Singer's Elliott Takes 11% Stake in Cabela's; Shares Soar

Oct 28 2015 | 8:04pm ET

Paul Singer’s Elliott Advisors has disclosed a whopping 11% stake in outdoor activity retailer Cabela’s, sparking the steepest rally in the company’s shares in five years. 

Elliott revealed the stake in a regulatory filing Wednesday, noting that it believes Cabela’s (CAB) to be “significantly undervalued” and that it plans to hold discussions with the company’s management in which it will alternatives including a sale, merger, capital structure changes or management shakeup. 

Cabela’s stock closed with a 17% gain on the day following news of Elliott’s involvement after being up more than 20% intraday, becoming the latest company to see their stock price soar following news of an activist investor’s involvement. It was Cabela’s largest one-day gain since November 2010. 

Elliott believes Cabela’s assets are substantial and not being reflected in the company’s market capitalization, which was $2.32 billion before Wednesday’s spike. The hedge fund noted that it viewed buyers such as private equity firms to be potential bidders. It plans to hold discussions with Cabela’s management about the company’s options, according to the securities filing. 

Sidney, Nebraska-based Cabela’s has an avid following among hunting, fishing and camping enthusiasts, but has seen comparable-store sales fall in recent years as the number of people interested in so-called “blood sports” like hunting and fishing has declined. That said, one of the company’s bright spot lately has been gun sales. 

Elliott is well known for shaking up companies once it has taken a stake in them, especially in technology companies. It has previously pushed for change at EMC, which was bought by Dell earlier this month, as well as companies such as Riverbed Technology, Novell, Informatica and Citrix Systems. The firm recently revealed twin stakes in telecom equipment makers Polycom and Mitel.

Founded by Paul Singer in 1977, Elliott's flagship fund has returned about 14% annually, according to Bloomberg data, and has approximately $27 billion under management through a number of investment vehicles active in debt, equities, commodities, currencies and various other asset classes.


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Editor's Note

    Oct 21 2015 | 10:41am ET

    One of the most unique charity benefits in the hedge fund industry, A Leg To Stand On's (ALTSO's) Hedge Fund Rocktoberfest - NYC, raised nearly $500,000 last Thursday thanks to the generous support of major sponsors and nearly 1,400 attendees from the Tri-State finance, business and hedge fund communities. Read more…