Elliott Management Takes $2.5B Stake in Texas Instruments, Demands Changes
Hedge fund giant Elliott Management has made a significant $2.5 billion investment in Texas Instruments (NASDAQ: TXN), the Dallas-based semiconductor company. The $65 billion activist investor is known for pushing for changes in the companies it invests in, and Texas Instruments appears to be no exception.
Elliott Management Proposes Changes, Wants Free Cash Flow to Improve
In a letter to Texas Instruments’ management, Elliott proposed a “dynamic capacity-management strategy” to increase the company’s free cash flow to $9 per share by 2026.
The hedge fund highlighted the reduction in free cash flow from $6.40 per share in 2022 to an expected $1.83 per share this year. Elliott argues that the company’s 2022 capital expenditure plan, which increased spending to $5 billion annually or 23% of revenues from a previous 5% over the last decade, has significantly reduced shareholder returns.
The proposed strategy would allow for more flexible and market-responsive capital spending.
Elliott’s proposed changes could have significant implications for Texas Instruments if implemented. Improved free cash flow could enhance shareholder value and attract more investors.
A more flexible capital expenditure plan might also help align production capacity more closely with market demand. Moreover, Elliott’s involvement could pressure the management to adopt more shareholder-friendly policies.
Commenting on the matter, a Texas Instruments spokesperson stated that the firm has received and is reviewing the letter. They also noted that the company’s “focus is on continuing to make decisions that are in the best interest of TI and all of our shareholders.”
Texas Instruments Stock Performance
Texas Instruments stock has performed well in recent years, with a 5-year return of 116.39%. The company’s current stock price stands at $200.18, representing a 0.50% increase since market open. Year-to-date, the stock has returned 18.62%.
The company has a market cap of $181.35 billion and a PE ratio (TTM) of 31.02. Texas Instruments’ profit margin stands at 35.16%, with a return on assets (ttm) of 12.76% and a return on equity (ttm) of 36.66%. The company’s revenue (ttm) is $16.8 billion, with a net income (ttm) of $5.88 billion.
Texas Instruments has a strong financial position, with total cash (mrq) of $10.39 billion. However, the company’s total debt/equity (mrq) stands at 83.55%, which may be a point of concern for some investors. Texas Instruments’ forward dividend & yield is $4.96 (2.49%), with an ex-dividend date of May 1, 2024.
Do you see this as a positive development for the company? Let us know in the comments below.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
Editorial Update (29th May, 2024 5:35 AM): The article was updated to include a comment received by The Tokenist from a Texas Instruments spokesperson.
You may also like
Back to 
