6/5/2026
Analysis: Wall Street Activism Returns to ASX With Elliott’s Northern Star Play
Australian Financial Review (06/05/26) Shapiro, Jonathan
When Elliott Management revealed itself to have built a position of over $1 billion in gold miner Northern Star (ASX: NST) on Tuesday, it couldn’t have hoped for a better reaction. The stock popped about 10% on the open, closing up 13.5%, and then gained another 4.5% the day after. The two-day pop was also great news for any other Northern Star shareholders who suffered the indignity of owning a gold mine while missing out on the spoils of a blockbuster bull run for the precious metal. But Northern Star was, in fact, an unpopular holding among institutions, according to JPMorgan’s (NYSE: JPM) love index, which tracks the extent to which active managers are overweight or underweight a stock relative to the index. That might explain why, aside from the share price jump, there wasn’t exactly an outpouring of enthusiasm about the content of Elliott’s 39-page pitch deck “Northern Star rising." That presentation pointed out just how woeful Northern Star’s recent market, operational and even disclosure performance had been, after production downgrades claimed its managing director, Stuart Tonkin, last month. Elliott, which oversees $US80 billion ($112 billion) in assets, called on Northern Star to consider putting itself up for sale, or failing that, embarking on a dramatic turnaround overseen by a fresh set of directors. What was absent was a confrontational tone, which suggests the hedge fund wants to play nice with Northern Star, which in turn has responded politely to the unwanted attention. The tension and drama of Elliott’s last encounter, when it launched a campaign against BHP (ASX: BHP), just isn’t there – at least not yet. Elliott’s return to the ASX highlights just how much the market and the activism game have changed since the BHP campaign back in 2017. Their arrival back then was met with a tinge of contempt. The sentiment was that Elliott’s push for BHP to collapse its dual-listed company structure had been raised repeatedly by investors and arbitrageurs. Ironically, BHP was believed to have already been preparing to divest its U.S. energy assets, and Elliott’s demands for them to do so triggered a visceral reaction to resist. But Elliott’s arrival coincided with a peak in investor frustration, and its campaign allowed long-suffering BHP shareholders to express their irritation at years of woeful capital allocation. The appointment of Ken MacKenzie to replace Jack Nasser as chairman marked a step change for the company and for Elliott’s campaign, which then turned amicable and private. There is a sense in the Elliott camp that were it not for their public expressions, BHP might not have moved to appoint a chairman of MacKenzie’s caliber. Another topic of endless fascination and division, which has come up again, is just how well Elliott did out of its BHP trade. It is not as simple as tracking the share price since Elliott showed up. The common perception is that Elliott hedged its broad exposure to the mining sector to isolate the impact of its influence via short positions in stocks such as Anglo American. They are, of course, in the business of delivering uncorrelated market returns. Those proxy stocks fared well, but some familiar with Elliott’s trading say the hedging was more complicated and highly proprietary and ultimately resulted in one of the most profitable trades on the ASX. We can only speculate about their profits and how they might be hedging their current billion-dollar-plus Northern Star position. There are two broader issues raised by Elliott’s return. One is that the activism game has changed. A global phenomenon, which is particularly acute in Australia, is that share registers are increasingly dominated by passive investment funds. That’s good and bad for activism. The bad is that passive funds have little incentive to engage with activists unless they’re required to act by casting a vote. They’re generally less engaged than traditional active managers, which makes it harder to win their support. But on the plus side, the prevalence of absent landlord shareholder registers is creating more opportunities for activists who can dominate the share of voice. Another complexity is that activism in the resources sector is particularly tricky given the geological constraints and the fact that the company has no control over the prices of the product itself. Others believe poorly managed miners are ripe for shareholder activism. The mineral endowments don’t change, but if the management that sits above them lacks competence, a change can create value. We’re also observing that activists and targets are willing to tone down their rhetoric to achieve their objectives. So, are the days of unbridled aggressive activism over? We hope not. What is abundantly clear is that the Australian market can do with some unbridled, aggressive activism. We need only look to the exchange operator, ASX Ltd, as evidence that there are times when owners need to show their fangs. A decade of capital misallocation and poor board oversight has turned a dominant monopoly into a basket case. It’s a warning that without some tough love, key national infrastructure, a market and even a nation can meander toward mediocrity.
Read the article