we learn is that the news moves the market. Of course, positive news leads to positive movement while negative news leads to negative movement. With the massive declines that we’ve seen on DEPO as of late, something needed to happen in order to turn this stock around. Therefore, the fact that Starboard has decided to take such a large stake in the company is incredibly positive news. It’s my opinion, and I’m sure the opinion of massive amounts of investors, that Starboard will help to push DEPO back upward. As a result, we’re seeing incredibly strong movement in the market following the great news. Currently (11:30), the stock is trading at $16.86 per share after a gain of $1.86 per share or 12.40% thus far today.
What We Can Expect To See Moving Forward
Moving forward, I have an overwhelmingly bullish opinion of what we can expect to see from DepoMed. While the company has clearly run into its fair share of issues, I am with Starboard in the belief that the stock is currently undervalued. All the company needs is strong management, and chances are that the stock will climb in a big way. With Starboard stepping in and their plans to nominate new board members, it only makes sense that the stock is going to start seeing better days relatively soon.
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What Do You Think?
Where do you think DEPO is headed and why? Let us know your opinion in the comments below!
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