Why is Forward Air stock up today?

When an activist investor in a company starts making noise, the noise can help lift the stock. That was the news that moved Air forward (FWRD 6.39%) stock for months. Intrigued by the possibility of a sale at a premium price, investors piled into Forward shares and sent its value down more than 6% on the day. That made her a standout in a session where S&P 500 the index landed in the red with a drop of almost 1%.

An activist investor called for change…

That activist is a firm called Alta Fox which, as is typical for such ventures, has a small stake (3%). On Monday, Alta Fox sent a letter to Forward Air’s board of directors requesting the company change. More precisely, they insist on the definitive sale of the business.

Taking the usual adversarial tone for activists, Alta Fox wrote that “We find your disastrous track record of ignoring shareholder viewpoints to be disastrous. However, now is your chance to do the right thing by listening to the resounding feedback from investors and making official sales. process that maximizes value for all shareholders.”

Although Alta Fox has a very limited stake in Forward, it said in its letter that other unnamed investors who currently own about 25 percent of the company have expressed support for “exploring strategic alternatives” — a phrase that often implies a sale. The firm added that a number of private equity firms with stakes are also backing such a move.

…and the company responded quickly

For some time, Alta Fox has discussed Forward’s recent deal to acquire transportation specialist Omni Logistics. That arrangement, which ended in January, put a heavy strain on the acquirer’s finances.

Forward Air wasted little time responding to Alta Fox’s missive, though it did not address the activist investor directly. In a terse and fairly neutral statement, the company wrote that “The board and refreshed management team are actively reviewing the business and strategy to ensure the company is on the best path to enhance shareholder value.”