Does Bill Ackman Have FedEx Corporation (FDX) in His Sights?

Meanwhile, FedEx Express has essentially saturated the air cargo market, but it continues to grow modestly as global trade increases. Moreover, the company’s ongoing restructuring program is designed to reduce costs in the Express division by more than $1.5 billion, boosting margins. This will produce a modest earnings benefit in FY14 and a significant benefit in FY15.

If restructuring leads to robust profit growth at FedEx for the next few years, FedEx stock should be able to break out of its recent rut with or without an activist investment. Moreover, having activist investors on board is not always a good thing. Sometimes, activist pressure leads to more shareholder-friendly policies, but it can also lead to distracting proxy battles that divert management’s attention from the business.

Foolish bottom line
It’s very risky to invest based on rumors about what other investors are planning to do. In many ways, you are better off doing your own homework and finding great businesses with growth prospects that are available for attractive prices. FedEx stock seems to meet those criteria. If the recent market speculation tells us anything, it’s that many people think FedEx could be a very good investment opportunity.

It’s possible that FedEx stock will drop in the near term if it turns out that Ackman has targeted another company instead. However, for long-term investors, FedEx will be a good investment as long as it can execute on its cost reduction goals over the next two years. FedEx’s management team has already laid out a strong business plan, and if it follows through on that plan, the stock should perform well with or without a boost from Bill Ackman.

The article Does Bill Ackman Have FedEx Stock in His Sights? originally appeared on Fool.com is written by Adam Levine-Weinberg.

Fool contributor Adam Levine-Weinberg owns shares of FedEx. The Motley Fool recommends FedEx, McDonald’s, and UPS and owns shares of McDonald’s.

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