The Morning Brief: Elliott Sees Another Settlement

February 14, 2017   Stephen Taub

NRG Energy forms a business review committee under a cooperation agreement with Elliott and Bluescape Energy.

Paul Singer’s Elliott Management, whose activist group has been especially busy of late, settled with another company: NRG Energy. The power generation company announced on Monday a so-called cooperation agreement with Elliott, which owns 6.9 percent of its common stock, and private investment firm Bluescape Energy Partners, which owns 2.5 percent of the shares. Under the deal, two NRG directors are retiring from the board. In addition, Bluescape executive chairman C. John Wilder and Barry Smitherman, former chair of the Public Utility Commission of Texas, have been appointed to the board. NRG also created a five-person ad hoc committee, which will work closely with the board and management to "comprehensively review" and make specific recommendations to the board in four key areas, including operational and cost excellence initiatives, potential asset sales, capital structure and other broader initiatives. "We are confident that the new additions to NRG’s board and the newly formed business review committee, tasked with developing and overseeing the high-performance plan, will lead to tremendous value creation for all NRG stakeholders," Jeff Rosenbaum, portfolio manager at Elliott, said in a statement. Shares of NRG Monday rose 0.5 percent to close at $16.75.

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Barclays aggressively raised its price target on The Advisory Board from $38 to $56, noting the company last week announced its board plans to look for strategic alternatives. "The statement suggests that the board and management are open to considering a sale of part or all of the company as well as significant changes to operations and strategy," the investment bank tells clients in a research note. Barclays says the company could be worth between $46 and $67 per share based on its sum-of-the-parts analysis. Last week, Elliott Management boosted its stake in the health care consulting firm to 8.3 percent. Shares of The Advisory Board fell Monday about 0.5 percent to close at $47.

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Taconic Capital Advisors filed revised quarterly stock holdings documents for the first three quarters of 2016 to include previously undisclosed positions. The filings show the hedge fund firm owned shares of Humana, LinkedIn and St. Jude Medical, which it previously had not acknowledged. At the end of the first quarter, Taconic held 600,000 shares of insurance giant Humana. Remember, the company was trying to merge with Aetna, so it is common for hedge funds and other investors to request the right to delay disclosing positions in merger partners. By the end of the second quarter, it trimmed the stake to 550,000 shares. For the June period, it also revealed owning a 440,000-share stake in LinkedIn, the online social media company, and a little more than 835,000 shares of St. Jude, the medical device company that was acquired by Abbott in January. At the end of the third quarter, Taconic now says it slashed its stake in Humana to 75,000 shares. However, it more than tripled its stake in LinkedIn to 1.375 million shares, and lifted its stake in St. Jude to 1.3 million shares. In a separate revised third quarter 13F, Taconic revealed holding put options on Avis Budget Group, Deere & company and an exchange-traded fund that tracks the S&P 500. It also held call options on an ETF tracking the oil and gas industry.


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