Elliott Fund Takes $3.2B Stake in AT&T, Criticizes Strategy

Said stock should be worth $60 a share
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Huge investment fund Elliott Management sent a letter to AT&T’s board that said it has acquired a stock in AT&T worth $3.2 billion and criticized its strategic focus and execution since acquiring Time Warner.

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In the letter, first reported on by CNBC, Elliott said AT&T’s stock could be worth as much as $60 a share. The stock closed Friday at $36.25, but was up sharply in Monday morning trading.

Related: Hedge Fund Buys Nielsen Stake And Urges Company to Sell

The criticism of AT&T resonated with tweeter-in-chief in the White House, who took to social media to blast AT&T’s CNN unit, which became part of AT&T when it bought Time Warner--a deal opposed by the Justice Dept.

“We firmly believe that AT&T’s M&A strategy has not only contributed directly to its profound share price underperformance, but has also caused distractions that have contributed to the Company’s recent operational underperformance,” Elliott said in the letter to AT&T’s board.

“AT&T has yet to articulate a clear strategic rationale for why AT&T needs to own Time Warner,” Elliott added.

“Elliott believes that through readily achievable initiatives — increased strategic focus, improved operational efficiency, a formal capital allocation framework, and enhanced leadership and oversight — AT&T can achieve $60+ per share of value by the end of 2021,” the letter said.

“We look forward to engaging with Elliott. Indeed, many of the actions outlined are ones we are already executing today,” AT&T said in a statement. “AT&T’s Board and management team firmly believe that the focused and successful execution of our strategy is the best path forward to create long-term value for shareholders.”

In tweets, Donald Trump said it was “great news” that an investor was putting pressure on AT&T and CNN. “. . .perhaps they will now put a stop to all of the Fake News emanating from its non-credible “anchors.” Also, I hear that, because of its bad ratings, it is losing a fortune,” one tweet said.

Last year, Elliott Management bought a stake in Nielsen and urged that he company sell parts of its business. Nielsen began a strategic review of its businesses that the company said is expected to be completed before the release of its third-quarter earnings.

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