Hedge Fund Elliot Management Takes $4,000,000,000 Bet n One Iconic American Company

Elliot Management has built a $4 billion position in PepsiCo Inc., making the hedge fund one of the company’s largest investors.

In a letter to the board of directors, the hedge fund notes that despite an underperformance in PepsiCo’s shares, the corporate giant is still a “storied company with iconic core brands and unmatched scale.”

The hedge fund, which has over $71 billion in assets under management, says it “sees a clear path to a better performing and higher valued PepsiCo through greater focus, improved operations, strategic reinvestment and enhanced accountability.”

PepsiCo (PEP) reached its all-time high of $197 in April 2023 and hasn’t recovered since. At time of writing, PEP is trading at $151, but Elliot says that “with the right strategic actions, PepsiCo can accelerate performance and reclaim its reputation as a world-class operator.”

In a presentation , the fund says PepsiCo is currently presenting investors with a unique opportunity.

“Despite its portfolio of leading franchises and a strong history of innovation and execution, PepsiCo has become a deep underperformer. This is driven by persistent share loss and margin pressure within its North American Beverages business, combined with a North American Foods business facing decelerating growth and declining profitability. As a result of this financial underperformance, PepsiCo has lost its long-held status as one of the world’s best-performing and most-revered CPG franchises. Instead, it is now viewed similarly to structurally lower-growth businesses, with investors uncertain about its path back to prior success.”

Elliot Management says that PEP is “dramatically underperforming its potential,” and will eventually return to its position as a market leader to unlock “a substantial level of shareholder value creation.”

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