Elliott Advisors urges Taylor Wimpey to move past ‘strategic missteps’
Hedge fund Elliott Advisors has said Taylor Wimpey is at a “critical juncture” as it hunts for a new chief executive.
In an open letter to the housebuilder’s board, the firm said its top-five position in the company’s shareholder register reflected its “conviction in the substantial upside potential”.
“Taylor Wimpey is a business with extraordinary potential, powered by talented employees dedicated to delivering high standards of product quality and customer satisfaction,” the letter said. “Yet for all this promise, the company continues to fall short of achieving the opportunity inherent in the business. In particular, a series of operational and strategic missteps has resulted in persistent share price underperformance, leaving shareholders frustrated and lacking confidence in the company.”
Hedge fund Elliott Advisors has said Taylor Wimpey is at a “critical juncture” as it hunts for a new chief executive.
In an open letter to the housebuilder’s board, the firm said its top-five position in the company’s shareholder register reflected its “conviction in the substantial upside potential”.
“Taylor Wimpey is a business with extraordinary potential, powered by talented employees dedicated to delivering high standards of product quality and customer satisfaction,” the letter said. “Yet for all this promise, the company continues to fall short of achieving the opportunity inherent in the business. In particular, a series of operational and strategic missteps has resulted in persistent share price underperformance, leaving shareholders frustrated and lacking confidence in the company.”
A spokesman for Taylor Wimpey said: “We have not met with Elliott and prior to today’s published letter we have not had any proposal from them.
Elliott said the hunt for a new chief executive to replace Pete Redfern must be “transparent and thorough” and focus on “external candidates who have not been a party to the underperformance to date”.
The hedge fund went on to say that the company’s focus on large sites led to cost overruns and sale price erosion, and a trade-off between margins and volume.
It also questioned the need for last year’s equity raise and criticised what it called an industry-worst in terms of financial performance during the pandemic.
“We believe that a meaningful change in leadership, with top-tier external talent, is essential to rebuild investor confidence,” the letter said. “It is clear that the status quo invariably leads to inadequate results and persistently impaired shareholder value. Fortunately, there are several readily achievable steps the board can take to address the company’s underperformance and restore its position in the industry.”
The hedge fund has recommended not only a suitable change in leadership but also enhancements to the board, including two new independent directors and a new operational committee.
Taylor Wimpey’s spokesman said: “Taylor Wimpey delivered record interim profits and increased guidance for the full year in August. This follows a successful and well-timed £500m equity raise in 2020 which enabled the company to invest in a total of £1.7bn of new land at a time when there was a lack of competition in the land market and prices were considerably lower than they are today. The company is set for another year of growth in 2022 and given the equity raise will deliver accelerated growth from 2023.”
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