Elliott Management, an investment firm long known for its activist streak, set it sights on Commvault today, purchasing a 10.3 percent stake and nominating four Elliott-friendly members to the company’s board of directors. It likely means that Elliott is ready to push the company to change direction and cut costs, if it sticks to its regular MO.
As an older public company founded in 1988 with a strong product, but weak stock performance, Commvault represents just the kind of company Elliott tends to target. In its letter outlining why it acquired its stake in Commvault, it presented a stark picture of a company in decline.
As just one small example, Elliott discussed the stock performance and it didn’t pull punches or mince words when it stated:
“Commvault’s strategy, operations, execution and leadership over the past eight years have failed to generate returns to shareholders, despite a leadership position in a growing market with a product set that customers like and competitors respect. Commvault’s underperformance has been so profound that an investor would have been better off buying the NASDAQ index instead of Commvault’s stock on 99% of trading days in the last eight years. …”
As it is wont to do, Elliott buys a stake and then forces its way onto the board of directors and this deal is no different where it will be adding 4 members:
“Given the long-term issues at the Company, we believe the Board would benefit from fresh perspectives, primarily in the area of operational execution, software go-to-market experience and current technology…