Elliott Management, the $27 billion hedge fund let by Paul Singer, has taken a large stake in aluminum maker Alcoa.
The activist investor now own more than 62 million shares, or a 6.5% stake in the company, according to a 13D filing.
Elliott thinks that Alcoa is deeply undervalued and the market has not fully appreciated the value created by teh spinoff opportunity, a person familiar with the matter said.
The stock was last trading up 2.9% at $8.96 per share.
In late September, Alcoa said that it would split itself into two separate publicly traded companies— Upstream Company and Value-Add Company.
"The globally competitive Upstream Company will comprise five strong business units that today make up Global Primary Products — Bauxite, Alumina, Aluminum, Casting, and Energy," Alcoa said.
"The innovation and technology-driven Value-Add Company will include Global Rolled Products, Engineered Products and Solutions, and Transportation and Construction Solutions."
Elliott is totally supportive of the management's decision of the spinoff.
The fund plans to engage in friendly dialogue with Alcoa management.
"Elliott advised us of their ownership of AA shares several weeks ago, shortly after we announced the separation of our Upstream and Value-Add businesses. Since then we have had constructive discussions with Elliott," an Alcoa spokesperson said in a statement.
The news was first reported by CNBC's David Faber.
