TXN - Elliott takes a stake in Texas Instruments: here's what activist fund wants
2024-05-28 09:48:30 ET
Texas Instruments Inc (NASDAQ: TXN) opened in the green this morning after Elliott Investment Management announced to have taken a sizable stake in the semiconductor behemoth.
Elliott is pushing for a lift to free cash flow
The activist hedge fund has secured a $2.5 billion stake in and is pushing its management to be more flexible in capital expenditures to improve free cash flow.
Elliott wants the Nasdaq listed firm to propose a “dynamic capacity-management strategy” that it’s convinced will lift its cash flow on a per-share basis to $9.0 by 2026.
That’s about 40% higher than the current consensus.
The news arrives about a month after Texas Instruments Inc reported its financial results for the first quarter that came in ahead of Street estimates.
Why has underperformed peers
Note that the per-share free cash flow of Texas Instruments stood at $6.40 in 2022. In comparison, that metric is expected to print at $1.83 a share this year.
Shares of the $181 billion company based out of Dallas, Texas have underperformed peers in recent years as a continued decline in FCF made the stock unattractive despite being a key supplier of analog chips to automotive and industrial complexes.
In a letter to , the activist fund questioned if the “fixed magnitude and pace of its capacity buildout appropriate given the expected level of excess capacity?”
Wall Street currently has a consensus “hold” rating on Texas Instruments stock that pays a dividend yield of 2.61% at writing.
The post Elliott takes a stake in Texas Instruments: here’s what activist fund wants appeared first on Invezz