Elliott Associates Shows New 6.4% Stake in Alcoa Inc (AA)

In a 13D filing on Alcoa Inc (NYSE: AA), hedge fund Elliott Associates disclosed a 5.1%, or 67,064,200 share, stake in the company. The firm did not hold shares at the end of the latest quarter ending September 30, 2015, though Elliot Management's 13F showed ownership of call options. Notably, as highlighted below, the firm also holds about 1.3 percent of additional interest in Alcoa via swap options, for an aggregate position of 6.4 percent.

The filing confirms earlier reports from CNBC about the stake.

From the filing:

The Reporting Persons purchased the securities of the Issuer reported herein based on their belief that such securities are dramatically undervalued by the public market. The Reporting Persons believe the spin-off transaction recently announced by management will create value substantially above the current share price, and seek to engage in a constructive dialogue with the Board of Directors of the Issuer (the “Board”) and the Issuer’s management regarding this transaction as well as a number of other additional available opportunities to maximize shareholder value.

Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer:

Elliott, through The Liverpool Limited Partnership, a Bermuda limited partnership and a wholly-owned subsidiary of Elliott (“Liverpool”), and Elliott International have entered into notional principal amount derivative agreements (the “Derivative Agreements”) in the form of cash settled swaps with respect to 5,780,000 and 11,220,000 shares of Common Stock of the Issuer, respectively (representing economic exposure comparable to less than 1% and less than 1% of the shares of Common Stock of the Issuer, respectively). Collectively, the Derivative Agreements held by the Reporting Persons represent economic exposure comparable to an interest in approximately 1.3% of the shares of Common Stock. The Derivative Agreements provide Elliott and Elliott International with economic results that are comparable to the economic results of ownership but do not provide them with the power to vote or direct the voting or dispose of or direct the disposition of the shares that are referenced in the Derivative Agreements (such shares, the “Subject Shares”). The Reporting Persons disclaim beneficial ownership in the Subject Shares.

Elliott and Elliott International have entered into notional principal amount derivative agreements with respect to 12,461,000 and 24,189,000 shares of Common Stock of the Issuer, respectively, in the form of physically settled swaps that the Reporting Persons may be deemed to beneficially own upon satisfaction of certain conditions. Collectively, the swaps held by the Reporting Persons represent economic exposure comparable to an interest in approximately 2.8% of the shares of Common Stock.

The counterparties to the Derivative Agreements and the physically settled swaps are unaffiliated third party financial institutions.

Elliott has purchased from counterparties call options that carry the right to call from such counterparties up to 6,681,300 shares of Common Stock at a price of $5 per share, if such right is exercised prior to or on December 1, 2015.

Elliott International has purchased from counterparties call options that carry the right to call from such counterparties up to 12,969,700 shares of Common Stock at a price of $5 per share, if such right is exercised prior to or on December 1, 2015.

On November 23, 2015, Elliott, Elliott International and EICA entered into a Joint Filing Agreement (the “Joint Filing Agreement”) in which the parties agreed to the joint filing on behalf of each of them of statements on Schedule 13D with respect to the securities of the Issuer to the extent required by applicable law. The Joint Filing Agreement is attached as an exhibit hereto and is incorporated herein by reference.

For more notable holders of Alcoa Inc stock click here. For more information on Elliott Management click here.

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