Elliott hedge fund opens new positions in RVBD, ADSK, NWS, NVDA, Sold DLPH, NTAP – 13F Flash (A)
Elliott Management hedge fund’s new trades in 3Q 2013 (Part 1 of 6)
In this six-part series, we will go through each one of the positions Elliott traded this past quarter.
Elliott Management is a New York based $20 billion+ event driven and distressed hedge fund run by the legendary Paul Singer. The fund is secretive in its approach, but sources attribute a 15% annual net return to its main fund since inception in 1977, compared to 11% for the S&P 500. The firm started new positions in Riverbed Technology (RVBD), Autodesk, Inc. (ADSK), News Corp. (NWS), NVIDIA (NVDA) and sold 30%-40% of its positions in Delphi Automotive (DLPH) and NetApp (NTAP).
Abbreviated financial summaries and metrics for these securities are included below. Detailed analysis and recommendations require a subscription (more information at the bottom of the article).
Why go long Riverbed Technology (RVBD)?
Riverbed bought back over 3 million shares for $50 million last quarter, and still has $200+ million left in its buyback plan. In addition, the company was able to improve operating margins by 1.7% year-over-year. Fundamentally, the company trades at 2.5x forward revenue and is an attractive takeover target for technology companies that would like more exposure to WAN optimization products. Last year, for example, private equity firm Thoma Bravo paid 2.2x for Blue Coat Systems, a company with a less developed product suite than Riverbed.
Although the Company has significant revenue exposure to the Federal government (18% of sales), which is facing ongoing budgetary issues, last quarter it was able to hit revenue and earnings estimates, but slightly disappointed in its outlook. Consensus was $267 million in revenues and $0.23 in EPS, but the company reported $265 million in revenues and $0.26 in EPS. For the 4 th quarter, the company guided to $270-$276 million in revenues and $0.27 in EPS.
What does Riverbed do?
Riverbed Technology helps businesses improve the speed and reliability of their networks, by optimizing WANs, or Wide Area Networks. Historically, computing across WANs has been plagued by poor performance, IT complexity and high cost. Riverbed’s product portfolio enables organizations to optimize their IT infrastructure and get maximum return from their network, storage, and application investments. The Company does this by providing solutions that diagnose and cure IT performance issues. Riverbed’s complete family of performance products includes solutions for branch offices, mobile workers, private data centers, private clouds and cloud computing.
More on Elliott Management
Paul Singer created Elliott Associates in January 1977, starting with $1.3 million from friends and family. In its earliest years, the firm focused on convertible arbitrage. However, since the 1987 stock market crash and early 1990s recession, the firm has focused primarily on distressed debt investing, and is therefore commonly referred to as a distressed debt or vulture fund. More recently, the company has been focused on activism.
Elliott is noted for its relatively high returns and low volatility. The New York Times has called Paul Singer ‘one of the most revered’ hedge fund managers on Wall Street. The firm is currently closed to new investors. As of mid-2008, Elliott had 175 employees in New York, London, Tokyo and Hong Kong.
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