Elliott Management: The US activist investor forcing change across the world

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Elliott Management has become a familiar name for UK investors after it targeted a few London-listed companies.


Run by billionaire Paul Singer, the New York-based activist investor has holdings worth over US$40bn and was valued at US$12.7bn as of 3 June.


At the time, its top holdings were Dell Inc, PowerShares QQQ Trust, Howmet Aerospace, Twitter Inc (NYSE:TWTR) and Marathon Petroleum Corp.


Elliott is renowned for its aggressiveness in forcing changes on its portfolio companies, which are selected after a long process of specialist analysis and sometimes years of observing from afar.


The latest UK company that sparked its attention has been SSE PLC (LSE:SSE), which may be subject to a takeover bid of around GBP20bn.


Any corporate pressure on SSE could be of interest to one of Europe’s major power firms such as French group EDF or Spain’s Iberdrola, the latter of which bought Scottish Power in 2007 for GBP11.6bn.


However, the investor’s previous strategies at other blue-chip UK firms could also raise speculation of a potential break-up of the firm’s businesses.


Elliott’s previous efforts in the London market included a campaign at pharma giant GlaxoSmithKline PLC (LSE:GSK) to appoint new directors and force a vote on whether chief executive Emma Walmsley should keep her job after the firm spins off its consumer division, effectively forcing her to reapply for the top role. Some City analysts see it as plain and simple sexism.


Elliott also pushed Premier Inn owner Whitbread PLC (LSE:WTB) to sell off its Costa Coffee business back in 2018, a strategy that was eventually executed with Coca-Cola Co buying the cafe chain for just under GBP4bn.


Recently, the hedge fund also built new positions in Duke Energy Corp (NYSE:DUK), Dropbox Inc (NYSE:DBX) and Tesla Inc (NASDAQ:TSLA).


It has been in a spate with Duke Energy after suggesting it should split up into three companies, however the board keeps opposing the plan, which it deems “financially unsound”.


Staying in the natural resources sector, Elliott may have welcomed BHP PLC’s departure from the FTSE 100 in its merger with Woodside.


The fund manager, its biggest investor with a 4.7% stake, previously argued a focus on the Australian Stock Exchange could generate an extra GBP16bn in value.


It’s also been very vocal against BHP’s fossil fuel portfolio and has been campaigning for an exit altogether. Five years ago, the energy giant offloaded its shale assets but kept the petroleum ones.


With BHP ticked off the to-do list for now, Duke Energy and SSE are likely to remain the main targets for Elliott over the coming months.

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