Elliott Management Activist: A Look at Their Notable Investments and Campaigns

Elliott Management is a renowned activist investor that has been making waves in the corporate world for decades. With a portfolio that spans across various industries, they have a reputation for shaking things up and pushing companies to be more efficient.

One of their earliest notable investments was in the 1980s when they invested in the company International Harvester. They successfully pushed the company to break up into two separate entities, one focused on agricultural equipment and the other on construction equipment.

Elliott Management's activist approach has also led to significant changes at companies like JPMorgan Chase, where they pushed for the sale of the bank's private equity business.

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Elliott Management has a strong leadership team, with seven equity partners who share decision-making responsibilities. These partners are Paul Singer, Jonathan Pollock, Gordon Singer, Steven Kasoff, Steve Cohen, Dave Miller, and Jesse Cohn.

Paul Singer and Jonathan Pollock are co-chief investment officers, overseeing the firm's investment strategies. Gordon Singer, Paul's son, manages the London office, bringing a local perspective to the team.

Here is a list of Elliott Management's equity partners, as of November 2020:

Elliott Management also has a number of affiliates and units, including Hambledon, Inc. and NML Capital, which are both controlled by Paul Singer.

Elliott has seven equity partners. Paul Singer and Jonathan Pollock are co-chief investment officers, and Gordon Singer manages the London office.

One of the notable equity partners is Steven Kasoff, who was named an equity partner in January 2015, after previously serving as a senior portfolio manager. He announced his retirement in April 2020.

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As we explore the world of equity partners and affiliates, let's take a closer look at the various entities involved. Hambledon, Inc. is a Cayman Islands corporation controlled by Singer.

In the realm of Elliott Management, we have two notable subsidiaries: NML Capital and Kensington International Ltd. These two entities are crucial in understanding the company's operations.

Maidenhead LLC and Warrington LLC are US entities that are controlled by Singer, highlighting the global reach of their influence. Elliott Advisors (UK) Ltd. is a London-based advisor to Elliott, providing valuable insights into the company's European operations.

Elliott Advisors (HK) Limited, on the other hand, is the Hong Kong arm of Elliott Management, showcasing the company's presence in the Asian market.

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Time Equities is a significant player in the real estate industry, particularly when it comes to distressed assets. Since 2010, Elliott Management has invested in distressed real estate, expanding its reach into Japanese and German markets.

Elliott Management has a strong global presence with teams of analysts and portfolio managers in London, Hong Kong, and Tokyo, managing investments worth over $2 billion. It has also focused on direct financing with developers in the US, filling in the gap left by banks.

In 2013, Elliott Management teamed up with Time Equities on a 63-story commercial and real estate project in New York, taking an ownership stake in Silverpeak Real Estate Finance, a commercial real estate lender.

The Beekman project, a 130-year-old building in Manhattan, was financed by Elliott Management through GFI Capital Resources, a New York real estate company, and is being developed into a 287-room hotel and 46-story condominium called the Beekman.

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Elliott Investment has a reputation for making savvy investments that pay off in the long run. They've successfully revived several early-stage businesses, including Goodyear Tire & Rubber, NRG Energy, and Crown Castle.

Elliott's investment in Southwest Airlines is a prime example of their approach. They invested $2 billion in the airline last month, with the goal of boosting its shares.

The airline has struggled with poor execution and a stubborn leadership that refused to revise its plan. This has led to dismal performance, particularly since the COVID-19 pandemic.

Elliott believes that new leadership is required at Southwest, as stated in a letter to the airline. They plan to meet with high management to discuss the issues.

Southwest Airlines has experienced significant problems since the pandemic, including a critical low point in 2022 when its technological systems failed.

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Elliott Management's early history focused on convertible arbitrage, but after the 1987 stock market crash and early 1990s recession, it shifted its attention to distressed debt investing.

The hedge fund's expertise in restructuring led to notable successes with U.S. firms like TWA, MCI, WorldCom, and Enron, as well as overseas companies including Telecom Italia SpA and Elektrim.

Elliott's campaigns often aim to maximize shareholder value and gain board representation to help struggling companies turn around.

Here are some of Elliott's notable past battles and victories:

Elliott's early history was marked by a focus on convertible arbitrage. They refocused primarily on distressed debt investing following the 1987 stock market crash.

The firm made a name for itself by restructuring several high-profile U.S. companies, including TWA, MCI, and Enron. These restructurings showcased Elliott's expertise in navigating complex financial situations.

Elliott also ventured into international markets, restructuring companies such as Telecom Italia SpA and Elektrim.

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Elliott has a history of taking on big companies and pushing for change.

Elliott invested in Twitter in early 2020 and called for the ouster of co-founder and CEO Jack Dorsey.

The hedge fund acquired a $3.2 billion stake in AT&T in 2019 and pushed the company to sell some assets.

One year later, Elliott divested its $3.2 billion stake in AT&T.

Elliott built a $628 million stake in Samsung C&T in 2015 and tried to block a merger with Cheil Industries.

In the end, South Korea was ordered to pay Elliott $53.6 million in compensation, plus 8 years’ worth of compound annual interest at a 5% rate, and $28.9 million in legal fees.

Here are some notable companies that have made changes after Elliott got involved:

Elliott is currently seeking representation on Starbucks' board. Under pressure from the activist, Starbucks named Brian Niccol, Chipotle's chief, as its new CEO, ousting Laxman Narasimhan earlier this month.

Elliott has a "sizable stake" in Starbucks, and was in talks with leadership to help stage a turnaround of its stock price and business performance. The Wall Street Journal reported in July that Elliott was building a stake in the company.

Elliott is also involved in a campaign against Texas Instruments, where it has a $2.5 billion position. The fund has called on Texas Instruments to commit to a $9 free-cash flow per share target in 2026, and to adopt a strategy to manage capacity instead of building it "far in excess of expected demand."

Southwest Airlines is another target of Elliott's activist campaign, which has been met with challenges from union influence. More than 80% of Southwest's employees belong to a union, and there are separate organizations for pilots, flight attendants, and mechanics.

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Elliott is currently seeking representation on Starbucks' board. They've built a sizable stake in the Seattle-based coffee chain and were in talks with leadership to stage a turnaround of its stock price and business performance.

The fund has been pushing for changes at Starbucks, which led to the company naming Brian Niccol, Chipotle's chief, as its new CEO, ousting Laxman Narasimhan earlier this month.

Elliott has also taken a $2.5 billion position in Texas Instruments, where they're calling on the company to commit to a $9 free-cash flow per share target in 2026.

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Southwest Airlines is facing significant union challenges. More than 80% of its employees belong to a union, with at least 11 unions represented.

This makes it harder for management to implement changes, especially those involving layoffs and cost cuts. Union influence can be a major hurdle.

The Southwest Airlines Pilots Association, with 11,000 members, met with Elliott's team in June to discuss their plans and timelines. They conducted an in-depth analysis.

Southwest has acknowledged some of the problems highlighted by Elliott, including system failures that caused thousands of cancellations in 2022. But financial challenges persist.

The company cut its second-quarter revenue forecast last week, citing complexities in adapting to current booking patterns.