Lots of money to be made in helping Americans lose weight, thinks former AOL president and current Pilot Group principal Bob Pittman. Pilot has bought nearly 3% of NutriSystem (NTRI), almost 1 million shares, a source tells us.
This is a new direction for Pilot, which normally invests in private start-ups and media properties. The firm reportedly thinks NutriSystem’s core business is undervalued, leaving the possibility for an “LBO-like” return (e.g., 5%-25% per year over a number of years).
Perhaps more importantly, NutriSystem’s new CEO, Joe Redling, used to work for Bob at AOL (TWX) and Six Flags (SIX). We’re just speculating, but we assume that Bob and Joe have discussed the opportunity in depth since Joe arrived last year, and we suspect Bob will be playing more of an advisory role than a minority public shareholder might ordinarily have at the company.
Pilot’s 3% barely puts it in the top 10 of NutriSystem’s shareholders–Invesco, Goldman, and Fidelity, among others, are larger–but, again, this marks a change in strategy for Pilot. Based on NTRI’s recent trading prices, we would estimate that Pilot acquired its position during the stock’s recent weakness, or between $12 and $20 a share.