(Reuters) -Activist investor Mantle Ridge has built a stake worth more than $1 billion in consultancy firm Cognizant Technology, saying its shares are undervalued, the Wall Street Journal reported on Friday.
Shares of the company, whose market capitalization stands at more than $41 billion, rose over 5% in extended trading.
Mantle Ridge started buying up shares of the company in the second half of 2022, when the stock was trading in the high $50 to low $60 per-share range, the report added.
The activist firm has been privately engaging with Cognizant about its progress on boosting the share price, the report said, citing people familiar with the matter.
Last month, Cognizant forecast annual revenue below estimates, weighed down by tepid spending on its IT businesses as an uncertain economy and high interest rates pressure enterprise budgets.
“Members of our management team and Board have been constructively engaging with Mantle Ridge since mid-2024, and Mantle Ridge has communicated support for our management and Board on multiple occasions,” a Cognizant spokesperson said in an emailed statement to Reuters.
Mantle Ridge did not immediately respond to a Reuters request for comment.
This engagement reflects a new approach from Mantle Ridge, which has so far chosen to work behind the scenes at Cognizant. It is also not planning to nominate any directors to the company’s board, the WSJ report said.
The firm intends to remain closely engaged with Cognizant’s management and believes the company has more room to grow.
(Reporting by Zaheer Kachwala in Bengaluru; Editing by Alan Barona)
