Elliott Management Shareholder Letter Equity Highlights

Elliott Management Corporation recently issued its 3Q 2014 shareholder letter. Below are some highlights from the letter on publicly traded companies in which Elliott holds an ownership position. 

Hess Corporation HES
“Despite trading down modestly, Hess outperformed its peers during the quarter. We continue to believe the company is priced at a discount to both intrinsic and its peers, in some cases by a material margin. We expect this gap to continue to close as additional restructuring steps are taken under the leadership of the newly constituted board, and as Hess seeks to achieve an inflection point in production growth in its third and fourth quarter results.”

EMC Corporation EMC
“EMC has developed a high-quality set of assets, including an 80 percent stake in VMware, Inc., a $40 billion market cap company that is the leader in virtualization software for data centers. Though EMC is a leader in numerous markets with very good products, EMC's stock price has deeply underperformed its proxy peers. The driver of this underperformance is EMC's unusual corporate structure, which management calls "The Federation." This structure, which may have served EMC well years ago, no longer has demonstrable benefits. The upside to EMC shareholders of a tax-free spin-off of VMware would be enormous, potentially exceeding 40 percent. Our constructive dialogue with EMC has enabled us to communicate to the company our views on the VMware spin-off and other pathways to shareholder value creation, and we look forward to continuing this dialogue in the months ahead.”

Juniper Networks, Inc. JNPR
“Elliott remains constructive on the position and believes that Juniper will weather the temporary slowdown and emerge with a leaner cost structure and a much smaller share base as a result of aggressive buybacks. We think that Juniper is undervalued at current levels, and we have also been in dialogue with management and the board regarding actions that would further drive shareholder value.”

Riverbed Technology, Inc. RVBD
“During the quarter, Elliott continued its campaign to encourage Riverbed to run a sales process. Until recently, the company had defended its decision not to engage with interested buyers on the basis of its plan to grow revenue 10 percent in 2014. In July, however, Riverbed disclosed that it would fall short of this target, adding strength to our argument in favor of a sale of the company. Subsequent to quarter-end, Riverbed again missed its guidance and announced that it would now be engaging with buyers, a decision we commended. Elliott intends to participate in the sale process, as we reaffirmed our offer of $21 per share.”