Activist Elliott snaps up 6.5% stake in Alcoa

Elliott has a reputation for pushing through corporate change by taking small stakes in companies and forcing management to pursue Elliott’s preferred strateg

Alcoa has 18 sites across the UK, ranging from forging plants in Sheffield to an architectural systems sales office in London (AP)

The activist investor Elliott Management has muscled in on a shake-up of Alcoa, the aluminium group, by buying a stake in the US-listed metals company.

The hedge fund, led by Paul Singer, revealed a 6.5 per cent holding in the company – making it the 127-year-old company’s second biggest shareholder.

Alcoa unveiled plans in September to divorce its upstream aluminium mining division from its downstream metal bashing units, many of which are housed in sites across the UK.

People close to Elliott said it was pursuing a “friendly” approach to the share purchase, and supported the Alcoa management’s decision to split the group in two but thought the company’s shares were undervalued.

Other hedge funds such as Baupost have taken stakes in Alcoa in the wake of the shake-up.

Elliott has a reputation for pushing through corporate change by taking small stakes in companies and forcing management to pursue Elliott’s preferred strategy, which it says boost shareholder value.

It scored a notable victory in the UK earlier this year in a battle with listed investment vehicle Alliance Trust, forcing the chief executive, Katherine Garrett-Cox, off the board of the company and obtaining two seats for itself.

The US-based fund, which has a large London presence, has also been locked in a tussle with the Argentinian government over bond repayments in recent years, reinforcing its reputation as a tough-talking activist.

Alcoa, long considered a bellwether for US corporate earnings given its early reporting date in quarterly earnings seasons, has 18 sites across the UK, ranging from forging plants in Sheffield to an architectural systems sales office in London.

Shares in the group, led by chief executive Klaus Kleinfeld, have plunged since last year after a surge in Chinese exports pushed aluminium prices to their lowest levels in six years. They rose 5 per cent in afternoon trade yesterday after Elliott Management revealed its interest in the company.