This content is from: Portfolio

The Morning Brief: Elliott and Arconic Settle Ahead of Annual Meeting

Elliott will be able to engage with Arconic’s CEO search committee and meet with candidates during the selection process.

Elliott Management Corp. and Arconic reached a truce in their contentious battle that began after the company’s spinoff from Alcoa. Under the deal, Elliott, which owns a 13.2 percent stake in Arconic, will nominate three people to its board of directors: Christopher Ayers, Elmer Doty, and Patrice Merrin. Arconic will also nominate two individuals.

“We are pleased to have reached a constructive agreement with Elliott, our largest shareholder, and look forward to working collaboratively with Elliott to enable Arconic to realize the full potential of its great businesses,” the company’s board said in a statement. The company is currently looking to hire a new chief executive officer and a permanent chairman. One of the directors Elliott will nominate will join the CEO search committee. In addition, Elliott will be able to engage with the CEO search committee and meet with candidates during the selection process.

“Elliott greatly appreciates the support received from other Arconic shareholders throughout this contest, and we would like to express our profound gratitude to those shareholders,” said Dave Miller, senior portfolio manager at Elliott, in the joint statement. “We believe the governance improvements and substantial infusion of new perspectives and talent into the Board announced today … will successfully position Arconic to realize its immense potential.” In the future, the company plans to hold annual elections for directors and no longer have a provision requiring a supermajority shareholder vote. Arconic’s annual meeting is planned for this Thursday, May 25.

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Melvin Capital Management said that it more than tripled its stake in CarMax, to 9.72 million shares as of May 18. This works out to 5.1 percent of the largest used-car retailer. Melvin is headed by SAC Capital alumnus Gabriel Plotkin.

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Perceptive Advisors was the exclusive institutional investor to participate in the $25 million Series A financing of Xontogeny, a biotech accelerator which announced the close of a $15 million tranche. Joseph Edelman, chief executive officer of Perceptive, and chief investment officer Adam Stone will sit on the board of directors. Xontogeny plans to focus on the early development of pharmaceuticals and other technologies. The company was founded by Chris Garabedian, who was most recently president and CEO of Sarepta Therapeutics, a major holding of Perceptive.

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UBS raised its price target on hedge fund favorite Apple from $165 to $170 after lifting its estimates for sales of the upcoming iPhone 8 as well as its 2018 earnings estimates. At the end of the first quarter, the company was the fifth most widely held stock among hedge funds, with at least 136 holding a position, according to Goldman Sachs Group. The stock is already up 33 percent this year.

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