Elliott Management’s expertise in technology sector
Earlier in this series, we discussed how LifeLock’s acquisition could enhance Symantec’s (SYMC) growth prospects. Let’s explore the role of hedge fund management company Elliott Management.
The tech sector seems to be Elliott Management’s strength. In Elliott Management’s words, “Within the technology sector, we have made approximately three dozen active investments and have successfully identified value-creating opportunities at companies,” listing Citrix Systems (CTRX), Informatica, Brocade Communications Systems (BRCD), Riverbed Technology (RVBD), Juniper Networks (JNPR), and Blue Coat Systems as examples.
Elliott Management has had a considerable influence over the Dell-EMC (EMC) deal, which is the biggest acquisition to date in the technology space. Elliott Management’s strategies usually revolve around taking a stake in a company and then devising ways to maximize shareholder returns. The majority of these companies find it difficult to report revenue growth that impacts their profitability and stock prices. Elliott Management usually exerts considerable pressure on the companies either to change their capital structure or strategy, spin off, or sell to a private equity firm.
Elliott Management’s stake in Symantec
Elliott Management took on a substantial stake in Symantec in February 2016. Considering the hedge fund’s past success in the tech space, Symantec’s stock surged by ~9% on the news. Elliott Management urged Symantec to “explore its options.” As a result, Symantec announced the acquisition of Blue Coat Systems in June 2016, its largest acquisition in more than a decade. Earlier, we highlighted that Elliott has a stake in Blue Coat.
Therefore, strategically, Elliott Management spurred the sale of Blue Coat to Symantec, thereby strengthening and expanding its Enterprise Security segment’s offerings and presence in the cybersecurity space.
It then influenced Symantec to consider a strategic acquisition to boost its personal computer–dependent Consumer Security segment. The result was LifeLock’s buyout by Symantec.
The above presentation shows that most of Elliott Management’s software targets have ended up being bought at attractive prices. Later in this series, we’ll discuss how LifeLock’s sale benefited Elliott Management.