Elliott's Letter to Texas Instruments: Reasonable?

Hi reader,

Elliott Investment Management, a well-known and well-respected activist investor, recently disclosed a $2.5 billion position in Texas Instruments. It’s always surprising to see an activist in a company with…

1. A stock close to all-time highs

2. A great track record of operational excellence

What’s definitely not surprising is to see short termism reign in financial markets. You’ll understand why I say this after reading this article, but I don’t intend to say that in a negative way; it’s actually where our advantage lies.

These two qualities of Texas Instruments made the announcement and the letter honestly quite surprising. Note that activists are not regular investors, since they intend to actively participate (thus, their name) in the company’s management to improve its operational performance. Elliott was no different and wrote a letter to the company’s board asking for several strategic and operational changes. I’ll share my thoughts on this letter and Texas Instruments’ “reply” in this article.

As a spoiler, I will say that I found some parts of the letter pretty misleading and that, as in any investment-related discussion, the discrepancies mostly arise from investment horizons. I’ll touch on both of these topics in the article.

The rest of the article is reserved for paid subscribers. I launched the paid subscription yesterday. There’s an on-going offer limited to the first 25 subscribers (we are not far from this number), through which you can lock-in a 25% forever discount on any plan:

As announced in the article I link above, as a free subscriber you’ll still get free content from time to time, just as it has been the case since I brought Best Anchor Stocks to Substack.

Many people have asked me if there’s any sort of “model” research they can look at to judge the quality of the research. This is a great question and is precisely the reason why I recently published my deep dive on Deere. You can read by clicking the following button (it’s close to becoming the most-read article of the entire site):

I’d also recommend reading the rest of the articles I have published for free, as they’ll help you grasp the type of content you can expect.

Without further ado, let’s get on with the article.