CF Industries Holdings Inc. raised its dividend by 150 percent, about two months after activist investor Dan Loeb’s Third Point LLC hedge fund demanded the fertilizer maker raise its payout.
CF will pay a quarterly dividend of $1 a share, up from 40 cents previously, the Deerfield, Illinois-based company said today in a statement. The payout will be made to shareholders of record as of Nov. 15, it said.
“This dividend increase reflects our confidence in the strength of CF Industries’ business model and is part of our ongoing commitment to build long term shareholder value,” Stephen Wilson, CF’s chief executive officer, said in the statement.
New York-based Third Point urged CF in July to pay a larger dividend, contending that the crop-nutrient producer was trading at an “unwarranted discount” to its fertilizer and chemical peers, according to the hedge fund’s second-quarter letter to its investors.
Third Point declined to comment.
Lower U.S. natural gas prices give CF, the largest U.S. producer of nitrogen fertilizer, a “sustainable margin” over foreign competitors, Third Point said in the letter. That provides CF with a steady source of cash with which to increase its payout to investors, the fund said.
Loeb, 51, concentrates on event-driven investing, or trading in stocks or bonds of companies going through mergers, spinoffs or other changes.
Third Point manages about $13 billion and returned 3.3 percent in the second quarter and 12.6 percent in the first half of the year, according to the July letter to its investors.