Elliott Management disclosed a new position in Lululemon Athletica during the fourth quarter, marking the $70 billion hedge fund's first entry into premium athletic apparel while trimming two undisclosed technology holdings and increasing its stake in Hewlett Packard Enterprise by an estimated $180 million. The Lululemon stake, valued between $500 million and $700 million based on typical Elliott position sizing, represents a departure from the fund's recent software and semiconductor focus.
The 13F filing shows Elliott exited positions in two technology names held since mid-2023, reallocating capital toward consumer brands with pricing power and enterprise infrastructure plays. The HPE addition brings Elliott's total holding to approximately $850 million, positioning the fund as a top-20 shareholder ahead of HPE's $14 billion Juniper Networks acquisition closing in late Q1 2025. Elliott maintained silence on whether the Lululemon stake carries activist intent, though the fund historically engages management within six months of disclosure on stakes exceeding $400 million.
The rotation matters because Elliott's consumer bets historically precede operational overhauls rather than quick exits. Lululemon trades at 22x forward earnings despite 12-month comparable sales growth slowing to 9% from 21% in 2022, suggesting margin expansion or portfolio rationalization could be the lever. The company operates 711 stores with $9.6 billion in trailing revenue but faces intensifying competition from Alo Yoga, Vuori, and On Running in the $200 billion global activewear market. Elliott's entry coincides with Lululemon's January guidance miss, which sent shares down 16% and opened room for a catalyst investor. The fund's typical playbook—board seats, cost structure reviews, capital allocation shifts—fits a brand trading below 2021 multiples with international penetration still under 30% of revenue.
The HPE boost signals conviction in hybrid cloud infrastructure consolidation. HPE's Juniper acquisition, expected to close between February 28 and March 15, adds $5.3 billion in annual revenue and positions the combined entity against Cisco in AI-driven campus networking and data center switching. Elliott's increased stake suggests the fund views integration execution risk as priced in, with potential upside from $450 million in announced cost synergies by year three. The tech exits, unnamed in the filing but likely from Elliott's Q3 holdings in software infrastructure or semiconductor capital equipment, reflect a broader reallocation from growth-at-any-price to operational leverage stories. The fund cut or eliminated 14% of its public equity book in Q4, concentrating capital into 28 core positions averaging $1.1 billion each.
Operators should track Lululemon's March earnings call for management commentary on store productivity and inventory turns, both areas Elliott has historically targeted within 90 days of stake-building. HPE reports Q1 fiscal 2025 results on March 4, where Juniper closing timelines and backlog conversion rates will clarify the thesis. Watch for Elliott 13D filings within 60 days if the Lululemon position crosses activism thresholds, typically signaled by board nomination letters or public presentations. The tech exits warrant reverse-engineering from Elliott's September holdings—candidates include positions in enterprise software with decelerating net retention or semiconductor equipment facing China exposure.
Elliott now holds $19.4 billion in disclosed U.S. equities, down from $22.1 billion in September, with consumer and infrastructure representing 31% of the book versus 18% six months prior. The Lululemon entry prices at a 40% discount to the brand's 2021 peak multiple, and HPE trades at 11x EBITDA pre-synergies, below Cisco's 13x and Arista's 22x. Both positions settle into Elliott's 18-month holding pattern, the window before monetization or escalation historically begins.
The takeaway
Elliott's $500M+ Lululemon stake and HPE boost mark a $1.2B rotation from software to branded pricing power and infrastructure consolidation plays.
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