On September 9, 2019, activist shareholder Elliott Management Corporation issued a letter to AT&T Inc.'s (T) Board of Directors. In this letter, Elliott shares its thoughts on how T can improve its business and realize a historic increase in value for its shareholders.
Elliott believes T can achieve a $60+/share value by the end of 2021 through readily achievable initiatives such as increased strategic focus, improved operational efficiency, a formal capital allocation framework, and enhanced leadership and oversight.
In my July 28, 2019 AT&T, Inc (T) article I explained why I have invested in the company for the long-term even though I could have potentially generated superior investment returns by investing in other companies.
Subsequent to that article, T has come under fire from Elliott Management Corporation. On September 9th, Elliott sent the following letter to T’s Board of Directors; a huge ‘Thank You’ to Badre S., a follower of this blog, who sent me a link to this letter.
T’s statement on Elliott Management’s Letter to T’s Board of Directors can be found here. I look forward to reading T’s response to Elliott’s recommended changes.
While Elliott’s $3.2B (common stock and economic equivalents) stake in T is certainly significant from my perspective, we need to put in context that its stake is just in excess of 1% of T’s September 13th ~$277B market cap. Given this, I think Elliott will have limited ability to force change.
Although Elliott’s letter has resulted in a very recent marginal boost to T’s share price, I am not optimistic T will institute all the recommended changes Elliott contends could lift the stock to $60+/share by the end of 2021.
For now, I stand by my ‘Final Thoughts’ in my July 28th article. I will not speculate by acquiring additional shares and will restrict any increase in my T exposure to the shares acquired through the automatic reinvestment of dividends.
Should you not have any exposure to T, I would refrain from acquiring T shares. In my opinion there are other companies out there which I think will provide superior long-term returns.
I wish you much success on your journey to financial freedom.
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Disclaimer: I have no knowledge of your individual circumstances and am not providing individualized advice or recommendations. I encourage you not to make any investment decision without conducting your own research and due diligence. You should also consult your financial advisor about your specific situation.
Disclosure: I am long T.
I wrote this article myself and it expresses my own opinions. I am not receiving compensation for it and have no business relationship with any company whose stock is mentioned in this article.