HP Enterprise targeted by activist Elliott with over $1.5 billion stake - sources

Investing.com -- Activist hedge fund Elliott Investment Management has built a stake of over $1.5 billion in Hewlett Packard Enterprise Co (NYSE:HPE), sources familiar with the matter told Investing.com. 

Bloomberg News first reported about the stake earlier Tuesday.

Elliott’s direct intentions could not be learned, but sources said the investment management firm plans to enhance shareholder value through its engagements with the company. 

HPE stock has been down over 30% this past year, but shares saw a 5% uptick following today's news. 

Elliott has decided to step in amid the $20 billion market cap company’s woes, including Q1 results and job cuts. 

In March, HPE reported disappointing first quarter results and weak guidance for the second quarter and full year.

Wall Street analysts described the results as “disappointing” with “poor execution.”

“Simply put, HPE's F1Q25 print was disappointing, with a weaker F2025E guide marred by lower margins and FCF standing out as the biggest negative,” analysts at Deutsche Bank (ETR:DBKGn) said following the report. 

Bernstein analysts noted gross margins in the first quarter were ~190 bps below expectations due to price cuts and inventory management problems for both traditional and AI servers.  Meanwhile, full-year EPS guidance was 15% lower at the mid-point.

With the earnings, the company also announced it would cut its workforce by 5%, or 2,500, to realign its cost structure.

As for Elliott, the firm boasts a strong record in tech, pushing Salesforce (NYSE:CRM), SAP, and Citrix Systems (NASDAQ:CTXS), which has since been privatized and now operates under Cloud Software (ETR:SOWGn) Group, into growth changes. Elliott helped take Citrix private in 2022 in a $13 billion deal with Vista Equity Partners. 

Additionally, Elliott is invested in HPE’s more successful competitor, Dell Technologies Inc (NYSE:DELL). Dell has consistently outpaced HPE, and sources told Investing.com that Elliott looks to help the company catch up in the ever-evolving tech sector, which has been primarily pointed to AI expansion and growth.

In 2015, HPE separated from HP Inc (NYSE:HPQ)., a computer and printer supplier. Since then, HPE has been active in M&A, acquiring Nimble Storage and Cray Inc. in 2017 and 2019, respectively. 

In 2024, HPE announced the acquisition of Juniper Networks (NYSE:JNPR), a company that Elliott had previously pushed for growth in 2014, buying a 6.2% stake. The acquisition by HPE has been paused since the U.S. Justice Department sued to block the deal over antitrust concerns. 

HPE declined to comment on the stake.