Updated on December 29th, 2020 by Nikolaos Sismanis
Founded by Paul Singer in 1977, Elliott Management is one of the oldest fund managers with uninterrupted operations. As of its latest filing, the fund had around $73 billion of assets under management (AUM). While most of these assets comprise of financial derivatives, nearly $9.5 billion is allocated to U.S. public equities.
Elliott Management is legendary within the investing community, not only for its long history of continuous success but also for its humble beginnings, including launching with just $1.3 million from friends and family. The company is based in New York but it also has operations in London, Hong Kong, and Tokyo.
Investors following the company’s 13F filings over the last 3 years (from mid-November 2017 through mid-November 2020) would have generated annualized total returns of 9.93%. For comparison, the S&P 500 ETF (SPY) generated annualized total returns of 12.20% over the same time period.
Note: 13F filing performance is different than fund performance. See how we calculate 13F filing performance here.
You can download an Excel spreadsheet with metrics that matter of Elliott Management’s current 13F equity holdings below:
Keep reading this article to learn more about Elliott Management.
Table Of Contents
- Introduction & 13F Spreadsheet Download
- Elliott Management’s Culture And Investment Strategy
- Elliott Management’s 10 Largest Public-Equity Investments
- Final Thoughts
Elliott Management’s Culture And Investment Strategy
Elliott believes that to achieve its goal of generating consistent returns for its investors, there are several elements for the fund’s investment and risk-management activities that are vital.
These elements include:
- An opportunistic trading approach
- Identification and creation of value
- Effective liquidity management, and
- Managing operational and counter-party risk
The fund applies a multi-strategy trading approach that incorporates a broad spectrum of strategies, including but not limited to:
- Distressed securities
- Traditional equity opportunities
- Arbitrage and commodities trading
- Various debt structures
- Portfolio volatility protection
- Private equity and credit, and
- Real-estate-related securities
Elliott will regularly take a leading role in event-driven situations to generate value or manage risk. For example, in May 2018, Elliott Management won a legal battle to control 2/3 of Telecom Italia’s board seats.
Elliott Management’s 10 Largest Public-Equity Investments
While the fund’s past-three-year performance may seem a bit underwhelming compared to the returns of the overall market, it’s important to remember that the fund utilizes a number of strategies as named above. As a result, its public-equity performance is not accurate to the performance of the fund itself.
Still, the company’s largest stakes in public equities are noteworthy, as these companies represent investable opportunities in which Elliott has identified profitable opportunities.
Source: Company filings, Author
Howmet Aerospace Inc. (HWM)
Howmet Aerospace provides superior engineered solutions for the aerospace and transportation industries. The company manufactures jet engine components, aerospace fastening systems, and mission-critical applications to be used both in defense and commercial aircraft. While the company’s defense operations have remained robust, powered by multi-year contracts with governmental entities, its commercial segments have suffered significantly due to COVID-19. The stock is Elliott’s largest single-stock investment, occupying around 28% of its public equity portfolio.
Due to Boeing 737 Max’s issues and canceled orders from airlines for additional planes due to the pandemic, demand for Howmet’s plane components has dramatically declined. Thankfully, the company has remained profitable due to its defense backlog, though management cut the dividend to preserve liquidity.
At its current stock price of around $27.76, the company trades at around 25 times its under-normal-conditions earnings, which indicates that shares are still trading at relatively fair levels despite their recovery rally. Still, COVID-19 remains active, and the aviation industry’s resumption to normality remains unclear. Therefore, new investors must be aware of such risks.
Elliott holds approximately $963 million worth of shares, owning around 8.0% of the company, which displays the fund’s active involvement goals. The position remained unchained as of Elliott’s latest 13F filing, signaling that the fund remains positive on the company’s long-term story, despite the recent challenges.
Marathon Petroleum (MPC)
The energy sector has had a rough past few months, as the pandemic caused a massive decline in the aviation and transportation industries. While most companies in the sector cut their distributions due to deteriorating financials, Marathon Petroleum has sustained this year’s increased dividend, as its higher exposure in midstream services has helped maintain a profitable bottom line.
Shares currently yield 4%, which is one of the highest in the sector right now. Elliott kept its position steady during the quarter, which displays confidence for the company’s future. Considering Elliott’s position in Marathon and Howmet aerospace, the fund possibly expects a quick and positive outcome out of the pandemic.
Elliott’s third-largest individual stock holding is eBay, in which the fund holds around half a billion dollars’ worth of equity. Despite the stock’s rally during the previous quarter, management held every single share during Q3, which has resulted in further gains amid the stock rally. Shares currently trade near all-time highs, as e-commerce has been boosted by COVID-19. Flipping all sorts of products online during the staying-at-home economy has also assisted with growing sales.
Despite their current seemingly high levels, shares remain attractively priced, with a forward P/E of around 14.7. Further management has been executing aggressive buybacks, which should keep on delivering long-term shareholder value creation, powered by eBay’s consistently positive bottom line.
The graph below displays eBay’s total active buyers per quarter, which displays continuously increased volumes for the company’s market place.
Unlike the energy sector mentioned earlier, the social media giants have been posting record sales, attracting huge traffic levels due to people spending more time inside as a result of the pandemic.
Twitter has had more challenges than its competitor Facebook (FB) in effectively monetizing its user base. However, with analysts expecting improving financials amid Twitter’s potential plan to roll out a subscription service, the stock is currently trading near a 5-year high, above $54. Elliott kept its stake in Twitter constant, sharing such bright expectations for its future as well. It’s worth noting that the fund sold the entirety of its Facebook position during the quarter, which was previously included in its top 10 holdings.
Arconic Corporation (ARNC)
Arconic Corporation produces and sells aluminum sheets, plates, extrusions, and architectural products globally. As industrial output and construction activities have been lagging during the pandemic, the company’s revenues have been hit hard, with Q2 being a money-losing quarter and its Q3 being barely profitable.
Elliott’s purchase of around 10.3 million shares was initiated in Q2 of 2020, as shown in the fund’s 13F filing, and is likely one of the “distressed-equity” situations that the fund specializes in. Arconic shares have been rallying higher over the past few months, because the company’s IPO in the midst of pandemic had already priced shares at an incredibly depressed valuation.
Elliott holds around 9.5% of the company’s outstanding shares, which could involve the fund having an active role in management, as one of its strategies aims to achieve.
Uniti Group Inc. (UNIT)
Uniti, an internally managed real estate investment trust (REIT), which owns 6.7 million fiber strand miles and other communications real estate throughout the United States. You can see our full REIT list here.
The company is one of Elliott’s few meaningful real estate positions, and its stake is entirely new, initiated in Q3-2020.
Uniti is Elliott’s second-most significant stock in terms of its dividend yield as well, which currently stands at around 5.55%. This makes Uniti a high-dividend stock.
The dividends should provide ample cash flows for Elliott to allocate to its other investments, or towards more shares of Uniti.
Equinix, Inc. (EQIX)
The unstoppable data center REIT that is Equinix is Elliott’s 7th-largest holding and second most significant real estate position. As with Uniti, Elliott initiated its Equinix position during the last quarter. The stock is one of the highest quality in its industry, showcasing a AAA-balance sheet, consistent growth, and arguably the most competent management in the industry. As a result, however, shares have been trading at a great premium, currently yielding just around 1.5%, which is one of the lowest among REITs.
Cubic Corporation (CUB) & Tesla (TSLA)
Elliott’s top 10 holdings include another two entirely new positions, this time in the industrial sector. The fund purchased a stake worth approximately $97 million in Cubic, which specializes in payment and information technologies and services for intelligent travel solutions.
Additionally, the company purchased a $91 million stake in Tesla, which is quite surprising considering the stock’s out-of-this-world valuation. The two stocks account for nearly 6% of Elliott’s total holdings and its only notable exposure in the industrial sector.
Last September, Elliott hit the news when the company reported it had acquired a $3.2 billion stake in AT&T. Today, the company owns just around $86million worth of shares, as the fund’s commitment to what it previously was a high conviction pick didn’t last long.
AT&T is a controversial company. Some investors love it, while others hate it. In any case, the company is a cash cow, paying a 7.3% dividend yield, while also being a 36-year Dividend Aristocrat. You can see the entire Dividend Aristocrats list here.
Elliott Management has had an outstanding run. From humble beginnings, the fund has grown into one of the world’s biggest, all while led by the same manager since its inception, Paul Singer.
Considering that the fund utilized multiple strategies at once, a relatively small part of its AUM is allocated towards individual public equities. However, the relatively small sample of stocks is enough to showcase the company’s strategy of investing in distressed equities and taking relatively sizeable stakes in companies to have some sort of active control on their board.
Some of their holdings are quite risky, while others may require a combination with the fund’s various derivatives to pay off. Still, investors can get a decent look at which companies the fund is fond of and potentially consider replicating as well.