This is not Elliott's first foray with NRG. In January 2017, the firm filed a 13D on NRG with a plan centered around operational improvements and portfolio actions. Elliott saw a company with an attractive collection of generation and retail assets that had lost its focus as it expanded beyond its core merchant power and retail electricity businesses, which led to an uncompetitive cost structure, an overleveraged balance sheet and a complex asset portfolio.
Missteps aside, Elliott thinks that the company's retail franchise is a crown jewel that has been a market leader in Texas for over 20 years and there remain several opportunities to get back on track. Now Elliott is back with a plan that is remarkably similar to its 2017 plan: improve operations, refresh the board, and fix strategy and capital allocation.
One of the biggest, but under-recognized benefits of shareholder activism is that activists often not only create value during their engagement, but they also put the company on the right trajectory to sustain shareholder value over the long term. The latter did not happen here, and now Elliott is realizing the difference between giving someone a fish and teaching them to fish.
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