After shaking up AT&T, Elliott Management divests its stake

Elliott Management shook up AT&T last year when it sent an open letter to AT&T’s board of directors, criticizing everything from soup to nuts about the company.

But yesterday, Elliott filed an SEC form 13F, signaling its exit of AT&T. The activist hedge fund sold 5 million AT&T shares in Q3, valued at $151.15 million as of the previous quarter's end, according to Yahoo Finance.

In its September 2019 letter to the board, Elliott criticized AT&T's attempted, but failed, purchase of T-Mobile and its acquisition of DirecTV. And it penned an entire section entitled “Poor Execution in Wireless.”

RELATED: Elliott trashes AT&T management and its execution in wireless

In response, AT&T said it would work with Elliott, and it said it was already in the process of making many of Elliott’s suggestions. Indeed, AT&T had already been selling certain assets to reduce its debt load. 

Elliott also wanted AT&T to conduct stock buybacks. In this way, the total number of AT&T shares would decrease, raising the price so that investors like Elliott could make a big profit.

In early March, AT&T said it would be repurchasing $4 billion worth of its shares during the second quarter, and it had plans for more buybacks throughout 2020. However, the Covid 19 crisis hit, and then AT&T put its accelerated share repurchase plans on hold.

In mid-2020, AT&T’s longtime CEO Randall Stephenson retired, and he was replaced by John Stankey, who had previously been the company’s chief operating officer.

RELATED: Stephenson out, Stankey in as AT&T CEO

One of the few areas where Elliott had complimented AT&T was acknowledging that the carrier had valuable wireless assets, including its spectrum holdings and its FirstNet build.

Ironically, AT&T is currently facing a great opportunity to gain valuable mid-band spectrum in the upcoming C-Band auction. But it’s been so intent on selling assets to pay off debt, that it faces a quandary: stick with its debt-reduction plan or make a capital outlay to invest in C-band for its future?

RELATED: AT&T’s debt hampers its C-band aspirations

When Elliott sent its letter to AT&T’s board of directors in early September 2019, AT&T’s stock was trading at about $36.25. Today, AT&T’s stock is trading at $28.90.