A Barbarian At St. James's Gate?
The case for Diageo Plc as an activist investor target.
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Value Situations is NOT investment advice and the author is not an investment advisor.
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St. James’s Gate Brewery, Dublin
In this issue of the newsletter, I set out what I think is a very plausible case for an activist investor intervention at Diageo Plc (DGE). DGE’s share price has declined -22% over the past 12 months, and is down -46% from its previous peak in January 2022 following a post-COVID sales boom.
Such disappointing performance from what is a blue chip FTSE 100 name that owns iconic brands such as Johnnie Walker and Guinness is attributable to a variety of concerns that I believe are fixable and/or temporary, as I discuss below.
This set-up combined with market concerns around DGE’s leadership and strategy suggests to me that it is now a very obvious target for an activist investor, particularly in the wake of the interim results published last week.
So what might an activist achieve at DGE in terms of value creation? Let’s examine the situation…