An update on Northern Star Resources (ASX: NST)

In June, activist investor Elliott Investment Management disclosed a ~$1bn (3–4%) stake in Northern Star and launched a campaign arguing the company was materially undervalued due to operational underperformance and governance issues. Elliott called for a new CEO with proven operational turnaround credentials, board renewal, a comprehensive strategic review, and a formal sale process to maximise shareholder value. While Northern Star agreed the shares traded below intrinsic value and welcomed engagement, it argued the timing was not right for a sale and noted an external CEO search was already underway.

Since then, Northern Star has addressed several of Elliott’s concerns, appointing Suresh Vadnagra as CEO from October, naming Michael Ashforth as incoming chairman, and adding former Perseus Mining CEO Jeff Quartermaine as an independent non-executive director. Despite these changes, Elliott maintains that board renewal and a full strategic review remain necessary, signalling its campaign is far from over as it continues pushing for further governance and strategic reform.

After Elliotts partial wins on management, a strategic review is likely with the new incumbents but into Christmas the stocks now likely to follow the gold price closely, and here lieth the issue – gold tested 9-month lows this week, close to 30% below its January high.

• We like the risk reward towards gold stocks after the recent weakness, and we think NST is still a buy at current levels.