Casella Waste Systems shares gain after Jana Partners discloses stake

On Tuesday, Casella Waste Systems Inc. shares experienced a significant increase of approximately 4% following Jana Partners' announcement of a new stake in the company and a call for operational enhancements. Scott Ostfeld, the managing partner and portfolio manager of Jana Partners, emphasized during the 13D Monitor Active-Passive Investor Summit in New York that the company should focus on boosting profit margins and returns on invested capital.

Founded in Rutland, Vermont, Casella Waste Systems has a market value of roughly $5.6 billion. Despite a recent decline of around 11% this year, its shares have remained relatively stagnant over the past five years as competitors have outperformed. To potentially revitalize its discounted valuation and capitalize on its strong position in the northeastern United States, Jana Partners aims to align Casella's compensation with shareholder value and publicly commit to achieving a 27% earnings before interest, taxes, depreciation, and amortization (EBITDA) margin by 2029.

The hedge fund also recommends hiring a performance improvement consulting firm to keep up with industry rivals. Notably, Casella is one of the few remaining regional solid waste companies publicly traded, making it an attractive target for potential buyers. With private equity and infrastructure funds, including Blackstone, EQT, Ares, and TPG, as well as larger buyers like Waste Management Inc. and GFL Environmental, showing interest in buying waste businesses, Casella's depressed valuation and strategic location could prove appealing.