Paul Singer‘s fund Elliott Management has revealed a new stake in Juniper Networks, Inc. (NYSE:JNPR), which amasses 6.2% of the company’s common stock. The position is activist by nature and contains around 31.42 million shares, including options. At the same time, Eliott disclosed a presentation stating its ideas regarding the company’s present the situation and ways that might increase the shareholder value of the company.
The stock of communications and networking company Juniper Networks, Inc. (NYSE:JNPR) gained around 9% in the morning trading amid Eliott’s disclosure of ownership of Juniper Networks shares. The fund considers that the measures it proposes can increase the stock price by 57-77% to $35-45 per share.
Paul Singer’s fund states that Juniper Networks, Inc. (NYSE:JNPR)’s stock had significantly underperformed in the past, in comparison with the broader indices as well as in comparison with its peers. The underperformance was mainly caused by Juniper’s outsized cost structure, inefficient capital structure, as well as poor Mergers & Acquisitions track record.
From Elliott’s point of view, Juniper Networks, Inc. (NYSE:JNPR) should adapt several low-risk initiatives that might increase the company’s value for its shareholders. One of the measures is a stock repurchase program worth $3.5 billion, out of which $2.5 billion worth of stock should be bought back immediately and the rest repurchased in the following year.
The company should realign its costs via a $200 million run-rate reduction in operating expenses. In this way, the cost structure of Juniper will be closer to its peers.
The new shareholder of Juniper Networks, Inc. (NYSE:JNPR) also says that their ideas are supported by the analysts who during the past year have been suggested that the company requires significant changes and measures some of which being in line with the ideas suggested by Elliott.
The full presentation is available below:
Diamond Hill Capital, led by Ric Dillon, also holds shares of Juniper Networks, its stake amassing 5.25 million shares. Daniel Benton‘s Andor Capital Management reported in its latest 13F ownership of 1.75 million shares, the stake surging by 116% over the quarter.