Singer's Elliott Management Takes 6.4% Stake in 'Undervalued' Alcoa

Nov 23 2015 | 4:50pm ET

(Reuters) - Hedge fund Elliott Management disclosed a 6.4 percent stake in "undervalued" Alcoa on Monday, sending the aluminum producer's shares up as much as 6.3 percent.

Elliott, run by activist investor Paul Singer, sees opportunities for Alcoa to improve its profit margins, a source familiar with the matter told Reuters.

"Elliott advised (Alcoa) of their ownership of shares several weeks ago, shortly after we announced the separation of our upstream and value-add businesses," Alcoa spokeswoman Monica Orbe told Reuters.

"Since then we have had constructive discussions with Elliott."

Alcoa said in September it would break itself into two companies, separating its faster-growing plane and car parts business from its traditional smelting operations as shareholders seek higher returns amid a slump in commodity prices.

Alcoa's margins have been compressed by a global glut of aluminum, which has hit prices and battered the company's stock.Up to Friday's close, Alcoa's stock had fallen 45 percent this year, compared with a 37 percent decline in the Dow Jones U.S. Basic Resources index.

Elliott's stake, disclosed in a regulatory filing, makes it the second-biggest shareholder in Alcoa after investment manager Vanguard Group Inc, which had an 8.21 percent stake as of Sept. 30, according to Reuters data.

Alcoa shares were up 4.7percent at $9.09 in late morning trading.


In Depth

PAAMCO: Will Inflation Deflate the Asset Bubble?

Jan 30 2018 | 9:49pm ET

As the U.S. shifts from monetary stimulus to fiscal stimulus, market pricing should...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Boost Hedge Fund Marketing ROI By Raising Your ROO

Feb 14 2018 | 9:57pm ET

Tasked with delivering returns on client capital, a common dilemma for many alternative...