The shares of Cabelas are trading higher after Elliott Associates (referred to as Elliott), and its wholly-owned subsidiaries disclosed a significant stake in the company.

The stock price of Cabelas surged almost 20% to $39.99 per share at the time of this writing around 12:12 in the afternoon in New York. Cabelas is a specialty retailer and direct marketer of camping, fishing, hunting, and other outdoor related products.

Elliott’s investment in Cabelas

Based on its 13D filing with the Securities and Exchange Commission (SEC), Elliott acquired 11.1% of the outstanding common stock of Cabelas.

The filing indicated that Elliott beneficially owned 1,962,321 shares or approximately 2.8% of the outstanding common stock of Cabelas. Elliott International and Elliott International Capital Advisors (EICA), each beneficially owned 2,202,679 shares or 3.2% of the outstanding common stock of the specialty retailer.

Elliott, Elliott International and EICA collectively, beneficially owned 4,165,000 or 6.0% of the shares of the outstanding common stock of Cabelas.

The firms have economic exposure comparable to approximately 5.1% of the outstanding common stock of the company under the Derivative Agreements.

Under the Derivative Agreements, Elliott and Elliott International have economic results comparable to the economic results of ownership but do not have the power to vote or direct the voting or dispose of or direct the disposition of the shares that were referenced in the agreements.

The firms have a collective voting power of approximately 6% of the outstanding common stock of the company.

Elliott may formulate plans/proposals for Cabelas in the future

Elliott acquired a stake in Cabelas because of its belief that its stock” was “significantly undervalued by the public market and represent an attractive investment opportunity.”

The activist hedge fund believed that the company has multiple ways to unlock unrealized value, and it may seek to engage in a constructive dialogue with the Board of Directors of the company regarding opportunities to maximize shareholder value.

Currently, Elliott has no plans or proposals to Cabelas. However, the activist hedge fund said it may express its views to the Board and management of the company from time to time in the future as it continues to review its investment.

Elliott said it might in the future formulate plans or proposals regarding the company’s business, strategies, assets, corporate governance, Board of Directors composition, and other issues to enhance shareholder value.

The shares of Cabelas traded between $33.03 and $58.90 per share. The company lost 25% of its stock value year-to-date.

Cabelas Elliott