AT&T stock is up almost 10% in pre-market trading to its highest level since April 2017 after Elliott Management released a letter outlining what they call "a compelling value-creation opportunity" at AT&T.
The activist fund argues could see the telecommunications giant trading at $60 a share or more and investors appear to be buying into that idea...
The New York hedge fund, run by billionaire Paul Singer, outlined a four-part plan for the company in a letter to its board Monday (full letter). As Bloomberg reports, the plan would call for the company to explore divesting assets including DirecTV, the Mexican wireless operations, pieces of the landline business, and others.
It focuses on increased strategic focus, improved operational efficiency, a formal capital allocation process, and enhanced leadership and oversight.
Elliott’s plan also calls for aggressive cost-cutting measures that aim to improve AT&T’s margins by 300 basis points by 2022. Elliott said in the letter it has identified opportunities for savings in excess of $10 billion but the plan would only require cost cuts of $5 billion.
Elliott is also calling for a series of governance changes, including separating the role of chief executive officer and chairman -- currently held by Randall Stephenson -- and the formation of a strategic review committee to identify the opportunities at hand.
Full Elliott Letter below: