Elliott Management U-turns to reinvest in AT&T

In November last year, Elliott Investment quietly divested of their $3.2 billion stake in AT&T. Now, just four months later, it seems that they want back in on the action – albeit on a seemingly smaller scale.

 

The company had initially purchased the stake in the operator in Q3 of 2019, quickly taking aim at AT&T’s raft of mergers left it one of the world’s most heavily indebted companies, driving down the stock value. In September of that year, investors from Elliott sent AT&T a public letter in which they criticised the companies M&A strategy as well as other elements of the business’s management.  

 

AT&T responded by saying they would work with Elliott to make significant changes and reduce the company’s debt. AT&T’s long time CEO Randall Stephenson retired in the middle of 2020, replaced by John Stankey, previously the company’s COO. The operator continued to streamline their operations, cutting further jobs; in fact, the company reduced their staff by around 42,000 over the past three years.

 

But perhaps most crucially, AT&T said it would initiate a share repurchasing strategy. In the March of 2020, AT&T said it would repurchase $4 billion-worth of shares during Q2, aiming at driving up the price of its remaining shares. However, this plan was ultimately put on the back burner as the coronavirus pandemic struck.

 

Nonetheless, the measures taken by AT&T were seemingly enough to make offloading the stock suitably attractive to Elliott, who fully divested in the November of 2020.

 

Now, Elliott is seemingly reinvesting in AT&T. However, where Elliott’s previous investment was valued at over $3 billion, this new stake appears instead to be around $100 million, only around 1% of Elliott’s total portfolio. The reasoning behind the new investment is unclear, but the lack of scale means Elliott will not have the same scale of influence on AT&T’s strategy moving forward.