Elliott Management investment in Samsung in 2016

Elliott Management invested in Samsung in 2016 and made public a presentation for it. If you are interested to learn about how hedge funds write presentations, here is one for you to learn from.

About the deck

About the deal

Elliott Management’s investment in Samsung in 2016 marked a significant turning point in the conglomerate’s history, sparking discussions on corporate governance, financial transparency, and strategic direction. The proposal put forth by Elliott, advocating for the restructuring of Samsung into two distinct entities – a listed holding company and a listed operating company – aimed to streamline the conglomerate’s businesses and management structure. By suggesting a possible all-stock merger between the new holding company and Samsung C&T Corp, Elliott sought to further refine the company’s organizational framework and potentially unlock shareholder value.

Central to Elliott’s proposal was the call for a substantial $37 billion special dividend from Samsung’s substantial $70 billion cash pile, alongside recommending that 75% of the new operating company’s cash flow be distributed as dividends. These measures were designed to address what the hedge fund deemed as excessive cash reserves and to ensure that shareholders could benefit more directly from the company’s financial performance. Elliott’s calculations indicated that despite Samsung Electronics’ impressive 27% stock price increase that year, the company’s shares were still trading at a significant discount of more than 30% compared to industry peers, largely due to its substantial net cash position.

In addition to advocating for financial restructuring, Elliott Management also pushed for changes in Samsung’s board composition by calling for the appointment of three new independent directors. These demands underscored the hedge fund’s commitment to reshaping the company and maximizing shareholder returns, signaling a broader shift in the dynamics of corporate governance within one of the world’s largest technology companies. The clash between the activist hedge fund and Samsung highlighted the growing influence of shareholder activism in shaping corporate decisions, emphasizing the need for companies to address investor concerns regarding capital allocation, transparency, and strategic direction.

Overall, Elliott’s investment in Samsung in 2016 served as a pivotal moment in the conglomerate’s trajectory, fueling debates and discussions around the optimal structure and governance of the company. The proposals put forth by the hedge fund reflected a broader trend of shareholder activism in the corporate world, where investors increasingly assert their influence to drive changes in companies’ operational and strategic practices. As Samsung navigated the challenges and opportunities presented by Elliott’s engagement, it underscored the importance of balancing shareholder interests with long-term corporate sustainability and growth.

About Elliott Management

Elliott Management Corporation is a prominent American hedge fund founded by billionaire investor Paul Singer in 1977. With headquarters in New York City, Elliott is known for its activist investing approach, which involves taking significant stakes in companies and then actively engaging with management to push for changes aimed at increasing shareholder value. The firm has gained a reputation for its aggressive tactics and willingness to challenge corporate boards, often through shareholder activism campaigns and legal battles.

Over the years, Elliott Management has been involved in numerous high-profile activist campaigns targeting companies across various industries, including technology, finance, and energy. Some of its notable campaigns include pushing for strategic changes at companies like EMC Corporation, Compuware Corporation, and Arconic Inc. Elliott is also known for its involvement in distressed debt investing, where it acquires the debt of struggling companies and seeks to restructure their operations for profit. With its track record of successful activist interventions and its substantial assets under management, Elliott Management continues to be a significant player in the world of finance and investment.

About Samsung

Samsung is a multinational conglomerate headquartered in Seoul, South Korea, renowned for its diverse range of products and services spanning electronics, semiconductors, telecommunications, and more. Founded in 1938, Samsung has grown to become one of the world’s largest technology companies, with a significant global footprint and a strong presence in numerous industries. The company’s extensive portfolio includes smartphones, tablets, televisions, home appliances, memory chips, displays, and various components used in consumer electronics, automotive, and other applications. Samsung Electronics, the flagship subsidiary of the Samsung Group, is particularly well-known for its innovative smartphones, including the Galaxy series, as well as its leadership in semiconductor technology, with products such as DRAM and NAND flash memory chips. Beyond consumer electronics, Samsung also operates in sectors such as construction, shipbuilding, insurance, and biopharmaceuticals, reflecting its diversified business interests. With a commitment to innovation, quality, and customer satisfaction, Samsung continues to drive advancements in technology and shape the future of industries worldwide.

Want to see more?

Head here to see the rest of the collection:

Hedge Fund Presentations