Activist hedge fund Elliott Management, fresh from a series of campaigns targeting the management at Compuware, Hess and other companies, has announced it has accumulated 6.2 percent of computer network equipment maker Juniper Networks.
Now Elliott wants stock buybacks, cost-cuts and other measures to boost Juniper’s stock price by 70 percent.
‘Juniper’s new CEO along with its existing management team and board have a unique opportunity to immediately unlock significant value at the company through three straightforward and much-requested courses of action,’ says Jesse Cohn, portfolio manager at Elliott, in a statement to investors.
‘Investors and Street analysts have been calling for Juniper to implement these value-creation initiatives for years, and we believe the three-pronged approach laid out in today’s presentation would be very well received.’
The presentation, made to investors via www.new-juniper.com, calls for a cut of $200 mn in operating expenses at Juniper in 2014, partly by scaling back wages and research and development costs.
It further calls for a $2.5 bn share repurchase in 2014 followed by a $1 bn repurchase in 2015, and a quarterly dividend of $0.125 per share. Elliott also wants Juniper to halt its program of takeovers and review its existing businesses, with a particular emphasis on the security-related business Elliott says is ‘underperforming’.
‘Elliott believes these initiatives can collectively result in a stock price of $35-$40 per share, which is up to 70 percent above the current price,’ the hedge fund says in its statement. ‘Elliott looks forward to working constructively with management and the board and thanks them for consideration of these thoughts.’
In the first working week of this year, Elliott, which has $23 bn in assets under management, won two seats on the board of Compuware in exchange for temporarily calling off the hedge fund’s fight to seize control of the board.
On January 8, Elliott’s extended feud with Hess Corp prompted the oil company to prepare to spin off its gasoline stations to head off a proxy battle. On the same day, Elliott made a $3.1 bn bid for control of computer networking company Riverbed Technology in the hopes of sparking a bidding war for the company.
