| Paul Singer, Elliott Management |
Paul Singer’s Elliott Management Corp. may be a diversified, multistrategy hedge fund firm, but its disclosure Monday of a new activist position in Cognizant Technology Solutions Corp. is the latest in what has become an especially busy year of activism for the New York firm.
It is a strategy that has helped to boost the nearly 40-year-old Elliott’s $30 billion or so in hedge funds — Elliott Associates, LP, and Elliott International Ltd. — which returned about 8.4 percent in the first three quarters of the year, making them among the better-performing hedge funds this year. On Monday, Elliott disclosed it owns more than 4 percent, or $1.4 billion in shares, of Cognizant, an IT consulting and services firm. It also fired off a 16-page letter outlining what it calls a three-part Value-Enhancement Plan, which Elliott says could boost the value of the stock by 50 percent to 60 percent in just more than a year. Elliott also requested a meeting with the company’s board.
Cognizant is one of many tech companies this year that Elliott has either targeted or has taken steps to boost their value after taking an activist stake. In early October, for example, Elliott disclosed an 8.1 percent stake in Mentor Graphics Corp., asserting that the electronics design company’s shares are deeply undervalued and that it has spoken with management and the board of directors about ways to boost the shares. In mid-November, Elliott decreased its economic exposure to the company to about 4.5 percent.
In June, Elliott said it owned 8.8 percent of LifeLock, an identity theft protection company. The hedge fund boosted this stake to 10.9 percent by August.
Among nontech companies, in recent weeks Elliott has been boosting its stake in Alcoa Corp. spin-off Arconic to 9 percent. So far, Elliott has not offered a plan for lifting the stock’s value. Also this year, Elliott launched an activist campaign against homebuilder PulteGroup.
Elliott is also suing Panamanian law firm Mossack Fonseca & Co., which is at the center of the so-called Panama Papers scandal. The case is related to Elliott’s earlier successful battle with Argentina over its defaulted debt.
Meanwhile, Elliott has seen many of its earlier campaigns pay off this year. In October, Dell agreed to acquire storage giant EMC Corp. after Elliott urged the company to break itself into two companies.
In June software company Qlik Technologies agreed to be acquired by private equity firm Thoma Bravo for about $3 billion in cash three months after Elliott disclosed an activist stake.
Also earlier this year, CDK Global, a software company that serves the auto industry and was spun off from Automatic Data Processing in October 2014, announced what it described as “a comprehensive streamlining of its organization.” It said it would reorganize the company into two main operating groups — CDK North America and CDK International — and also integrate product management, create a single North American sales organization, and form a single global research and development organization, among other initiatives. It also announced “a number of leadership changes.” It subsequently announced plans to accelerate the remaining $710 million of its $1 billion stock repurchase plan.
These moves came just a month or so after Elliott spelled out in a 13-page “Value-Maximizing Plan” for the company.
Elsewhere in its portfolio, Elliott cut its stake in October in Cabela’s, a seller of outdoor gear, after the retailer agreed to be acquired by competitor Bass Pro Shops for $4.5 billion. One year ago Elliott had urged Cabela’s to put itself up for sale when the hedge fund initially disclosed an 11 percent stake in the company.
Meanwhile, in late May, Ares Capital Corp. announced plans to acquire American Capital in a deal involving business development companies (BDCs). Elliott was the largest shareholder of American Capital.
