(Reuters) - Hedge fund Elliott Management Corp on Monday disclosed a 10.3 percent stake in Commvault Systems Inc (CVLT.O) and nominated four directors to the data software developer’s board, sending the company’s shares up almost 12 percent.
Elliott, whose new stake makes it one of the largest shareholders in Commvault, urged the company to start an operational review and return capital to investors.
Elliott said Commvault’s troubles include severe margin underperformance, weak financial targets, recurring execution issues and lagging corporate governance, all issues it said can fixed.
Elliott also called for a “review of management” in the letter. Commvault Chief Executive Officer Robert Hammer, 75, is one of the four directors up for nomination at this year’s annual meeting. Elliott is calling for the four directors it is nominating to replace Hammer, along with three other management-backed board nominees.
Commvault said in a statement that it has held initial talks with Elliott.
“We go into these discussions with an open mind, a goal of enhancing stockholder value, and optimistic for Commvault’s future,” Commvault said.
The New York-based hedge fund, which has more than $33 billion in assets, is known for shaking up management and pressuring companies for change. It comes a week after Elliott disclosed large stake in travel software firm Travelport Worldwide (TVPT.N) and said it might try to purchase the travel software company outright.
Elliott, known for pushing technology companies to explore sales processes, did not explicitly call for a sale of the company in its letter Monday.
Two of the board nominees it is backing, however, have ties to private equity firms. Private equity firms have turned out to be popular buyers of many of the tech companies that Elliott has targeted over the years.
Eric Martinuzzi, analyst at Lake Street Capital Markets, called Elliott’s letter a “positive near-term development for the shares although it tends to put pressure and create a new distraction for management.”
Commvault, based in Tinton Falls, New Jersey, went public in September 2006 and has a market valuation of about $2.6 billion.
Commvault shares rose $6.80, or 11.9 percent, to $64 a share on Monday.
Reporting by Munsif Vengattil in Bengaluru and Liana B. Baker in New York; Additional reporting by Sonam Rai and Supantha Mukherjeein Bengaluru; Editing by Arun Koyyur and David Gregorio