In this piece, we will take a look at the top 10 stock picks of Elliott Management.
It was arguably one of the best years for hedge funds, going by the $67 billion returned to shareholders in 2023 as the overall equity markets shrugged off high interest rates to finish on a high. Elliott Management was one of the hedge funds that were up 4.7% for the year, slightly down from the 5.9% gain in 2022.
Founded in 1977, Elliott Management is one of the oldest and most successful hedge funds often tracked on Wall Street for investment opportunities. The hedge fund has only lost money in two years since its inception, affirming its impressive track record of focusing on underperforming and distressed companies.
Billionaire investor Paul Singer is the brainchild behind the highly diversified hedge fund that returned $5.5 billion to investors last year, taking its net gains since its inception to $47.6 billion. Additionally, the hedge fund manager boasts an average annual return of 14%, underscoring why he is one of the respected voices on Wall Street.
Elliott Management has two main funds, Elliott Associates L.P. and Elliott International Limited in which it leverages various strategies to generate value in the market. In the first quarter, Elliott Associates L.P generated a return of 2.5% and boasts of a 12-month return of 8.5% and two year compounded annual return of 5.5% on the other and Elliott International Limited was up by 2.4% in Q1 and 7.9% return in the past 12 months adding to compounded annual rate of return of 4.9%.
Since its inception, Elliott Management has invested in distressed securities. Initially, it operated as a hedge fund focusing on convertible arbitrage, but over time, it shifted its attention to investing in companies and, eventually, countries experiencing economic difficulties.
In the 1990s, it acquired distressed debt from nations like Peru and Argentina, which resulted in significant repayments of multi-million dollars. These strategies, which occasionally involved investments in corporate debt, led to Paul Singer being dubbed the “doomsday investor” by The New Yorker magazine in 2018.
More recently, in March 2021, amidst the turmoil in the nickel market following the conflict between Ukraine and Russia, the activist fund sought over $450 million in compensation from the London Metal Exchange for employing an illegal tactic aimed at disrupting trade.
Singer stands out from other hedge fund managers in his ability to identify high-risk reward opportunities and never shy away from taking risks. He accurately predicted the 2008 financial crisis and went on to benefit from it through aggressive investment strategies.
Likewise, Elliott Management showed no signs of slowing down in the first quarter of 2024. Singer and other investment managers have perfected the art of investing in underperforming companies and pursuing strategic changes to unlock optimum value.
Consequently, Elliot Management is one of the most revered activist hedge funds known to exert maximum pressure on companies it gets involved in to turn around their fortunes. In its activist campaigns, the hedge fund is known to push for management changes and board seats, all to influence strategic direction aimed at unlocking value. In aggressive situations, the firm can advocate for a spinoff of some assets or the sale of the entire business. Last year alone, the firm launched 15 activist campaigns.
Paul Singer of Elliott Management
Elliott Management boasts of one of the most diversified investment portfolios worth $16.12 billion. Nevertheless, the hedge fund is heavily invested in the Basic Materials sector, which accounts for 36.9% of its portfolio, with other best standing at 50.5%
The activist hedge fund has also been active in the capital markets, raising $8.5 billion in the first quarter after initially targeting $7 billion. The capital raise comes as it gears up for what it terms as a potential market downturn given the inexorable levitation” of the markets. The hedge fund has raised concerns over the premium valuations most equities and bonds enjoy that have come at the back of record interest rates.
The firm argues that the Federal Reserve lacks a deeper understanding of inflation and market fragility than the general public and that the presence of concentrated passive investors, elevated levels of government debt, and the possibility of currency depreciation all indicate a bubble situation.
Additionally, the hedge fund believes there are glimpses of bubbles in the market going to the frenzy triggered by the artificial intelligence revolution. Singer has warned of an ugly end to the Federal Reserve’s easy money policies for the longest time, insisting on trouble ahead due to high valuation and too much leverage.
Our Methodology
Elliott Management generated a gain of 12.6% in the first quarter underlines the effectiveness of its strategy of investing in companies with robust growth metrics and long-term prospects. After analyzing the 13F filing, we have settled on the top 10 holdings of Elliott Management. The stocks are ranked based on the hedge fund’s stake in them.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Top Stock Picks of Elliott Management
10. Etsy, Inc. (NASDAQ:ETSY)
Elliott Management’s Stake Value: $154.62 Million
Number of Hedge Fund Holders: 35
Etsy Inc (NASDAQ:ETSY) is one of the top 10 stock picks of Elliott Management. The hedge fund has built a 13% position in the e-commerce company. Together with its subsidiaries, Etsy Inc (NASDAQ:ETSY) operates two-sided online marketplaces that connect buyers and sellers in the US.
While Etsy Inc (NASDAQ:ETSY) has been under pressure over the past two years, going down 21% in 2024, Elliott Management managing partner Jesse Cohn believes the company has the potential to generate significant multiyear upside. Cohn believes Etsy Inc (NASDAQ:ETSY) can add more buyers and increase their spending on the platform.
In the first quarter, Etsy Inc (NASDAQ:ETSY) recorded a 2% increase in active buyers, but gross merchandise sales across marketplaces fell to $2.99 billion from $3.10 billion a year ago. A total of 35 hedge funds tracked by the Insider Money database held stakes in the company as of Q1 2024.
9. Cardinal Health Inc (NYSE:CAH)
Elliott Management’s Stake Value: $223.80 Million
Number of Hedge Fund Holders: 45
Cardinal Health Inc (NYSE:CAH) is one of Elliott Management’s top 10 holdings in the healthcare sector that provides customized solutions for hospitals, healthcare systems, pharmacies, and clinical laboratories. After delivering mixed first-quarter results, Cardinal Health Inc (NYSE:CAH) has been under pressure recently.
Its first-quarter net income fell to $258 million from $345 million a year ago, even as revenues increased 9% yearly to $54.9 billion. Likewise, Cardinal Health Inc (NYSE:CAH) has been up by about 4% in the year to date.
In addition, Cardinal Health Inc (NYSE:CAH) has increased dividends for 37 consecutive years. We recently released a list of the Top Dividend Stocks to Buy in 2024; according to Billionaire Paul Tudor Jones, Cardinal Health Inc (NYSE:CAH) secured the 2nd spot on this list. As of the end of the first quarter of 2024, 45 hedge funds were tracked by the Insider Monkey database.
8. Catalent, Inc. (NYSE:CTLT)
Elliott Management’s Stake Value: $225.80 Million
Number of Hedge Fund Holders: 41
Catalent, Inc. (NYSE:CTLT) is one of the top 10 holdings of Elliott Management and was part of its 15 activist investment campaign last year. The company, which develops and manufactures solutions for drugs, protein-based biologics, and gene therapies, was forced to reach an agreement with the activist investor mid-last year on agreeing to include new directors and pledge a review of strategic alternatives such as a sale.
Elliott Management’s efforts have paid off as Catalent, Inc. (NYSE:CTLT) has rallied more than 28% year to date. It has also agreed to be acquired by Novo Nordisk in a deal that values it at $16.5 billion. The deal comes on the company being a target of takeover interest from private equity firms for some time.
Insider Monkey’s database shows that hedge fund interest in Catalent, Inc. (NYSE:CTLT) increased in the first quarter of 2024. The number of hedge funds with stakes in the company increased from 28 in the fourth quarter of 2023 to 41 in the first quarter of 2024.
7. SeaDrill Limited (NYSE:SDRL)
Elliott Management’s Stake Value: $285.80 Million
Number of Hedge Fund Holders: 39
SeaDrill Limited (NYSE:SDRL) is one of Elliott Management’s investment players in the energy sector, providing offshore contract drilling services to the oil and gas industry. It owns and operates drill rigs, semi-submersible rigs, and jack-up rigs.
SeaDrill Limited (NYSE:SDRL) is up by about 17% for the year as it benefits from an uptick in oil prices in 2024 above the $ 75-a-barrel level. The company has also been returning value to shareholders through buybacks as part of a $200 million program.
Insider Monkey’s database shows that hedge fund interest in SeaDrill Limited (NYSE:SDRL) dropped in the first quarter of 2024. The number of hedge funds with stakes in the company fell from 40 in the fourth quarter of 2023 to 39 in the first quarter of 2024.
6. BioMarin Pharmaceutical Inc (NASDAQ:BMRN)
Elliott Management’s Stake Value: $305.72 Million
Number of Hedge Fund Holders: 51
BioMarin Pharmaceutical Inc (NASDAQ:BMRN) is one of the top 10 holdings of Elliott Management, offering exposure in the healthcare sector. The company develops and commercializes therapies for people with severe and life-threatening illnesses.
The activist hedge fund launched an activist campaign against BioMarin Pharmaceutical Inc (NASDAQ:BMRN) last year, resulting in the company offering three independent director slots on the board. The hedge fund was also to form a committee to evaluate the company’s business strategy and operations.
After initially rallying on the activist campaign, BioMarin Pharmaceutical Inc (NASDAQ:BMRN) has come under pressure, dropping by about 11% in 2024. 51 out of 920 hedge funds tracked by the Insider Monkey database held stakes in the company as of the end of Q1 2024.
5. NRG Energy Inc. (NYSE:NRG)
Elliott Management’s Stake Value: $701.20 Million
Number of Hedge Fund Holders: 44
NRG Energy Inc. (NYSE:NRG) is an energy and home services company that produces and sells electricity generated using coal, oil, solar, and battery storage. It is turning out to be one of the best-performing stocks in Elliott Management’s portfolio, going by the 43% year-to-date gain. Elliott Management confirmed a 13% stake in NRG Energy Inc. (NYSE:NRG) worth $1 billion last year.
The impressive run comes a year after Elliott’s management launched an activist campaign posing for an overhaul of NRG Energy Inc. (NYSE:NRG)’s board. In addition, the hedge fund pushed for the unwinding of the security firm acquisition of Vivint Smart Home.
As of the end of the first quarter of 2024, 44 hedge funds tracked by the Insider Monkey database held stakes in NRG Energy Inc. (NYSE:NRG), an improvement from 31 as of 2023.
4. Pinterest Inc (NYSE:PINS)
Elliott Management’s Stake Value: $970.76 Million
Number of Hedge Fund Holders: 64
Pinterest Inc (NYSE:PINS) is an image-sharing and social media services company and one of the top 10 holdings of Elliott Management, offering exposure in the communication services sector. The hedge fund first got involved in Pinterest Inc (NYSE:PINS) in 2022, becoming its largest shareholder. With the investment, the firm launched an activist campaign to improve the struggling company’s operations.
While Pinterest Inc (NYSE:PINS) is up by about 4% in 2024, it has come under pressure on Grizzly Research, releasing a short report on the company insisting that it misleadingly reports its performance statistics. The research firm insists the company is declining in its key markets and insists the stock should trade between $5.28 and $16 per share.
Pinterest Inc (NYSE:PINS) attracted 64 hedge funds out of the 920 that Insider Monkey tracks in the March quarter of 2024.
3. Marathon Petroleum Corporation (NYSE:MPC)
Elliott Management’s Stake Value: $1.48 Billion
Number of Hedge Fund Holders: 50
Marathon Petroleum Corporation (NYSE:MPC) is an integrated energy company specializing in the exploration and development of crude oil and other feedstocks at its refineries on the Gulf Coast. It is one of the stocks that has benefited from oil prices stabilizing above the $75 a barrel level for the better part of the year.
The decline in Marathon Petroleum Corporation (NYSE:MPC)’s stock price can be attributed to several factors. Specifically, the Refining & Marketing segment’s adjusted EBITDA fell to $1.9 billion, down from $3.9 billion in the first quarter of 2023. Additionally, California workplace regulators have imposed a $188,000 fine on Marathon Petroleum’s Martinez refinery for a series of alleged safety violations.
Marathon Petroleum Corporation (NYSE:MPC) did not experience any significant change in hedge fund holding in Q1 2024. A total of 50 hedge funds tracked by the Insider Money database held stakes in the company as of Q1 2024.
2. Triple Flag Precious Metals Corp. (NYSE:TFPM)
Elliott Management’s Stake Value: $1.93 Billion
Number of Hedge Fund Holders: 15
Triple Flag Precious Metals Corp. (NYSE:TFPM) is the top holding of Elliott Management in the basic materials sector, focused on acquiring and managing precious metals streams, royalties, and other mineral interests in Australia. Additionally, Elliott Management is the largest shareholder, owning 66% of the outstanding shares.
Triple Flag Precious Metals Corp. (NYSE:TFPM) has been on a roll in 2024, rallying about 17%. The rally came on the company delivering record-setting gold equivalent ounce sales of 28,000 ounces in the first quarter and an EBITDA of $48 million. In the second quarter, Triple Flag Precious Metals Corp. (NYSE:TFPM) delivered gold equivalent ounces of 16,124 and revenues of $37.7 million.
Insider Monkey’s database shows hedge funds’ interest in Triple Flag Precious Metals Corp. (NYSE:TFPM) increased in the first quarter of 2023. The number of hedge funds with stakes in the company increased from 11 in the fourth quarter of last year to 15.
1. Suncor Energy Inc. (NYSE:SU)
Elliott Management’s Stake Value: $1.94 Billion
Number of Hedge Fund Holders: 35
Suncor Energy Inc. (NYSE:SU) is Elliott Management’s biggest holding, with its $1.94 billion worth of stakes. The company offers exposure in the energy sector as an integrated energy company that operates through oil sands, exploration, and production. It explores, develops, and produces bitumen, synthetic crude oil, and related products.
After trading in a range for the better part of 2023, Suncor Energy Inc. (NYSE:SU) has gained more than 18% year to date. In May, the stock rose to 16 16-year high after announcing plans to ramp up share buybacks. Suncor Energy Inc. (NYSE:SU) bolstered its spending on share buybacks to 75% of its free funds, marking a successful activist campaign for Elliott management that has pushed for a management shakeup in the past.
Suncor Energy Inc. (NYSE:SU) is one of the top 10 holdings of Elliott Management, the hedge fund, having increased its stake in the firm by 427% in the first quarter. It now holds 4.1% direct stakes. During the first quarter, 35 hedge funds had positions in Suncor Energy Inc. (NYSE:SU), according to Insider Monkey’s database.
Elliott Management is one of the most successful hedge funds that often post positive annual gains, which is why investors and analysts on Wall Street usually track it. However, given that the artificial intelligence arms race is just starting, under-the-radar AI stocks are trading at highly discounted valuations with incredible promise for anyone looking to diversify their portfolio. If you are looking for an AI stock that is more promising than the top activist investment plays, check out our report about the cheapest AI stock.
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