The Morning Brief: Elliott Boosts Alcoa Stake, Wants to Chat

Paul Singer’s Elliott Management boosted its stake in activist target Alcoa to 7.4 percent, stressing that the stock is “dramatically undervalued.” In a regulatory filing, the New York hedge fund firm applauded the aluminum maker’s plan to split into two companies — its parts manufacturing business and core aluminum operations — and said it wants to discuss with management and the board that transaction as well as other ways to boost the stock price. In the filing, Elliott stresses it currently does not have a plan or a proposal. But it does say it wants to discuss potential changes in operations, management, the certificate of incorporation and bylaws, board composition, ownership, capital, corporate structure, dividend policy, strategy and other plans.


Shares of SunEdison surged 2.6 percent after rising a lot more earlier in the day on news that David Einhorn’s Greenlight Capital will be awarded a seat on the board of the reeling renewable energy company. After the market closed, Greenlight disclosed in a regulatory filing that it raised its stake in the company to 6.8 percent, including the conversion of convertible senior notes and warrants. It also said it held discussions with the board from January 15 to January 25 and called on the company to appoint an independent director designated by Greenlight. However, there is no mention of a deal to award a board seat to such a director. The hedge fund firm also said it requested that SunEdison amend its bylaws so that it is unable to issue equity and equity-linked securities over the next two years without a supermajority vote of the board. “To date, no understanding has been reached between Greenlight and the company” related to these issues, the firm states in a regulatory filing. However, Greenlight did say it would evaluate its investment in the future and may seek further communication with the board and/or senior management or communicate with other shareholders or third parties. The one-time high-flying stock collapsed last year, making it one of three huge losers last year for Greenlight.


Viking Global Investors has made another big energy bet. The Greenwich, Connecticut hedge fund firm, cofounded by Tiger Cub O. Andreas Halvorsen disclosed that it owns 6.8 percent of Range Resources Corp., an independent oil and gas exploration and production company. Viking did not own any shares of the company at the end of the third quarter. We reported last week that Viking disclosed owning 7.5 percent of Cabot Oil & Gas and 9.2 percent of Southwestern Energy.


Remember when investors cared so much about the dire financial risks of Greek debt? Well, very quietly on Monday Standard & Poor’s upgraded the credit rating on Greece to B- from CCC+, noting the government is “broadly complying with the terms” of its 86 billion euro ($93.35 billion) financial support program financed by eurozone member states. “In particular, by the end of March we expect a compromise to be reached on pension reform that will balance the government’s preference to raise social security contributions and consolidate the separate pension funds into a single system, with creditors’ and the IMF’s focus on spending cuts to narrow an unsustainably high pension deficit,” S&P adds in the report.

Managed futures funds declined by 1.19 percent in December, putting their average loss for the year at 1.43 percent, according to the Barclay CTA Index. “European Central Bank easing in December fell short of investor expectations, and markets promptly registered disappointment with sharp trend reversals in European equities, interest rates and the euro,” says Sol Waksman, founder and president of BarclayHedge, in a press release.