Hedge fund Third Point LLC is pushing Cano Health to put itself up for sale because the senior-care facility operator’s stock price has tumbled since it went public with a blank check company.
The New York-based firm, run by billionaire investor Daniel Loeb, said in a regulatory filing that it now owns 6.4% of the Miami-based company, making it the third-largest investor.
Third Point, which invests $18 billion, spent $106 million to buy 11.5 million shares, the filing said.
Loeb, who has run activist campaigns at Baxter International and Campbell Soup Company and recently pushed Intel Corp to make changes, said his firm is currently not looking for board seats. The filing said the firm has “confidence” in the company’s strategy and management team.
But that could change, the filing said, if the company fails to address the “value gap” between its share price and intrinsic value of the company.
Cano’s sluggish stock price is related to the fact that investors have “a largely unfavorable view of companies taken public through special purpose acquisition vehicles”, Loeb wrote. He urged the company to hire bankers and lawyers to review strategic alternatives and said “this strategic review should focus on a sale.”
Cano Health closed its merger with investor Barry Sternlicht’s special purpose acquisition company in June and its stock price lost more than half of its value. On Wednesday the stock price surged 40% on news Third Point was involved, valuing the company at $3 billion.
Cano said in a statement that it is “successfully executing its strategy” and that the business has strong momentum, “as demonstrated by our 115% year-over-year membership growth in 2021 and continued growth into 2022.” The company, which operates primary care medical centers in eight U.S. states and Puerto Rico, also said it welcomes shareholder perspectives.
Third Point participated in a private placement alongside Sternlicht and Fidelity Management & Research Company and BlackRock, according to a statement made when the deal was announced.
