Elliott Buys More Than $200 Million Twitter Shares On Dip
(Bloomberg) -- Elliott Investment Management has increased its stake in Twitter Inc. following a dramatic sell-off of the social media company’s shares after it reported a sluggish start to the year last week, according to people familiar with the matter.
The New York-based hedge fund run by billionaire Paul Singer has increased its stake in Twitter by more than $200 million and continues to buy after the sell-off began Friday, the people said, asking not to be identified because the matter is private. Elliott disclosed a stake in Twitter last year, though it’s not clear how big it currently is.
Twitter fell more than 15% on Friday on sluggish digital ad sales in the first quarter and revenue guidance that rattled investors. Management said the declines were the result of some advertisers pulling back their spending because of the riot at the U.S. Capitol on Jan. 6. Paring earlier losses, the stock was down 1.8% to $54.21 at 12:40 p.m. in New York on Monday, giving it a market value of about $43 billion.
Representatives for Elliott and Twitter declined to comment.
Elliott has shared its views with several Wall Street analysts since Twitter reported results on Friday, arguing the sell-off is overdone, the people said. Elliott likens the decline to similar swings in the company’s stock after advertisers pulled back spending during the Black Lives Matter protests last year, and when Twitter banned former U.S. President Donald Trump, the people said. The investment firm continues to believe Twitter is still on track to reach its goal of doubling annual revenue by 2023, as outlined at an analyst day in February, the people said.
Elliott has not reported the total size of its stake in Twitter since February 2020, just before it reached an agreement with the company for a seat on its board. At the time, it said it had economic exposure equivalent to roughly 30.1 million shares, in stock and options, that would be valued at roughly $1.6 billion Monday. It is required to hold a 2% stake in the company in order to keep its seat under the terms of the agreement.
Elliott is not the only one seeing an opportunity. Cathie Wood’s Ark investment funds purchased 1.3 million shares of Twitter during the sell off, according to an investor update.
Doug Anmuth, an analyst with JPMorgan & Chase, said in a note to clients Friday that investors should buy on the pullback. He said he believed Twitter was well positioned to benefit from events and product launches with the economy opening up more in the coming quarter.
Elliott first disclosed its stake in the company last year as part of an effort to replace Chief Executive Officer Jack Dorsey and force Twitter to make other changes to its corporate structure. The parties eventually reached an agreement that saw three new directors appointed to its board, including Elliott partner Jesse Cohn, and more aggressive financial targets adopted. Dorsey kept his job after a board review.
Cohn has since said he plans to step down from the board once a replacement is found. Total shareholder returns have been roughly 66% since Elliott first disclosed its stake in February 2020, according to data compiled by Bloomberg.
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