Cott Shares Rise 14% On HF News

Shares of struggling soft-drink maker Cott Corp. rose nearly 14% after a U.S. hedge fund induced a leadership shakeup, the Canadian Press reports.

After years of losses, Cott’s stock rose 44 cents, or 13.8%, to C$3.61 after Crescendo Partners of New York disclosed it has purchased an 8.7% stake in the company and is seeking changes in its operations and management.

Cott shares, worth more than C$17 a year ago, traded as low as C$1.74 in March. At the current price, its stock-market value is about C$250 million.

In a filing with the U.S. Securities and Exchange Commission Friday, Crescendo stated it would meet company executives to discuss "potential changes in the composition of the management team and the board of directors," calling the stock "very undervalued" and "an attractive investment opportunity."

Peter Holden, an analyst with Veritas Investment Research, said it was too early to tell what, if any, impact Crescendo might have on Cott since the firm hasn't detailed any specifics about how it thinks it can maximize value.

"The issue is not who's running it, but how are they going to turn this around—how are they going to increase margins,” Holden said. “Because if you can't increase margins on domestic soda pop, you can't increase the value of the company,"

Crescendo ceo Eric Rosenfeld declined to comment, saying the filing on Cott would have to speak for itself.