D. E. Shaw Targets Emerson Electric

September 30, 2019 | Activist Updates, Hedge Funds, News

Hedge fund D.E. Shaw is building a stake in conglomerate Emerson Electric and may push for its breakup, says Reuters.

Emerson Electric, the industrial conglomerate and Fortune 500 company, is in the cross-hairs of activist hedge fund D.E. Shaw.

The hedge fund may pressurize the company to break-up itself up, amidst other changes.

Also, according to sources quoted by Reuters, D.E. Shaw is currently accumulating a position in Emerson Electric preparatory to launching activism against the company.

Activism: D.E. Shaw stepping on it

D.E. Shaw has stepped up its activism role in recent times. It conducted forays against oil and gas explorer EQT Corp and grains trader Bunge Ltd.

Further, the hedge fund manages $29 billion of alternative investments and about $25 billion of long-oriented strategies. The latter are also based on quantitative and computational techniques developed over 30 years of research and trading.

This year, D.E. Shaw’s returns owe a lot to its tactical asset allocation fund called Orienteer that invests in risk premia across various markets. However, risk premia investing is also called factor investing.

It now ranks as the fifth-highest grossing hedge fund of all time. It has also has earned $27 billion for investors since its inception.

Emerson Electric should buyback shares

Meanwhile, apart from a breakup of the conglomerate, D.E. Shaw is also reported to be pushing for a buyback of $7 billion of its shares, even if it requires taking on additional debt to fund the buyback.

Finally, D.E. Shaw is asking for the company to bifurcate into an automation solution business and a commercial and residential solutions business.

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