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Investment Q&A

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Q: I have a question about name changes. In your experience if/when a Company changes its name does this help or hurt. My question is specifically about Veran (Crescent Point Energy). Now I have held this Company stock and options for a long time and made lots of money on it. Also lost some along the way. They have been slowly changing their operations to be very positive ie: no more Saxberg and serial aquisitions. Now they have decided to change the name and the stock has not responded very well. I grew up on a farm and found you may dress up a pig but it is still an oinker after the dress-up. Thanks Gordo
Asked by gord on May 22, 2024
5i Research Answer:

Name changes can occur for numerous reasons, not always bad. With a large acquisition a company may adopt the name of the acquired company. WSP did this, for example. Valent Pharmaceutical changed its name to Bausch Health Companies after the scandal of drug price gauging, with the purpose to renew its identity with investors. On the other hand, Facebook changed its name to Meta in 2021 reflecting the bet the CEO made on the company’s future on the metaverse. Or Google changed its name to Alphabet, just because it wanted to consolidate all of  its various entities under a holding company, and let investors know it is not just Google. Name-changing alone may not be an issue without considering the company’s plan going forward. Of course, it does not impact fundamentals in any way.  In the case of CPG, the company has indicated a more disciplined approach in terms of capital allocation going forward which would prioritize balance sheet strength and capital returns rather than significant investment. CPG has historically been a serial issuer of stock and a serial acquiror, not always to great success. We are OK with the name change, but the company needs to fulfill its goal here of being more disciplined for it to really count for anyway. 

Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in META, GOOG.