Shares of AT&T were up more than 10% this morning.
All after Paul Singer’s Elliott Management disclosed a new $3.2 billion stake in the company, and outlined plans that could see the telecommunications giant at $60 a share.
“The purpose of today’s letter is to share our thoughts on how AT&T can improve its business and realize a historic increase in value for its shareholders,” Elliott Management stated, as quoted by CNBC. “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.”
In a letter to AT&T, Elliott Management argues that stock returns have been disappointing to shareholders, that merger integration and operational issues are responsible for the underperformances, that its assets are trading at a historic discount, and that AT&T can unlock value by improving management and operational performance.
Elliott also noted that, “Over the past ten years, AT&T – a “bellwether” in all senses of the word – has not only failed to keep pace with the broader market, but has actually underperformed by over 150 percentage points,” as also quoted by CNBC.
However, should AT&T fix these issues, Elliott argues that it could create sizable value.
Technically, the stock is looking much healthier.
While the stock did slip from a 2016 high of $38 to a 2019 low of $26, it has begun to stage quite a rebound. In fact, AT&T last traded at $36.25.
Should the company take Elliott Management’s advice, it could see $60, as noted.