Hewlett Packard Enterprise (HPE) shares are having a big day on Thursday, up more than 7% as investors digest news that another activist investor has joined the party. The broader market is also green — the Nasdaq is up 0.83% and the S&P 500 has gained 0.69% — but HPE's move is clearly stock-specific.
The catalyst? A report from Semaphor that Irenic Capital has built a stake in the tech company. Irenic, led by Adam Katz, managed about $2.4 billion at the end of last year. Katz has a history of pushing back against corporate moves — he previously opposed mergers at News Corp (NWSA) and Fox Corp (FOX).
Irenic joins Elliott Management, which has been agitating for changes at HPE for more than a year. According to the report, Irenic's leadership has already spoken with HPE executives about their frustrations. What exactly Katz wants isn't public yet, but the market seems to like the idea of more activist pressure.
All of this comes on the heels of HPE's $14 billion acquisition of Juniper Networks, the company's biggest deal ever. The deal closed after an 18-month regulatory review that reportedly involved allegations of improper lobbying. That's a lot of baggage for a company that's now trying to convince investors the acquisition was worth it.
From a technical perspective, HPE stock is flying high — maybe too high. The stock is trading at $34.41, well above its 20-day moving average of $28.95 (that's 17.2% above) and its 200-day moving average of $23.53 (44.2% above). That's classic extended price behavior in a strong trend. The longer-term picture still looks constructive, especially after a golden cross in April (the 50-day moving average crossed above the 200-day), which reversed a death cross from March.
But momentum is a near-term risk. The relative strength index (RSI) is at 71.53, which puts the stock in overbought territory. That doesn't mean the stock will drop tomorrow, but it does suggest the recent pace of gains is getting stretched. The stock has also broken above its prior 52-week high of $32.53, turning that old ceiling into a potential support level if the stock pulls back.
For now, investors are betting that two activists are better than one. Whether that bet pays off will depend on what Katz and Elliott actually push for — and whether HPE's management is ready to listen.
