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Key Takeaways
- Johnson Controls stock moved higher in premarket trading Monday after Bloomberg reported that activist investor Elliott Investment Management has taken a stake of more than $1 billion in the company.
- Elliott’s reported investment in the company comes at a time when the industrial conglomerate is exploring selling several non-core businesses and has seen a number of senior executive changes.
- A break above key chart resistance around $70 could lead to a retest of the stock’s all-time high at $81.77 set in December 2021.
Shares in Johnson Controls International (JCI) moved higher in premarket trading Monday after Bloomberg reported late Sunday that activist investor Elliott Investment management has taken a significant stake in the industrial conglomerate.
According to people familiar with the matter, the New York-based hedge fund has built a position in the company valued at over $1 billion, though the intentions for taking the stake couldn’t be immediately learned, the report said.
Elliott’s investment in Johnson Controls comes several months after reports surfaced that the industrial conglomerate was considering divesting several non-core businesses. In March, Reuters reported the industrial firms including Robert Bosch GmbH, Lennox International (LII), and Samsung Electronics (SSNLF) had competed against each other to acquire the conglomerate’s heating and ventilation assets worth more than $6 billion.
Johnson Controls, which primarily manufacturers fire detection, refrigeration, security, and HVAC equipment for commercial buildings, has also seen changes in its senior executive ranks. In January, the company announced that Marc Vandiepenbeeck would replace Olivier Leonetti as chief financial officer (CFO).
Elliott’s recent investments in Sensata Technologies Holdings (ST), Crown Castle (CCI), and NRG Energy (NRG) Inc have led to C-suite reshuffles after it gained corporate influence in each of those firms, Bloomberg reported.
Monitor This Chart Level Amid News-Driven Strength
Since bottoming out in late October last year, the Johnson Controls share price has trended mostly higher, with the 50-day moving average (MA) crossing above the 200-day MA in March to form a bullish golden cross buy signal. More recently, investors promptly stepped in to buy the dip below the 50-day MA, suggesting underlying strength in the stock.
Following the news that Elliott has taken a significant stake in the company, it’s worth keeping an eye on a key area of chart resistance around $70 that has been in play since early last year. A convincing close above this technically important area could lead to a retest of the stock’s all-time high (ATH) at $81.77 set in December 2021.
Johnson Controls shares were up 6.2% at $73.30 about two hours before the opening bell.
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