From Morningstar: 2024-06-20 11:09:47

Elliott Management is looking to shake up leadership at Southwest Airlines after taking a 10% stake in the airline, citing underperformance and the need for change. Meanwhile, Nvidia’s stock split is creating buzz, with potential impact on investors. CrowdStrike, KKR, and GoDaddy are new names in the S&P 500, reflecting market trends. Economist Jason Barr explores the investment potential of the world’s tallest buildings.

Activist investor Elliott Management has purchased a $2 billion position in Southwest Airlines, representing an 11% stake. Elliott is pushing for changes in leadership, highlighting underinvestment in technology and operational deficiencies. Southwest’s CEO Bob Jordan has faced challenges, with shares down 35% during his tenure. The market has reacted positively to Elliott’s involvement.

Elliott Management’s previous stake in Texas Instruments, where they hold a smaller 1% position, resulted in a similar push for change. With the significant 10% stake in Southwest Airlines, Elliott may have greater influence in the boardroom. Southwest’s board may push back, citing external factors like delayed Boeing deliveries and rising fuel costs. However, Elliott’s reputation as a respected activist investor could lead to meaningful changes.

Investors should consider the potential impact of Elliott Management’s influence on Southwest Airlines, as the airline faces challenges in technology modernization and operational efficiency. Elliott’s track record and focus on value creation could drive significant changes in Southwest’s leadership and strategy. The market reaction to Elliott’s involvement underscores the potential for positive change in the airline’s performance and valuation.



Read more at Morningstar: Southwest Airlines Faces a Shake-Up