Rolls Royce could be headed for a “turnaround” in its fortunes, thanks to further investment from American hedge fund ValueAct.
David Stubbs, a global market strategist at JPMorgan Asset Management believes that the activist fund, which on Thursday increased its stake in Rolls Royce to around 10%, could help the company weather a “turbulent time” for the engineering company.
Speaking to BBC Radio 5 Live on Friday morning, Stubbs was asked about ValueAct’s involvement in the company, and rumours of a potential breakup in Rolls Royce as the company comes under pressure from some corners to sell of its marine unit.
He said: “I think its a turbulent time for the industry, but ultimately I think an activist investor getting involved could well be part of a turnaround, whether its a breakup or not.”
“Certainly you can come up with as many good examples as bad examples of activist investors making high profile statements. I think its something that could be potentially beneficial.”
ValueAct, Rolls Royce’s biggest shareholder, has reportedly asked for a seat on the company’s board, something that, according to the Financial Times, is being backed by many investors.
Rolls Royce has been seriously struggling of late and has been hit by low oil prices and a general fall in investment in the energy sector. It has already cut 600 jobs this year, and 400 more are set to follow in the company’s marine division.
Last week, the company issued a profit warning, with the company’s CEO Warren East saying that 2016 will be “very challenging” for the company. The profit warning was its fifth in less than two years. Shares crashed by nearly 20% on the morning of November 12, and have almost halved since February 2014.
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