How activist investor Elliott became the shark that transforms giants like Starbucks and Southwest

Elliott Investment Management is one of the largest activist funds in the world, building its reputation on aggressive and public tactics aimed at transforming firms.

The West Palm Beach, Florida-based hedge fund manages roughly $69.7 billion in assets and employs about 570 people as of June 30. The firm makes headlines for its sometimes brash approach and lofty ambitions to boost major companies whose stock and business performance have proven to be lackluster.

Read on to learn more about Elliott, from its start more than four decades ago, to its shark status and ongoing campaigns.

Elliott was founded in 1977 by Paul Singer, with reportedly just $1.3 million in seed capital raised primarily from friends and family. The New Jersey-born investor described it at the time as a “tiny, little friends-and-family” firm.

In its early years, Elliott focused on convertible bond arbitrage, followed by distressed investing. By the 2000s, however, Elliott shifted its focus to activist investing, the process by which hedge funds build large stakes in companies to persuade leadership to enact business changes.

Singer remains the firm’s president, co-chief executive officer, and co-chief investment officer to this day.

The firm’s most famous fight was with the government of Argentina. After the country defaulted on its debts in 2001, it sought to restructure billions of dollars in debt with a group of hedge funds. But Elliott refused to sign on, and sued the country’s government in U.S. federal court for refusing to repay its more than $1 billion in debts to the fund and others.

Then-Argentine President Cristina Fernández de Kirchner labeled the holdouts, like Elliott, “vulture funds.”

The 15-year legal battle, which included the seizure of an Argentinian training ship docked in Ghana, ended with a more than $2 billion payout for Elliott.

The firm underwent a major transformation in 2015 when it formed Evergreen Coast Capital for its private equity investments. In the years since, Elliott has made around 40 acquisitions, including book retailer Barnes & Noble, cloud connectivity firm LogMeIn, computer security specialist Gigamon, and defense and transportation manufacturer Cubic.

Elliott retired the Evergreen name last year, however, to avoid confusion.

Elliott’s campaigns focus primarily on maximizing shareholder value and gaining board representation to help turn around struggling companies. It has launched a number of campaigns that have targeted several major companies, including Twitter, AT&T, and Samsung.

• Twitter: Elliott invested in the social media platform (now known as X) in early 2020, and called for the ouster of co-founder and CEO Jack Dorsey. A 2022 filing showed that Elliott got rid of its holdings in the company, not long after Tesla CEO Elon Musk first expressed interest in taking it over.
• AT&T: In 2019, Elliott acquired a $3.2 billion stake in AT&T and pushed the company to sell some assets. One year later, it divested its $3.2 billion stake in the company.
• Samsung: Elliott built a $628 million stake in Samsung C&T in 2015, with plans to block a merger with Cheil Industries. Last year, an international arbitration tribunal ruled that South Korea should pay Elliott $53.6 million in compensation, plus 8 years’ worth of compound annual interest at a 5% rate, and $28.9 million in legal fees over its approval of the merger.

In a victory for Elliott, Australian mining giant BHP Billiton followed Elliott’s recommendations when it reorganized its business and sold its U.S. shale holdings.

Several companies the hedge fund has built a stake in — including Crown Castle, NRG Energy, and Goodyear Tire & Rubber — have swapped out their CEOs amid pressure from the firm.

Southwest Airlines is bracing for a proxy battle after Elliott disclosed in June that it had acquired an 11% stake in Southwest.

Elliott’s goals include firing CEO Bob Jordan and board of directors chair Gary Kelly, installing a group of friendly directors, and instituting a “comprehensive business review” with the intention of getting to the bottom of the airline’s struggling business. The firm also revealed a slate of 10 people it plans to nominate for seats on Southwest’s 15-member board, including three former airline CEOs, and several former federal government officials.

Elliott said it’s confident its candidates will help “chart a brighter future” for Southwest and help restore it as an “industry-leading airline with best-in-class profitability.”

But Southwest hasn’t welcomed Elliott’s incursion. In July, the company announced that it’s adopting a so-called “poison pill” defense in its bid to fend off the hedge fund. The provision, outlined as part of a newly unveiled “shareholder rights plan,” would expand the number of Southwest shares outstanding and dilute Elliott’s sizable stake if the fund tries to acquire a bigger percentage of the company.

Jordan told staff in a memo last Monday that its proxy battle against Elliott will be a “battle for the heart of our company and our future.”

Elliott is currently seeking representation on Starbucks’ board. Under pressure from the activist, Starbucks named Brian Niccol, Chipotle’s chief, as its new CEO, ousting Laxman Narasimhan earlier this month.

The investor has built a “sizable stake” in the Seattle-based coffee chain, and was in talks with leadership to help stage a turnaround of its stock price and business performance, The Wall Street Journal reported in July.

Elliott is also currently involved in a campaign against semiconductor manufacturer Texas Instruments, where it has a $2.5 billion position. The fund has called on Texas Instruments to commit to a $9 free-cash flow per share target in 2026, and to adopt a strategy to manage capacity instead of building it “far in excess of expected demand.”