By Lauren Thomas and Ben Glickman

Activist investor Mantle Ridge has built a more than $1 billion stake in Cognizant Technology Solutions and believes shares of the tech-services firm are undervalued, according to people familiar with the matter.

The details

Mantle Ridge started buying up shares in the second half of 2022, when the stock was trading in the high $50s to low $60s per-share range. Cognizant shares now trade at around $83 per share, giving the company a market value of more than $41 billion.

Mantle Ridge has been privately engaging with Cognizant about the company's progress on boosting its share price, the people said. (Cognizant named a new CEO and chair, Ravi Kumar, in January 2023.)

The engagement reflects a new approach for the activist firm, which has so far elected to work behind the scenes at Cognizant. Mantle Ridge isn't planning to nominate board directors at this time, the people said.

However, Mantle Ridge still believes Cognizant shares are undervalued and that the market doesn't fully appreciate the progress that has been made, the people said. It believes the company has more room to grow and intends to remain closely engaged with management, they said.

Cognizant said in a statement that it has been constructively engaging with Mantle Ridge. Since Kumar's appointment, it said it has improved performance and driven total shareholder return of approximately 40%.

Teaneck, N.J.-based Cognizant helps companies update their IT systems and outsource certain business functions. Its peer group includes Accenture, Infosys and Cap Gemini.

The context

Cognizant has grappled with stagnant growth in recent years, posting a 2% increase in revenue in 2024 after a slight decrease in 2023.

Mantle Ridge expects Cognizant should be able to quickly meet the growth targets made as part of its full-year guidance released in Februar y , the people familiar with the matter said.

Kumar said in a February earnings call that the company is focused on having revenue growth among the best in the industry and expanding margins.

Cognizant is expected to host an analyst day later this month to discuss its focus on capitalizing on businesses looking to implement artificial intelligence.

Unlike many other activist investors, Mantle Ridge typically focuses on only one or two positions at a time. Earlier this year, the firm run by Paul Hilal secured three board seats and effectively ousted the chief executive of Air Products and Chemicals after a shareholder vote.

Write to Lauren Thomas at lauren.thomas@wsj.com and Ben Glickman at ben.glickman@wsj.com

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Cognizant named Ravi Kumar as CEO in January 2023. "Activist Mantle Ridge Builds Over $1 Billion Stake in Cognizant," published at 4:30 p.m. ET, incorrectly said Kumar was also the chair.

(END) Dow Jones Newswires

March 07, 2025 17:47 ET (22:47 GMT)

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