Yesterday it was reported that 3 hedge fund managers had upped their shares of FDX by just over 1% of the total FDX shares outstanding. Dan Loeb in particular is viewed as an activist hedgie who only engages in companies where he sees a way to influence the management team to act more aggressively towards share valuation. The market has responded accordingly with shares nearly at the $140 mark and CEO Smith feeling the need to say, "I'm still the boss here and don't intend to go anywhere." I find this whole scenario to be curious for a number of reasons. First, in my mind anyway, FDX shares are severely overvalued with as forward P/E just under 20 compared to UPS' 18.5. Secondly, FDX faces (sooner or later) a hugely expensive, state AG by state AG legal attack on their independent contractor classification that has allowed their ground operations to be so profitable. Thirdly, the UPS Orion roll-out should make a huge difference in expanding margins, cutting training costs, cutting driver mileage and saving fuel costs that will only increase over time. Does FDX have such a novel approach? Fourth, could the hedge fund managers be pressing FDX to increase its dividend payout thereby impacting capital expenditures? In any event, I'm curious as to why these "smart" investors see a brighter future with FDX than with UPS. I'm assuming that the Teamster contract is ratified giving us several years of defined cost analysis. Comments?
I'm a driver and I will say that I am very impressed with Orion at least on my route. The number of stops I'm running today just 5 years ago I would have had a helper. If FDX doesn't have anything like this in the future I think we will be kicken some butt.