In this six-part series, we will go through each one of the positions Elliott traded this past quarter.
Elliott Management is a New York based $20 billion+ event driven and distressed hedge fund run by the legendary Paul Singer. The fund is secretive in its approach, but sources attribute a 15% annual net return to its main fund since inception in 1977, compared to 11% for the S&P 500. The firm started new positions in Riverbed Technology (RVBD), Autodesk, Inc. (ADSK), News Corp. (NWS), NVIDIA (NVDA) and sold 30%-40% of its positions in Delphi Automotive (DLPH) and NetApp (NTAP).
Abbreviated financial summaries and metrics for these securities are included below. Detailed analysis and recommendations require a subscription (more information at the bottom of the article).
Why go long Autodesk, Inc. (ADSK)?
Last week, Autodesk acquired Delcam a major player in the computer aided manufacturing (CAM) market. The acquisition is key to management’s goal to enter this growing market, which is also aligned with 3D printing. This acquisition will transform Autodesk from a design company to both a design and a CAM software business. ADSK was also able to use its offshore capital to pay for the acquisition, without having to repatriate it and pay taxes. In addition to design and CAM, the company also recently entered the simulation software business and has seen preliminary success there.
The Company also recently had its analyst day, where it revealed that it expects revenue to grow at a 12% CAGR (compound annual growth rate). More specifically, 20% of the growth will be from pricing, while the balance will be from growing its 2 million customer base by 50%.
What does Autodesk do?
Autodesk is a design software services company that serves customers in the architecture, engineering and construction; manufacturing; and digital media, consumer and entertainment industries. The Company’s sophisticated software products enable subscribers to experience their ideas before they are real. Customers are able to imagine, design and create their ideas by visualizing, simulating and analyzing real-world performance early in the design process by creating and manipulating digital prototypes. These tools allow customers to optimize and improve their designs, save time and money, improve quality, communicate intentions and foster innovation. Additionally, Autodesk sells a line of consumer products for digital art, personal design and creativity, and home design. These products are sold over the Internet and in various digital storefronts, including the Apple App Store and the Google Play Store.
More on Elliott Management
Paul Singer created Elliott Associates in January 1977, starting with $1.3 million from friends and family. In its earliest years, the firm focused on convertible arbitrage. However, since the 1987 stock market crash and early 1990s recession, the firm has focused primarily on distressed debt investing, and is therefore commonly referred to as a distressed debt or vulture fund. More recently, the company has been focused on activism.
Elliott is noted for its relatively high returns and low volatility. The New York Times has called Paul Singer ‘one of the most revered’ hedge fund managers on Wall Street. The firm is currently closed to new investors. As of mid-2008, Elliott had 175 employees in New York, London, Tokyo and Hong Kong.