#activist-investing

#activist-investing

Shares of Lululemon Athletica ( NASDAQ:LULU) jumped 7% on December 18 following news that activist investor Elliott Management built a $1 billion stake in the athleisure retailer. The move sparked a surge in retail trader enthusiasm on Reddit, with sentiment scores climbing to 72 (bullish) from neutral levels just days earlier. The Elliott news arrives as Lululemon recovers from a brutal year, with shares down 44% over the past 12 months but up 31% in the last month alone.

Unafraid of concentration risk, Ackman channels billions into select names he believes are undervalued giants, as evidenced by past winners like Chipotle Mexican Grill ( ) and Hilton Worldwide Holdings ( ). His strategy prioritizes quality management and long-term moats over diversification. In the first quarter, he launched a blockbuster stake in Uber Technologies ( ), acquiring 30.3 million shares worth $2.21 billion at the time - now valued at $2.8 billion and comprising 21% of his $13.7 billion portfolio. Yet, he hasn't added since, content with the position amid Uber's rally.

In a different era, when Elliott was less institutional and managed less than half the $76 billion in assets it boasts today, a letter like this would send chills down the spine of Pepsi CEO Ramon Laguarta. Now, thanks to the growing scale of activists, the growth of corporate defense teams at investment banks, and regulatory tweaks, a campaign from a feared investor is closer to a McKinsey review than a corporate espionage-filled battle.