A textbook Wall Street activism play is unfolding with underperforming software company Virtusa

A textbook Wall Street activism play is unfolding with underperforming software company Virtusa

A battle heats up between a deep-research investor with a private equity mindset and an underperforming small cap software stock. This is a textbook case of good activism “” a company with poor operating history, horrible corporate governance, underperforming stock, overpaid CEO and a large, long-term shareholder with a very friendly and reasonable request with impressive director nominees.

Company: Virtusa Corp. (VRTU)

Business: Virtusa's technology services include information technology (IT) and business consulting, digital enablement services, user experience (UX) design, development of IT applications, maintenance and support services, systems integration, infrastructure and managed services. Its services enable its clients to accelerate business outcomes by consolidating, rationalizing and modernizing the clients' core customer-facing processes into one or more core systems.Stock Market Value: $924 million ($30.67 per share)

Activist: New Mountain Vantage

Beneficial Ownership:  8.98%Economic Exposure: In addition to the 2,706,161 (8.98%) shares of common stock owned by New Mountain, they have economic exposure, but not voting control, to 540,654 shares underlying cash-settled swaps for a total economic exposure of 3,246,815 shares (10.78%).Average Cost: $37.79 per shareActivist Commentary: New Mountain manages private equity, public equity and credit capital with aggregate assets under management totaling more than $20 billion. It started as a private equity fund but has