Elliott Management takes a stake in Hewlett Packard Enterprise. How the firm may create value

Elliott has taken an approximately $1.5 billion position in Hewlett Packard Enterprise .

HPE trades at less than 5 -times earnings before interest, taxes, depreciation and amortization, compared to its closest server peer Dell at over 7 -times EBITDA.

The primary driver of HPE 's undervaluation appears to be poor execution and a loss of credibility.

The $14 billion deal, originally announced in January 2024 , has been stalled.

The Department of Justice sued to block the acquisition, saying it would eliminate competition.

If the deal is blocked, HPE would have over 25% of its market cap in net cash.

But with the right oversight, it should be a win-win for shareholders.