Why Automatic Data Processing, Inc. Shares Lost 10.5% in August

Stock in Automatic Data Processing, Inc. (NASDAQ: ADP) lost 10.5% last month, according to data from S&P Global Intelligence.

Shares of the payroll and human resources software giant settled back to prior levels in August after spiking roughly 13% on July 27, when news outlets reported that activist investor Bill Ackman had taken a significant stake in the company through his Pershing Square Capital Management firm.

Pershing Square revealed an 8.3% stake in the company on Aug. 4, and on Aug. 17, Ackman made a detailed presentation to investors laying out his case for Pershing to gain three seats on ADP's board. Ackman believes that APD has overemphasized acquisition over internal innovation as it has grown and has failed to develop best-in-class software offerings. The activist investor claims that competitors have thus been able to take market share from APD, and that outmoded technology is also keeping the company from realizing better margins.

Source: Fool.com