Activist Fund Elliott Buys Monsanto, Lifelock, Sells Off Qlik

Elliott Management is a New York-based hedge fund founded by billionaire activist investor Paul Singer in 1977. Elliot Management provides services to pooled investment vehicles, and invests in public equity, fixed income, and alternative markets around the world. The firm obtains external research to complement its in-house research. Elliott Management has generated net compound annual returns of 14.6% for its investors since its inception, and currently manages a U.S. public equity portfolio worth over $11.6 billion, according to its 13F filing for the June quarter.

Paul Singer has degrees in psychology and JD (Doctor of Law) from the University of Rochester and Harvard Law School respectively. He started Elliot Associates with $1.3 million borrowed from friends and family. Initially, Mr. Singer focused on convertible arbitrage, but ever since the stock market crash and recessions of 1987 and the early 1990’s, the fund has transitioned into a multi-strategy hedge fund. Often known as the “Vulture”, Mr. Singer’s net worth stands at $2.2 billion according to Forbes’ list of the world’s richest people. In this article, we’ll take a closer look at some of the most important moves made by Mr. Singer and his team at Elliot Management during the second quarter.

Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see more details here).

Interpublic Group of Companies Inc (NYSE:IPG)

– Shares Owned by Elliott Management (as of June 30): 11.43 million

– Value of Elliott Management’s Holding (as of June 30): $264.3 million

Elliot Management sold 4.23 million shares of Interpublic Group of Companies Inc (NYSE:IPG) during the second quarter, cutting its holding in the company by 27%. The fund ended the quarter with 11.44 million shares of the marketing services company, which have a total value of about $264.3 million. Interpublic reported its second quarter results last month, which came in at EPS of $0.33, in-line with analysts’ consensus estimate, while revenue of $1.92 billion was slightly below analysts’ forecast of $1.93 billion. Earlier this month, Harley-Davidson (NYSE:HOG) selected Interpublic Group (NYSE:IPG) to handle its global media and digital marketing efforts.

  Monsanto Company (NYSE:MON)

– Shares Owned by Elliott Management (as of June 30): 1.36 million

– Value of Elliott Management’s Holding (as of June 30): $140.79 million

Elliot Management added Monsanto Company (NYSE:MON) to its portfolio during the June quarter, buying 1.36 million shares of the company. The new stake accounts for about 1.21% of the value of the hedge fund’s equity portfolio. On Wednesday, Reuters reported that Monsanto had given German suitor Bayer AG limited access to its books after turning down a $64 billion acquisition offer last month. Some reports also suggest that Bayer may turn directly to Monsanto Company (NYSE:MON)’s shareholders for a merger, as Monsanto has now rejected two of its offers. Shares of Monsanto have gained over 5% so far this year.

On the next page, we continue our discussion of Paul Singer’s biggest purchases of the second quarter, plus a large sold off position.

Lifelock Inc (NYSE:LOCK)

– Shares Owned by Elliott Management (as of June 30): 7.15 million

– Value of Elliott Management’s Holding (as of June 30): $113.04 million

Arizona-based identity theft protection company Lifelock Inc (NYSE:LOCK) was also added to Elliott Management’s portfolio during the three-month-period ended June 30. The fund acquired about 7.15 million shares of the company, amassing around 7.5% of the company’s total stock. Lifelock is reported to have hired investment firm Evercore Partners amid Paul Singer’s activism campaign to push the company to increase shareholder value. Goldman Sachs’ analyst Gabriela Borges recently initiated coverage of Lifelock with a ‘Neutral’ rating and has a price target of $18 on it, only $1.22 above the shares’ current going rate. Ahmet Okumus’ Okumus Fund Management owns about 5.36 million shares of Lifelock Inc (NYSE:LOCK) as of the end of the second quarter. The stock has gained over 15% year-to-date.

Imperva Inc (NYSE:IMPV)

– Shares Owned by Elliott Management (as of June 30): 2.33 million

– Value of Elliott Management’s Holding (as of June 30): $100.2 million

Elliot Management acquired 2.33 million shares of the Redwood-based cybersecurity company during the second quarter. The fund now holds over 7% of the company’s total float. Imperva Inc (NYSE:IMPV) is down by over 25% so far in 2016. Imperva is yet another target of Elliot’s activism, as the hedge fund is reportedly pressuring the company to find a buyer amid disappointing financial results. Analysts think that Cisco Systems, IBM, Raytheon, or Symantec could all be potential suitors for the company. Philippe Laffont’s Coatue Management owns 547,353 of Imperva Inc (NYSE:IMPV) as of the end of the second quarter.

Qlik Technologies Inc (NASDAQ:QLIK) Position Sold Off

Elliot Management dumped its entire holding of Qlik Technologies Inc (NASDAQ:QLIK) during the second quarter, selling over 4.63 million shares of the company, although this isn’t really a big development given that the company was acquired during the quarter and became a merger-arb play. The Pennsylvania-based software company said Wednesday that more than 77% of its shareholders had approved the acquisition of the company by private equity firm Thoma Bravo. The transaction is expected to close early next week, and Qlik shareholders will be entitled to receive $30.50 in cash for each share of Qlik Technologies Inc (NASDAQ:QLIK) common stock they hold. Given that Qlik was actually trading higher than the transaction price just days before its announcement, it’s perhaps somewhat surprising that shareholders so readily accepted the deal.

Disclosure: None