NRG Energy (NYSE:NRG) stock is on the move Monday as activist investor Elliott Investment Management wants to make changes at the company.
Elliott sent a letter to NRG Energy’s Board of Directors outlining its plan for change. The investor’s main goal is to remedy underperformance while creating significant and sustainable value. For the record, Elliott has a 13% economic interest in NRG stock.
First up, Elliott wants to add new independent directors to the company’s board. The investor wants to add board members with “strong power and energy industry expertise” that could “help guide the necessary changes” at the company.
Secondly, Elliott is seeking to improve operations and reliability at NRG Energy. This has the activist investor targeting “at least $500 million of recurring, EBITDA-accretive cost reductions.”
Finally, Elliott is looking for strategy and capital allocation. This has it targeting a “strategic review” of NRG Energy’s home services strategy. That includes Vivint, a company recently acquired by NRG. Elliot isn’t happy with the acquisition, calling it “the single worst deal in the power and utilities sector in the past decade.”
What This Could Mean for NRG Stock
If Elliott is right about its plans for change, it could offer a massive boost in price to NRG stock. The investor believes it can create more than $5 billion of shareholder value. If true, that could see the price of NRG reach $55 per share. For comparison, NRG traded for $32.79 per share when markets closed on Friday.
NRG stock is up 1.4% as of Monday morning.
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On the date of publication, William White did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.