Elliott Discloses 8.1% Activist Stake in Mentor Graphics

  • Shares of design-services provider are ‘deeply undervalued’
  • Hedge fund sometimes runs activist campaigns at companies

Elliott Management Corp. increased its activist stake in Mentor Graphics Corp. to 8.1 percent, saying shares of the design-services provider are deeply undervalued.

“There are numerous operational opportunities, including enhancing operational efficiency and revenue quality, as well as strategic opportunities” that would improve shareholder value, the hedge fund, run by billionaire Paul Singer, said in a 13D filing Thursday. Elliott has “initiated a dialogue with the issuer’s management and board of directors regarding those opportunities.”

Shares of the Wilsonville, Oregon-based company rose as much as 8.5 percent to $26.78 in after-market trading. Elliott had previously reported a 4 percent stake in a 13F filing last month.

A representative for Mentor Graphics declined to comment.

Mentor reported a loss of $10 million in the six months ended July 31, compared with profit of $21 million in the same period last year, according to a regulatory filing.

Under head of U.S. equity activism Jesse Cohn, Elliott has been one of the busiest activist investors, often targeting technology companies. CDK Global Inc. reached a settlement with Elliott in August, agreeing to add two independent directors to its board, while homebuilder PulteGroup Inc. added three in July. Citrix Systems Inc., which added Cohn to its board last year, is merging its GoTo business with LogMeIn Inc.

Elliott also started a private equity arm, Evergreen Coast Capital Corp., which agreed in June to acquire Dell Inc.’s software unit in partnership with Francisco Partners Management.

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