EMC-Dell talks highlight Elliott's clout across tech sector

Fri Oct 9, 2015 6:33am EDT
 
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By Michael Flaherty

(Reuters) - Acquisition talks between EMC Corp. and Dell Inc. are significant not just for the size of the potential transaction but also for a common element behind this and dozens of other major tech deals over the past decade: Elliott Management.

The possible tie-up between the $50 billion storage company and the privately owned computer maker, which surfaced on Wednesday, would be the largest tech deal ever and would solidify Elliott's reputation of sparking key and sizable transformations throughout pockets of the industry.

While other famous activists such Nelson Peltz's Trian Partners and Bill Ackman's Pershing Square have steered cleared of technology investments because of their volatile nature, Elliott, run by billionaire hedge fund manager Paul Singer, has made a name for itself in the technology sector.

Elliott has agitated for changes at EMC since 2014, and on Thursday the hedge fund announced yet another tech-focused position and plan: it disclosed stakes in U.S. video-conferencing equipment maker Polycom Inc and Canadian telecoms provider Mitel Networks Corp and pushed for a combination of the two.

Elliott's aggressive tech investing also stands out for its ability to lay the groundwork for wider consolidation in the section of the industry it targets.

"They've been able to come into companies that have faced challenging markets and been able to drive change," said Macquarie analyst Rajesh Ghai.

The multi-strategy hedge fund founded by Singer in 1977 has pursued more than 40 campaigns aimed at tech companies in the 11 years since its star tech investor, Jesse Cohn, pioneered this arm of the firm.

Among the keys to Elliott's success with technology investments is that Cohn, 34, is a former programmer who has built a team of industry experts. Cohn's main approach to tech investing, like that of the broader Elliott philosophy, is to find under-valued companies in struggling sectors and push for changes.   Continued...

 
Paul Singer, founder and CEO of hedge fund Elliott Management Corporation, speaks at the Sohn Investment Conference in New York, May 8, 2013. REUTERS/Brendan McDermid