CBL Stock Surges 19% on Activist Investor Involvement
CBL & Associates (NYSE: CBL) has been one of the biggest victims of the retail apocalypse in recent years. CBL shares have plunged from nearly $20 to less than $1 over the past five years. To make matters worse, the company was forced to suspend its dividend earlier this year -- following a pair of dividend cuts in the previous two years -- due to a growing cash crunch and roughly $90 million of liabilities from settling a class action lawsuit.
However, shares of the retail real estate investment trust (REIT) skyrocketed on Monday, gaining 19% after Exeter Capital announced that it had taken a 6% activist stake in the company. Despite this big pop, CBL stock looks like a potential value trap that investors should continue to avoid.
CBL's management has been criticized for years for the REIT's poor performance. Several members of the founding Lebovitz family serve in high-ranking roles, suggesting that family ties may outweigh talent in choosing the management team. Thus, it's not surprising that investors would welcome the presence of a strong outside voice to drive change at the company.
Source Fool.com
