Callaway Golf jumps 13% after activist Jana Partners unveiled his participation

Callaway Golf soared Thursday after activist investor Jana Partners announced a 9.2% stake in the company.

Jana, founded by Barry Rosenstein in 2001, announced its intention to discuss with Callaway the sale of all or part of the manufacturer of golf equipment and clothing, despite what the activist has recognized as a successful innovation and a share of sustainable market in its main golf activity.

The position of the activist would make it the second largest shareholder of the company, based on the latest documents filed by the government.

The shares are "undervalued and represent an attractive investment opportunity," Jana said in a document filed with the Securities and Exchange Commission.

Jana "intends to discuss with the [Callaway’s] board of directors and management regarding the composition of the issuer's portfolio; strategic alternatives, such as selling the issuer or disposing of assets; capital allocation and acquisition strategy; operational performance and cost management; and governance, "he added.

"We do not usually discuss individual shareholders, however, the board of directors and senior management usually meet with shareholders to discuss the strategy." of the company in accordance with SEC regulations, "a spokesperson for Callaway Golf told CNBC.

Despite the sharp rise on Thursday, Callaway's shares have weathered the entire stock market in recent months, largely as a result of the company's acquisition of the Jack outdoor clothing brand. Wolfskin earlier this year. Although CEO Chip Brewer has estimated that the $ 476 million purchase in January was an opportunity to offer "an innovative product offering with long-term synergies," investors have been more difficult to convince.

A quick look at the title shows a drop of about 20% in the last 12 months up to Wednesday's close, although a closer look reveals that the golf provider has surpassed the S & P 500 in 2018 with an increase of 9.8%. But since November 2018, at around the time that Callaway's Jack Wolfskin bid was announced, the S & P index returned 6.5% versus a 27% fall from Callaway.

Although the company announced record sales of $ 516 million in the first quarter last month, investors were not enthusiastic about Jack Wolfskin's prospects for reduced sales, which Brewer said was result of "much weaker market conditions in Central Europe China." As a result, the company said it expects Jack Wolfskin 's net business figure for the year 2019 to be 4% to 6% lower than the previous estimate of 382. millions of dollars.

The company also reported non-GAAP earnings per share of 63 cents in the first quarter of 2019, down 2 cents from the first quarter of 2018. Sales in the United States increased 5.9% in the first quarter of quarter compared to a year ago.

Nevertheless, the acquisition revealed a key element of Callaway's – and Brewer's – long-term strategy. One of the world's leading golf equipment sales companies, the company has embarked on a sprint to reinforce the brand in recent years, including the X Hot and X2 Hot rangelands and the reintroduction of the Big Bertha driver. .

He also tried to strengthen his position in the golf balls segment with his Triple Tack technology and his new ERC golf ball, faced with fierce competition from the Titleist leader.

"Our market share in the United States continues to break records," Brewer said when calling the first quarter results on May 9. "On the brand side, we had a good start to the year on the Tour with several victories of bullets and pilots, and as part of a new strategic initiative, we acquired the claim to be the New engine number one in the world tour and we continue to be the first putter on tour. "