Lamb Weston Holdings Inc Stock Surge

Shares of Lamb Weston Holdings Inc (NYSE: LW) surged by 11% in premarket trading on Friday following reports that Jana Partners, an activist investor, confirmed it holds a 5% stake in the company. Moreover, Jana is encouraging Lamb Weston to consider a sale.

The investment firm invested approximately $336 million to acquire 7,131,339 shares, including options for an additional 3,230,400 shares. Jana believes that Lamb Weston’s shares are currently undervalued, presenting a compelling investment opportunity.

Jana Partners plans to engage with Lamb Weston’s board of directors and management to address several issues, including:
– Self-inflicted errors leading to shareholder underperformance
– Core operating deficiencies such as customer demand planning and raw potato procurement
– Implementation of enterprise resource planning (ERP) systems

Additionally, Jana intends to critique Lamb Weston’s capital expenditure strategy, share repurchase plans, and investor communication practices to enhance transparency regarding operational missteps impacting capacity utilization. They will also review compensation practices for management, advocating for return on capital targets to discourage excessive growth efforts.