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Business

Paul Singer makes $1.4B investment in Cognizant Technology

By
Carleton English
Published Nov. 28, 2016
Updated July 26, 2017, 11:31 a.m. ET

Fresh off a series of wins this year, hedgie Paul Singer has his latest activist target in sight.

His $30 billion hedge fund announced a 4 percent stake in Cognizant Technology Solutions on Monday. Elliott Management’s $1.4 billion investment in the New Jersey-based information-services provider marks one of the firm’s largest initial equity investments.

“We firmly believe [Cognizant] is at a pivotal point, facing a more mature and evolving market as well as deeply diminished shareholder confidence,” Jesse Cohn, portfolio manager for Elliott wrote in Monday’s letter.

Cohn said that the shares of Cognizant could gain up to 69 percent over the next year, which would price the stock around $90 a share. This could be achieved through changes in operations and management as well as initiating a $2.5 billion buyback funded with a mix of debt and cash on hand, he wrote.

Fellow Cognizant investor Sahm Adrangi of Kerrisdale Capital supported Elliott’s recommendations.

“That’s a really ambitious price target … but the path to getting there is a lot more straight forward,” Adrangi told The Post.

Cognizant said in a statement that it had a conversation with Elliott on Monday morning and that it “welcomes open communications with all of its shareholders and values their input.”

Shares of Cognizant gained 6.9 percent Monday, closing at $56.95.

Cognizant represents Elliott’s ninth activist stake this year. Earlier this month, Elliott announced a stake in Marathon Petroleum, urging the company to split in three. The firm also recently invested in Samsung, Lifelock, PulteGroup and Qlik.