On paper, NRG looks quite dismal. Negative margins, misallocation of capital, and failure to deliver on projections. We got a favorable entry after the Vivint home acquisition was announced and the stock took a major hit. Our thesis on this company is an activist investor play through Elliott Management. They have amassed a 13% stake in the company and appear committed to turning the company around. Their letters describe the upside and the $5B of shareholder value they believe can be unlocked by holding management accountable (or replacing them) and to focus on their core business. We believe that Elliott’s track record of having sustained impact in companies and the stocks depressed valuation is a compelling story.
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