The Wall Street Journal: Elliott Management takes stake in F5 Networks

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Activist investor Elliott Management Corp. has taken a stake in F5 Networks Inc. and spoken to the software company’s management in recent weeks about ways to boost its lagging stock, according to people familiar with the matter.

The exact size of Elliott’s stake couldn’t be learned, though it falls below the 5% threshold that would require regulatory disclosure, the people said. Elliott is one of the biggest investors in F5 Networks, a Seattle company with a market value of about $8.8 billion, they added.

Founded in the mid-1990s, F5 Networks FFIV, +2.49% is a so-called applications-services company, working behind the scenes to make sure apps like Netflix Inc. NFLX, +0.18% are secure and perform smoothly.

The company’s stock has risen 3.4% since the start of the year, clawing back all the steep losses it suffered in the early stages of the coronavirus pandemic, after a strong quarterly earnings report showed accelerating software growth. Still, it is far behind a 33% climb in the tech-heavy Nasdaq Composite Index COMP, +0.03% as growth has slowed and margins have declined. The stock closed Friday at $144.37, down from a high of roughly $200 in late 2018.

Among other things, Elliott managers question the company’s recent acquisitions of Shape Security Inc. and Nginx Software Inc., suggesting it may have overpaid without a clear integration strategy, the people said.

An expanded version of this report appears on WSJ.com.

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