By Mackenzie Tatananni
Hewlett Packard Enterprise stock popped Tuesday after activist investor Elliott Management took a stake of more than $1.5 billion in the technology company, according to a person familiar with the matter.
The New York-based investment management firm plans to engage with the company to boost shareholder value, a source told Barron's. A representative for HPE declined to comment on the matter.
Shares of the edge-to-cloud company, which specializes in enterprise information technology solutions, rose 5% to $15 after climbing even higher earlier in the session. The S&P 500 and tech-heavy Nasdaq Composite were up 0.5% and 0.4%, respectively.
HPE stock has declined 30% this year, versus the S&P's 7.7% decline. It remains down nearly 40% from its all-time closing high of $24.42 on Jan. 22, 2025, according to Dow Jones Market Data.
The company posted underwhelming fiscal first-quarter earnings and a weak second-quarter outlook in March, causing shares to nosedive. Management said the company would cut around 2,500 jobs as part of a cost-reduction program.
Following the report, Susquehanna analysts noted that HPE's "poor execution" in the quarter and lack of product diversification were red flags. Both Susquehanna and Barclays noted that the company continued to face margin pressure, with Barclays analysts dubbing the gross margin miss of 2oo base points "concerning."
Elliott has a documented history of involvement in tech companies. The firm was a longtime holder of Dell Technologies, one of HPE's biggest rivals. Following its public equity investment in Citrix Systems, Elliott took Citrix private in 2013 through a $13 billion deal with Vista Equity Partners.
Fourteen CEOs have stepped down from their roles at public companies where Elliott has been invested since 2022, according to public information. The firm managed roughly $72.7 billion in assets as of December 2024.
Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com
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April 15, 2025 11:31 ET (15:31 GMT)
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