Look behind you, NetApp: Angry investor is coming for YOU
First Xyratex, then Emulex and Brocade... now Elliot's stalking a storage giant
Activist investor Eliott Management, of Emulex fame, always pushes to have its voice heard - especially when it thinks bosses of its "investment companies" don't put shareholders first. Now the fund has actually taken on storage giant NetApp.
According to a Bloomberg report, Elliott is pushing NetApp to change its board. We can only imagine exec chairman Dan Warmenhoven's volcanic reaction.
Apparently Elliott and NetApp have been talking for some weeks, with Elliott suggesting a new set of directors. The investor actually holds less than five per cent of NetApp's shares but may increase its holding.
Stifel Nicolaus analyst Aaron Rakers writes: "Elliott was listed as holding only ~1.151 million shares (0.3 per cent of stock/outstanding) as of 3/31/13 filings."
Why is NetApp vulnerable to this sort of exercise? Two words: shareholder value. The shares peaked at $60.60 on 11 February, 2011 and have been worth less than $40 for the past 12 months.
NetApp doesn't pay a dividend but has been re-purchasing its shares, as Rakers writes: "While we are somewhat suspect of NetApp’s willingness to initiate a dividend strategy, we do believe a more active return of cash to shareholders is warranted. NetApp exited its January 2013 quarter with a outstanding share repurchase authorisation of $1.033 billion."
NetApp shares jumped 6.5 per cent on the news of Elliott's involvement, to $38.51. The company's fourth quarter and full year results are being reported on 21 May next week. Expect fireworks in the earnings call. ®