When activist investors show up, it can be a huge problem for a company. Activist investors typically come with not only their own agenda, but also their own power base in the form of voting shares. Canadian oil stock Parkland (TSE:PKE) is facing just such a proposition, and investors are displeased with the internal discord. Shares are down fractionally in Tuesday morning’s trading.
Engine Capital LP, operating out of New York state, owns 2.5% of Parkland, and has a particular issue with one of Parkland’s biggest plans: a potential sale of the entire business. For those not already familiar, about two weeks ago, Parkland announced plans to launch a “strategic review,” which could in turn mean anything from basic changes to a complete sale. Parkland planned the review in order to “maximize value creation for shareholders,” reports noted, and has been running it ever since.
The strategic review, for its part, kicked off after Simpson Oil called for Parkland to launch it. Since Simpson Oil owned 20% of Parkland, Parkland did not exactly have much choice. So the review was launched, hoping to keep Simpson around. But that seemed to annoy Engine Capital, which led to the next steps.
Competent or Not?
As it turns out, Engine Capital’s big objection to Parkland’s move here is that Engine Capital does not actually trust Parkland to do the job correctly. As such, Engine Capital wants a complete overhaul of the Parkland board, so that the strategic review can be done properly.
But it was not just the strategic review that Engine objected to. Engine also objected to the recent earnings reports Parkland issued, as well as Parkland’s failure of accountability in terms of these less-than-stellar reports. Engine also dredged up a few old corpses, pointing out that Parkland passed on a takeover bid back in 2023, which Engine looks to believe should have gone through. Given that Simpson seems to agree somewhat—which prompted the review to begin with—Engine might get its way on this.
Is Parkland Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Strong Buy consensus rating on Parkland stock based on six Buys assigned in the past three months, as indicated by the graphic below. After a 12.36% loss in its share price over the past year, the average PKI price target of C$47.83 per share implies 31.04% upside potential.
See more TSE:PKI analyst ratings
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