Over the past two years, Paul Singer’s hedge fund, Elliott Management, has successfully pushed a number of technology companies to sell themselves. Now, it appears that the $25 billion hedge fund has set its sights on a new target.
The activist investment firm disclosed on Monday that it had acquired a roughly 8 percent stake in Informatica, a specialist in data integration services with a market value of about $4 billion.
Though Elliott was circumspect in describing its motivations in a regulatory filing, the hedge fund appears likely to push its newest investment into selling itself. The firm has made a specialty of taking positions in enterprise technology companies and agitating for shifts in corporate strategy, usually by calling for a sale to a private equity firm.
Last month, Riverbed Technology agreed to sell itself to the private equity firm Thoma Bravo and an arm of the Ontario Teachers’ Pension Plan for $3.6 billion after a long activist campaign by Elliott. And other companies, including BMC Software and Novell, have also been prodded into sales after the hedge fund emerged as an investor.
Informatica has faced questions for several months about whether it should sell itself, particularly after a similar software provider, Tibco, sold itself to the private equity firm Vista Equity Partners for $4.3 billion, one of the largest leveraged buyouts in the technology industry last year. Tibco was also under pressure from a hedge fund to weigh a sale.
To activist investors, many of these technology providers fit into a common theme: No longer posting the rapid sales growth of yesteryear, these companies have often presided over lagging stock growth. Moreover, hedge funds have argued, the tech companies have turned to acquisitions that have softened their focus and consumed cash that otherwise could be paid out to shareholders through stock dividends.
Over the past 12 months, Informatica’s stock price has fallen about 8 percent, compared with double-digit gains in both the Standard & Poor’s 500-stock index and the Nasdaq.