Will Elliott’s underperformance pressure lead to more aggressive activism at Medtronic? Given that Elliott is lagging the S&P 500 and facing investor scrutiny about its fees and returns, might they push harder for faster, more dramatic changes at Medtronic to demonstrate results and justify their performance?
Recent Financial Times Article:
https://www.ft.com/content/74631e4d-f841-4e9a-a770-6933189894f0
Article is paywalled so here is a summary:
Elliott Management, the $78 billion hedge fund founded by Paul Singer, is addressing investor concerns about whether its massive size is hurting performance after lagging behind market returns.
Key Points:
• Recent Performance: Elliott gained 4.7% (net of fees) in the first nine months of the year, compared to the S&P 500’s 15% total return
• Historic Milestone: For the first time in over 20 years, Elliott’s annualized returns since 1994 have fallen behind the S&P 500 (though it still beats the index since its 1977 founding)
• Size Defense: The firm insists its $78 billion in assets is an advantage, not a hindrance, attributing underperformance to “mistakes, problems with hedges, or market issues” rather than scale. However, it pledged to reduce assets if size becomes a barrier
• Growth Challenges: Assets have nearly doubled in five years, forcing Elliott to target larger companies. This makes it harder to find overlooked opportunities and easier for targets to mount sophisticated defenses
• Investor Concerns: Some investors question whether the firm’s high fees are justified given its recent underperformance compared to simply investing in the S&P 500
• Current Activity: Elliott remains active as an activist investor, recently taking stakes in Pepsi, BP, and Southwest Airlines, and is raising a $7 billion drawdown fund