LSEG shares boosted as Elliott stake revealed Proactive uses images sourced from Shutterstock
Shares in London Stock Exchange Group PLC jumped 8% in early trading after it emerged that activist hedge fund Elliott Management has built a stake and begun engaging with the board.
The move comes at a delicate moment for LSEG, whose shares fell by 20% last month as it was caught up in a wider sell-off due to investor worries about the impact of new artificial intelligence tools, which has contributed to its shares falling almost 40% over the past year.
Elliott has built a “significant” stake and been engaging with LSEG ahead of its annual results, according to a report in the Financial Times.
It is understood to have urged management to consider a multibillion-pound share buyback once a £1 billion programme is completed and to focus on improving margins relative to rivals such as Moody’s and CME Group.
Although best known as the operator of the Square Mile’s stock exchange, LSEG has transformed itself into a data and analytics group following its £22 billion acquisition of Refinitiv in 2021, while also holding a stake of around £10 billion in electronic marketplace Tradeweb.
Analysts at Barclays noted that LSEG is considered to be heavily exposed to the threat of AI because more than 40% of its revenues are derived from data and analytics, but said they think the de-rating for LSEG was “overdone” given 90% of revenues for its Data & Feeds business are backed by proprietary IP and infrastructure, plus it has deep AI partnerships that potentially create licensing upside.
Other at UBS and JPMorgan have agreed, arguing that the group’s data franchise, partnerships and recurring revenues leave it well placed to benefit rather than suffer from rising AI adoption.