Elliott Management, a hedge fund, announced September 9, 2019, it owns $3.2 Billion in AT&T (T) https://investors.att.com/ stock. The stock closed 09/9/19 @ $37.91, up just 52¢. The hedge fund stated it hopes to trim assets to improve the business to realize a historic increase in value of at least $60 per share.
Elliott Management is critical of the $104 Billion takeover of Time Warner’s lackluster performance; the failed purchase of T-Mobile and believes AT&T should sell DirecTV and its Mexican Wireless operations and focus on its core business. Also, recommended was that the Board should consider changes in leadership
In February, 2017, after regulatory authorities scrutinized the deal, AT&T agreed to acquire Time Warner for $85+ Billion. Their vision was a gigantic entertainment, as well advertising and analytics business, competitive with Facebook and Google. So far, customers are cord cutting, preferring streaming service as an alternative to cable or satellite.
Time Warner acquired Turner Broadcasting in 1996. AT&T committed to managing Turner separately under the Warner media umbrella. In March, 2019, fresh off their Time Warner court victory, they announced a major reorganization of its broadcasting assets to effectively take the scalpel to dissolve Turner.
In 2015 AT&T completed the $67 Billion acquisition of DirecTV Broadcast, with high expectations to meet all of consumers future entertainment preferences, offering millions of people more choices from almost anywhere, any time.
AT&T has an enterprise value of $270 Billion, with about $200 Billion in debt. AT&T is a cheap stock, trading at less than 10 times next year’s earnings and 5.5% yield. The companies’ upside is huge, even with just a little improvement. 3rd Quarter earning results will be announced October 23rd; unfortunately, analysts expect AT&T to disappoint investors.
The Elliott investment in AT&T may mean that on Wall Street it could help institutional interest in the stock. AT&T has underperformed its major rivals and made some costly mistakes.
CEO Randall Stephenson typifies the new breed of CEO with bold plans to retrain employees; courageous positions on social policies, and leading with inspiration. At the same time, performing for shareholders is strategic and tactical.
Ultimately it will come down to time and trust between AT&T and its new shareholder, and won’t be accomplished overnight.
And, AT&T’s 52 week range is $26.80 – $38.75. To reach $60 a share is breathtaking in scale and scope.
Are You a Bull or Bear ?
Date September 13, 2019 – AT&T Stock – Share price was $37.91
If you’re a Bullish Mom and think AT&T will go up, try the January 17, 2020 Expiration Date – CALL $37.00 Bid; and $36.00 Ask strike prices. Premium is 79¢ debit to pay = Long Call Vertical Spread on www.TDAmeritrade.com
On the other hand, Mom, if you think AT&T is bearish and will go down, try the Expiration Date January 17, 2020 – PUT $37.00 Ask; and $36.00 Bid strike prices. Premium is 49¢ debit to pay = Long Put Vertical Spread on www.TastyWorks.com
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