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Engine Capital urges EPAM to accelerate buybacks or explore a sale

The activist, which holds a 1.5% stake, says EPAM could repurchase 60% to 80% of its shares by end-2028 using about $750m in cash, free cash flow, and additional borrowing capacity.

Reported · Written up by our desk · Hedge Funds

Activist investor Engine Capital is pressing EPAM Systems to take major steps to counter a sharp share-price slump, urging the IT services firm to either accelerate a stock buyback program or consider putting itself up for sale, according to Hedgeweek citing a Bloomberg report.

Engine, which holds a 1.5% position in EPAM, told the company’s board that the stock has fallen more than 40% this year and that the decline gives management an opportunity to deploy capital to support the shares. The firm argues EPAM’s performance has lagged both peers and the broader IT services sector.

In a letter to the board, Engine managing member Arnaud Ajdler proposes expanding balance-sheet use, including EPAM’s approximately $750m cash position, future free cash flow, and additional borrowing capacity, to fund repurchases. Engine estimates EPAM could buy back between 60% and 80% of its outstanding shares by the end of 2028.

Engine is also seeking governance changes, including additional independent directors and a dedicated capital allocation committee. If EPAM does not move quickly, or if repurchases fail to reverse performance, Engine wants a formal strategic review backed by an external financial adviser, with a potential sale among the options.

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