Activist Elliott Takes Stake in PulteGroup

Hedge fund Elliott Management Corp. has taken a stake in home builder PulteGroup, which in recent months has been embroiled in a battle between its founder and chief executive over the company's future.

A Pulte spokeswoman confirmed that Elliott Management has taken a position, though she didn't specify the size of the stake.

In a statement, the company said "we welcome dialogue with all of our shareholders." A spokesman for Elliott Management declined to comment.

The move by the activist hedge fund marks the latest twist in a saga that began with a public spat between PulteGroup founder William J. "Bill" Pulte and chairman and chief executive Richard Dugas two months ago.

Amid pressure from Mr. Pulte, who is the company's largest shareholder, Mr. Dugas announced in early April he would be retiring next year. But Mr. Pulte continued to demand Mr. Dugas's immediate resignation, arguing to board members and shareholders in a series of letters that PulteGroup's stock performance and sales volume have lagged behind rival home builders throughout the housing recovery.

Shareholders re-elected Mr. Dugas as chairman and chief executive, along with the entire board, at the company's annual meeting in May.

Mr. Pulte couldn't be reached for comment. His grandson, also William J. "Bill" Pulte, declined to comment on the Elliott Management stake.

Jack Micenko, an analyst with Susquehanna Financial Group, said the founder and grandson have been speaking with institutional investors over the last month and he believes "their message is beginning to resonate with folks."

"It's clear they're not going away any time in the near future," Mr. Micenko said. "That's the one thing I'm absolutely sure of as I come out of these meetings."

He said the two men are pushing for a new chief executive and a shake-up of the company's board that would involve bringing on people with more experience in the home building business.

In a research note last month, Mr. Micenko noted that the Pulte family had hired a proxy advisory firm, Okapi Partners, and that representatives of the firm were in attendance at his meeting with them.

Michael Fein, a senior managing director at Okapi Partners, said the firm isn't currently soliciting on behalf of the Pultes but they have attended meetings with other shareholders. He declined to comment further.

Elliott Management last year took a position in struggling outdoor recreation retailer Cabela's. It also had a stake in computer data and security company EMC Corp. before it was acquired by computer maker Dell Inc. last year.

Write to Chris Kirkham at [e-mail]

(END) Dow Jones Newswires

June 07, 2016 17:45 ET (21:45 GMT)

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