AT&T Targeted by Elliott Management

Elliott Management, a top activist shareholder firm, disclosed Monday that it has taken a $3.2 billion stake in AT&T. In a letter to AT&T’s board, Elliott Management partner Jesse Cohn and associate portfolio manager Marc Steinberg wrote that AT&T’s stock could potentially surge to above $60 a share by 2021 if the company “increased strategic focus, improved operational efficiency” and “enhanced leadership and oversight.” That would be a more-than 65% increase from Friday’s closing price of $36.25. Shares of AT&T jumped more than 4% in early trading to around $38 a share.

Elliott wants AT&T to sell many of its non-core businesses that are “distractions and should not be part of the portfolio,” proposing AT&T discuss spinning off DirecTV, its Mexican wireless business, and several other operations. “Any assets that do not have a clear, strategic rationale for being part of AT&T should be considered for divestment,” Elliott said. AT&T has purchased several large assets over the years, including its $85 billion purchase of Time Warner, which it completed last year after a lengthy court battle with the US Department of Justice.

“This is a great American brand, and great American brands can go off the rails and come back on the rails and Elliot has a good track record,” Michael Antonelli, Market Strategist with Baird PWM, shared with Fox’s Charles Payne on “Making Money with Charles Payne” today on FOX Business. “Activist investing is still happening, Elliot is still taking an active stake and that is good for the market in general, I think that is a good thing.”

Elliott took issue with some aspects of how WarnerMedia has been run after the AT&T deal closed, saying that “there is still confusion over strategy and a growing sense that AT&T doesn’t have a plan” — particularly with regards to the HBO cable network and streaming media. AT&T is set to release HBO Max, its streaming play, early next year. Elliott also noted that WarnerMedia has “suffered from alarming executive turnover.” But there was no specific mention of CNN whatsoever in Elliott’s letter to AT&T.

Todd “Bubba” Horwitz