Paul Singer has invested $1.4 billion in Cognizant Technology. His Elliott Management Hedge Fund now has a 4 percent stake in the company.
Cognizant Technology’s shares jumped 7 percent after Paul Singer made the purchase of its stock. The company’s shares closed at $55.63 on Tuesday. But Elliot Management feels that its stock is greatly undervalued and is really worth more than $90. It released a letter outlining a three-part value-enhancement plan which the firm says will achieve this goal by the end of 2017.
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According to The Wall Street Journal, Elliot Management’s 16 page letter called for Cognizant to boost profitability and return cash to shareholders instead of focusing on revenue growth.
“We have identified an opportunity to trim function sizes, specifically HR and finance, ” said the letter.
Jesse Cohn, portfolio manager for Elliott, wrote “We firmly believe it is at a pivotal point, facing a more mature and evolving market as well as deeply diminished shareholder confidence.”
Cognizant is a provider of information technology, consulting, and business process services. Headquartered in Teaneck, New Jersey, Cognizant has over 100 development and delivery centers worldwide and approximately 255, 800 employees as of September 30, 2016, Cognizant is a member of the NASDAQ-100, the S&P 500, the Forbes Global 2000, and the Fortune 500 and is ranked among the top performing and fastest growing companies in the world.