What Investors Need to Know After TreeHouse Foods' 23% Pop Wednesday

Shares of TreeHouse Foods (NYSE: THS), a manufacturer and distributor of private-label packaged foods and beverages, jumped as much as 23% Wednesday morning after an activist investor encouraged a strategic review.

Jana Partners, a New York-based activist investor with a roughly 7.5% stake in the company, encouraged TreeHouse to launch a strategic review, including a potential sale of the company. The basis of the argument is simply that the stock appears undervalued to Jana Partners, and that the low price could entice potential buyers as interest in private-label brands has increased in recent years. It's true that the stock price has disappointed with a 34% decline over the past five years compared to the S&P 500 index's 110% gain.

Per an SEC filing from Wednesday: "JANA has had, and intends to continue to have, constructive discussions with the Issuer's board of directors (the "Board") and management regarding avenues to resolve the Issuer's undervaluation and total stockholder return, including evaluating a sale of the Issuer, operations, capital allocation, corporate governance and compensation practices."

Source Fool.com