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Billionaire Activist Investor Paul Singer Takes Profits and Rolls It Into These 3 Unexpected Stocks
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Paul Singer founded Elliott Investment Management L.P., a Florida-based hedge fund known for its investor activism, in 1977. According to Forbes, a Singer worth an estimated $6.2 billion can be highly combative when going after a target.
In 2024, Elliott launched at least 12 activist campaigns, targeting companies with an average market cap of around $30 billion. Four years ago, it was about half that amount. The average size of targets has increased due to a significant jump in its assets under management (AUM).
As of Nov. 4, the hedge fund had 38 institutional and high-net-worth clients with AUM of $97.37 billion. Elliott’s 13F had $19.31 billion in assets invested across 59 stocks.
Of the 12 activist campaigns in 2024, Southwest Airlines (NYSE:LUV) is one of the investment firm’s most significant holdings, adding 55.1 million shares of the airline to the 6.0 million it bought in Q2 2024.
Yet, when Singer sold 100% of its Marathon Petroleum (NYSE:MPC) holdings in Q3 2024, it moved some of the proceeds into these three unexpected stocks.
Key Points About This Article:
- Elliott Investment Management sold 100% of its billion-dollar-plus stake in Marathon Petroleum (NYSE:MPC) for significant profits in Q3 2024.
- While most of the money went to take a nearly 10% stake in Southwest Airlines (NYSE:LUV), the hedge fund made three other vital moves during the quarter.
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A Good Profit From Marathon Pete
In the third quarter, the hedge fund sold 100% of its 7.37 million shares in Marathon Petroleum. It first bought shares in the oil refiner and gas station operator in Q2 2019. At the end of June 2024, Elliott’s fifth-largest holding accounted for 7.37% of its 13F assets. Marathon Petroleum was the hedge fund’s fourth-largest position the quarter before that.
Why did Singer sell?
The billionaire concluded that the best times were behind it. MPC stock hit a 52-week high of $221.11 last April. By the end of September, its share price had fallen by 26% to $162.91.
As I said above, Elliott first bought shares in Q2 2019. Its 13F shows that it purchased 4.6 million shares during the quarter and call options for another 1.25 million shares. It finished the third quarter with 8.6 million shares and a call for 3.48 million more. By the March 2020 correction, it had amassed 9.67 million shares and held a call for another 4.0 million.
WhaleWisdom.com’s data suggests Elliott paid an average price per share of $55.20. So, it likely generated close to $900 billion in profits from the sale of its stock in Q3 2024.
Forget About Southwest. Focus on These 3 Instead.
Elliott’s new stocks or additions to its portfolio in the third quarter were primarily put or call options. While the airline was one of only two holdings with more than $1 billion invested, these three stocks caught my attention.
Utilities Select Sector SPDR Fund (NYSEARCA:XLU) is the first non-option that caught my attention. Elliott has taken this position, holding 1.46 million shares of the ETF, making it the hedge fund’s 25th-largest position.
Utilities stocks are back. Until February 2024, XLU had gone sideways for three years, but it’s up nearly 23% in the past 12 months. Elliott likely sees more gains ahead.
The second move that caught my attention was Elliott’s acquisition of put options for the SPDR S&P 500 ETF Trust (NYSEARCA:SPY). These options are equivalent to 7.2 million SPY shares and have a notional value of $4.13 billion.
SPY instantly became the hedge fund’s largest position, accounting for 21.4% of its portfolio. This suggests that it expects a correction in the S&P 500 in 2025. I guess we’ll see.
Lastly, the billionaire’s firm upped its Etsy (NASDAQ:ETSY) stake by 11.1% during the third quarter, adding 500,000 shares. It now owns 4.36% of the two-sided online craft and vintage marketplace.
That’s excellent news if you’re a longtime owner of ETSY stock. It hasn’t traded this low since the March 2020 correction.
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