With Elliott Management, CDK Now Has Its Third Activist

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CDK has its third activist investor

Elliott Associates has gone active on CDK with a  4% stake. They haven’t laid out any plans, but they do join Sachem Head Capital and Fir Tree, both currently active. Sachem Head owns 5.2% of the company and has CDK as its top holding – making up 32% of its portfolio. Then, there’s Fir Tree, which owns 9% and also has it as its top holding – making up 7.6% of the fund’s portfolio.

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Gates Capital Management's ECF Value Funds have a fantastic track record. The funds (full-name Excess Cash Flow Value Funds), which invest in an event-driven equity and credit strategy, have produced a 12.6% annualised return over the past 26 years. The funds added 7.7% overall in the second half of 2022, outperforming the 3.4% return for Read More

Recall CDK is the auto software spinoff from Automatic Data Processing. It’s a play on software for car dealerships – making up about 80% of its revenues. The other 20% is digital marketing. It’s already had a heck of a run, up 66% since its September spinoff; now trading at 18.5x forward EV/EBITDA, which is nearly double what DealerTrack Technologies trades at.

Even still, you’ve got three funds with active 13Ds that are bullish. It’s an interesting story given it is newly spun off and performing relatively well. Other funds are bullish as well – we’ve got some good info/analysis in that regard, email us if you’re interested in that analysis.

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