On a recent Schedule 13D filing Paul Singer’s Elliott Management disclosed, along with its affiliates including Elliott Associates and L.P Elliott International Capital Advisors Inc, now own about 11.1% of Arconic Inc’s (NYSE:ARNC) total float. The fund believes that the company is “dramatically” undervalued after its recently spun off Alcoa Corporation (NYSE:AA). The fund thinks that the newly created finished productions company is an attractive investment opportunity. The filing also said that the fund wants to engage in discussions with the company to explore opportunities to improve operating performance and increase shareholder value.
Back in 2015, Alcoa announced that it will split into two separate publically traded companies to detach its traditional aluminum business from swiftly growing plane and car parts business.
The 72-year old billionaire and activist investor Paul Singer is following Arconic Inc (NYSE:ARNC) since its birth. Last month, Singer’s fund increased its position in the company from 7.5% to 9%, citing same reasons as explained in the latest filing. Mr. Singer also managed to seize three director seats in Alcoa’s board prior to the company’s split. But it seems the billionaire will have to do more to get what he wants as Arconic’s board is up for staggered elections, which means any investor cannot get on the steering wheel of the board in one annual election. Also, in order to convene a special stakeholders meeting, investors need to have at least 25% of the company’s shares. Things could also escalate and result in a proxy battle as activist funds Highfields Capital Management and Orbis Investment Management are also stakeholders of Arconic Inc (NYSE:ARNC).
Argus recently upgraded Arconic to ‘Buy’ from ‘Hold’ with a price target of $25. Goldman Sachs started covering Arconic (NYSE:ARNC) with a ‘Sell’ rating and a price target of $15.00.
Famous Wall Street expert Jim Cramer and Chief Investment Strategist of finance publication ‘The Street’ Jack Mohr recently said that they find Arconic more attractive than Alcoa. The experts said in a report that the company will face a few problems as it solidifies its investor base and works to lighten its debt, but the company has strong growth prospects in the near future. Jim Cramer’s Action Alert Plus Charitable Trust owns shares of Arconic (NYSE:ARNC).
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