These Are Billionaire Paul Singer’s Stock Picks That You NEED to Avoid

Cognizant Technology Solutions Corp. (NASDAQ:CTSH)

How Many CTSH Shares Elliott Management Owns: 1.12 million

How Much Money Elliott Management Has Invested in CTSH: $79.86 million

Elliott’s Activist Pressure Pays Off: Elliott Management sent a letter to Cognizant Technology Solutions Corp. (NASDAQ:CTSH) shortly after taking an activist position in the company in November 2016. By the following February, the pressure had paid off, as Cognizant entered into an agreement with Elliott that included the company replacing three members of its board and announcing that it would accelerate its shift towards digital and start returning more money to shareholders.

The results have been impressive for both parties, as CTSH shares have gained 45% since the end of 2016. Cognizant’s digital business now accounts for 27% of the company’s revenue and grew by 30% in the fourth-quarter of last year and several analysts are bullish on the company outperforming the already-solid growth and margin expansion estimates for 2018 that were issued by the company.

NXP Semiconductors NV (NASDAQ:NXPI)

How Many NXPI Shares Elliott Management Owns: 16.44 million

How Much Money Elliott Management Has Invested in NXPI: $1.92 billion

NXP Semiconductors NV (NASDAQ:NXPI) is another large-cap stock that bucked the long-term trend of Elliott Management whiffing on such picks. Elliott first bought a small position in the stock near the end of 2016 but sold it off during the next quarter. However, in the second-quarter of last year, Elliott re-opened a much larger position of 12.37 million shares, which has since been raised by another 4.07 million. NXPI has gained 27% since the end of 2016 and 13% since the middle of 2017, by which point Elliott had amassed the bulk of its position.

Singer Balks at QUALCOMM, Inc. (NASDAQ:QCOM) Bid: Qualcomm initially offered $110 per share to buy NXP in a proposed deal offered at the end of last October. However, shares shot past that mark over the following year as the deal remained in regulatory limbo, prompting Elliott to launch an expensive activist campaign to ensure that shareholders didn’t bite on the offer. Elliott argued that NXP’s shares were worth at least $135, though the fund has since backed a revised $127.50 per share offer made by Qualcomm, which is itself trying to fend off a takeover bid from Broadcom Ltd (NASDAQ:AVGO).

All in all, 2017 was a strong year for Singer’s large-cap stock picks. However, historical data tells us that it was an outlier that is unlikely to be repeated. It should also be noted that Singer’s successful large-cap positions were in companies that were just small enough that he was able to exert on them the same kind of activist pressure which has made him so successful investing in smaller companies. That is not always the case with Singer’s large-cap picks, which is why we continue to warn investors to stay away from them, turning instead to his biggest money makers year-in and year-out, in which he is adept at working his activist magic.

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