Activist investor Ed Bramson has found a new target in the US and is building up a stake in Nasdaq-listed Navient Corporation after giving up his campaign against Barclays (BARC) earlier this year.
Bramson’s Sherborne Investors C (SIGC) has built up a 16% stake in Navient (NAVI.O), making the Guernsey investment company the largest shareholder in the $3.5bn (£2.6bn) US student loan servicing and collection business ahead of fund managers BlackRock with 11.6% and Vanguard with 10.7%.
Bramson told investors in August he was lining up a new company, saying SIGC would ‘provide a further update to investors in the new year’.
Navient was spun off from SLM Corporation – known also by the nickname Sallie Mae – in 2014 and is the country’s largest servicer of federal student loans.
News of Bramson’s involvement led to Navient shares falling 6% after its management mounted a defence, launching a shareholder rights plan to allow existing investors to buy extra shares at a discount and making it more expensive for Sherborne to build its stake to more than 20%.
‘Navient is committed to engaging in constructive dialogue with all of our investors and we welcome their perspectives,’ said chief executive Jack Remondi.
‘We also want to ensure investors are able to realise the full long-term value of their investment and receive fair and equal treatment, which is what the rights plan is designed to do.’
Bramson’s move comes seven months after he admitted defeat in the fund’s three-year campaign against Barclays, during which he called for chief executive Jes Staley to be ousted and for the UK high street bank to shrink the size of its investment bank, selling his entire 6% stake in May.
Staley stepped down in November to fight a regulatory investigation into his links with convicted sex offender Jeffrey Epstein, who died in prison.
Numis Securities analyst Priyesh Parmar said: ‘Navient trades at a price-to-earnings ratio of 4.36x and a 1.19x book value. It has underperformed since inception in April 2014, generating share price total returns of 7.1% per annum compared with the 14.6% per annum for the S&P 500.’
Parmar said the size of Navient is ‘very different to Barclays’ and investors will want to understand the investment thesis behind the move.
The decision to target a smaller company than £31bn Barclays takes Bramson back towards the strategy of his other Guernsey fund, Sherborne Investors B (SIGB), which gained control and profitably wound down Electra Private Equity (ELTA ), spinning off restaurant chain TGI Fridays, one of its last investments, into Hostmore (MORE) last month.
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