Singer's Elliott Management Takes 8.1% Stake in Mentor Graphics

Sep 29 2016 | 11:58pm ET

Paul Singer’s activist hedge fund Elliott Management has doubled its stake in electronics company Mentor Graphics, going from the 4% ownership disclosed in June to 8.1%.

The hedge fund described Mentor as “deeply undervalued” and called on the company to increase shareholder value and explore strategic alternatives, according to regulatory filings. 

Elliott, famous for a 15-year tangle with Argentina over defaulted bonds, an attempt to block a merger between two Samsung-related businesses in South Korea, and involvement in the recent InBev merger, Elliott is also a well-known activist in technology circles. It has led recent campaigns involving Qlik Technologies, Riverbed, Informatica and Compuware, all of which were eventually sold to private equity buyers following Elliott’s involvement. 

Oregon-based Mentor has dealt with activist shareholders before, dealing with famed investor Carl Icahn in a bruising proxy fight in 2011 that resulted in the billionaire activist securing three board seat. Icahn closed the position earlier this year. 

The overall semiconductor industry has been consolidating over the past few years, with several larger players merging and NXP Semiconductors entering preliminary discussions with industry giant Qualcomm regarding a potential merger, according to Reuters. 

As often happens when well-known activists enter well-known companies, news of Elliott’s involvement spiked Mentor’s stock in afterhours trading, pushing the share price up around 6.5% on Thursday and thus discounting at least some of the missing value Elliott envisions. 

Singer founded Elliott in 1977 and has since become one of the world’s most prolific activist investors. The firm manages approximately $27 billion through a number of investment vehicles active in debt, equities, commodities, currencies and various other asset classes.

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