Elliott Management Decreases Stake in Emulex Corporation (ELX)


Paul Singer‘s Elliott Management cut its activist stake in Emulex Corporation (NYSE:ELX). The fund’s current holding amounts to 3.28 million shares – 4.10% of the company’s total common stock outstanding. Previously, Elliott Management owned 4.38 million shares of Emulex.

Paul Singer

Based in Costa Mesa, California, Emulex Corporation (NYSE:ELX) is a provider of network connectivity, monitoring, and management hardware and software solutions that support enterprise, cloud, government, and telecommunications. In 2009, Broadcom Corporation (NASDAQ:BRCM), a US fabless semiconductor company operating in the wireless and broadband communication area,  attempted to purchase Emulex for $9.25 per share, offering 40.00% premium over the stock’s closing price on April 20, 2009, and subsequently for $11.00 per share on June 30. Both offers were rejected by Emulex’ board of directors.

Emulex Corporation (NYSE:ELX)’s shares currently trade at $5.11 per share, plummeting around 30.00% a few days ago after reporting worse than expected financial results (GAAP loss per share of $0.09) for the third quarter of 2014. In the same press release, Jeff Benck, the company’s Chief Executive Officer, said “Our team did a nice job of protecting profit in 3Q despite a softer demand environment among our OEMs and lack of predictability from NVP.  We remain squarely focused on capturing the growth opportunity inherent to traffic visibility. Within connectivity, we are not immune to near-term disruptions associated with strategic developments at our major customers and we have taken steps to position us to better weather this period of transition in the market.” In 2013, the company delivered losses of $0.06 per share and Free Cash Flows of $-5.00 million, trading at an Enterprise Value to EBITDA ratio of around 7.00. Emulex Corporation is estimated to generate earnings of $0.52 per share this year, analysts providing a 1 year target price of approximately $6.70.

Stephen V. Raneri‘s Lioneye Capital Management also holds a large position in Emulex Corporation (NYSE:ELX), the position amassing nearly 3.00 million shares. Led by Rishi Bajaj, Altai Capital is another fund, which recently decreased its activist stake in Emulex to 3.70 million shares, down from the previously held 4.77 million.

Managing $15.00 billion of capital for large institutional investors and wealthy individuals, Paul Singer invested more than 55.00% of the fund’s equity portfolio in the Technology and Basic Materials Sectors. Twenty-First Century Fox Inc (NASDAQ:FOX) is among the fund’s largest holdings, the position amounting to around 11.40 million shares of the company.