Elliott Management, the hedge fund founded by Paul Singer (Trades, Portfolio), disclosed last week that it established five new positions during the fourth quarter of 2019. The fund also boosted its holdings of Dell Technologies Inc. (DELL, Financial) and AT&T Inc. (T, Financial).
The New York-based hedge fund seeks long-term capital appreciation primarily through activist investing, i.e., taking a position in underperforming companies and pushing for management changes. Elliott also purchases sovereign debt at a discount.
As of quarter-end, the $11.79 billion equity portfolio contains 49 stocks, with turnover of 6%. The top three sectors in terms of weight are technology, industrials and energy, with weights of 17.45%, 16% and 10.07%.
Elliott’s new positions for the quarter were iShares iBoxx $ Investment Grade Corporate Bond (LQD, Financial), LogMeIn Inc. (LOGM, Financial), iShares iBoxx $ High Yield Corporate Bond (HYG, Financial), NortonLifeLock (NLOK, Financial) and Anixter International Inc. (AXE, Financial).
Dell
Elliott added 2,128,712 shares of Dell, increasing the stake 16.37% and the equity portfolio 0.93%. Shares averaged $51.29 during the quarter.
Dell said on its website that Michael Dell (Trades, Portfolio) founded the Round Rock, Texas-based company in his dorm room, believing that he could provide clients with powerful technology at good value by rethinking how computers were manufactured and delivered. The company’s brands include Dell, Dell EMC and Pivotal. According to GuruFocus, Dell’s Joel Greenblatt (Trades, Portfolio) return on capital and three-year revenue growth rate outperform over 87% of global competitors, suggesting good profitability.
Dodge & Cox and Steven Cohen (Trades, Portfolio) also added shares of Dell during the quarter.
AT&T
Elliott added 1.875 million shares of AT&T, increasing the position 60% and the portfolio 0.62%. Shares averaged $38.24 during the quarter.
The Dallas-based telecom company announced in October 2019 a three-year capital allocation plan in response to engagement with its shareholders, including Elliott. On Jan. 29, AT&T said adjusted earnings for the three months ending December 2019 were 89 cents, up 3 cents from the prior-year quarter, while adjusted earnings for full-year 2019 were $3.57, up 5 cents from the prior year.
GuruFocus ranks AT&T’s profitability 7 out of 10: Operating margins are outperforming 71.33% of global competitors despite revenues declining approximately 2.3% per year over the past three years, a rate that underperforms 65.54% of global telecom companies.
iShares iBoxx $ Investment Grade Corporate Bond
Elliott purchased 1,176,350 shares of iShares iBoxx $ Investment Grade Corporate Bond, giving the holding 1.28% weight in the equity portfolio. Shares averaged $127.36 during the quarter.
According to the iShares website, the iBoxx $ Investment Grade Corporate Bond exchange-traded fund seeks to track the investment of an index composed of U.S. dollar-dominated, investment-grade corporate bonds.
LogMeIn
Elliott purchased 1,353,765 shares of LogMeIn, giving the stake 0.98% weight in the equity portfolio. Shares averaged $74.54 during the quarter.
The Boston-based company provides a wide range of cloud-based collaboration and connectivity solutions, including online meetings, secure remote access, outsourcing and password security. GuruFocus ranks LogMeIn’s profitability 7 out of 10: Although the company’s three-year revenue growth rate outperforms 87.40% of global competitors, its margins and returns are underperforming more than half of global software companies.
iShares iBoxx $ High Yield Corporate Bond
Elliott purchased 832,000 shares of iShares iBoxx $ High Yield Corporate Bond, giving the holding 0.62% weight in the equity portfolio. Shares averaged $86.05 during the quarter.
According to the iShares website, the iBoxx $ High Yield Corporate Bond ETF seeks to track the investment results of an index composed of U.S. dollar-denominated, high-yield corporate bonds.
NortonLifeLock
Elliott purchased 2,665,681 shares of NortonLifeLock, giving the stake 0.58% weight in the equity portfolio. Shares averaged $24.48 during the quarter.
The Tempe, Arizona-based cybersecurity company said on Feb. 6 that revenues for the three months ending Jan. 3 were $618 million, up $3 million from the prior-year quarter. The company’s profitability ranks 7 out of 10: NortonLifeLock’s operating margin and return on assets are outperforming 82.79% and 95.65% of global competitors despite the three-year revenue growth rate outperforming just 59.88% of global software companies.
Anixter
Elliott purchased 25,000 shares of Anixter, giving the holding 0.02% weight in the equity portfolio. Shares averaged $81.43 during the quarter.
The Glenview, Illinois-based company distributes network, security, electrical and utility power products and services. GuruFocus ranks Anixter’s profitability 7 out of 10: Although the company’s return on equity outperforms 76.77% of global competitors, operating margins have contracted approximately 5.5% per year on average over the past five years and are underperforming 52.20% of global industrial distribution companies.
Disclosure: No positions.
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