Activist hedge fund calls for shakeup of eBay's portfolio

Elliott Management disclosed a 4% stake in online marketplace eBay on Tuesday as it called for a shake-up of the company’s portfolio in order to double the outfit's share price.

Paul Singer's activist hedge fund urged eBay to take a fresh look at its portfolio and dispose of several assets - including StubHub and its classifieds portfolio - as part of a concerted effort to refocus itself on its core retail business and "ensure that it has the right, most experienced talent in place to oversee the portfolio review and operational improvements."

Elliott said: "Today eBay suffers from an inefficient organisational structure, wasteful spend and a misallocation of resources."

"By increasing operational efficiency, eBay can free up capital to invest in capability- and revenue-enhancing activities."

The hedge fund, which now has a stake in the firm worth roughly $1.4bn, said eBay shares could be worth as much as $55 to $63 by the end of 2020 if the San Jose, California-based company acted on its suggestions.

"In addition to eBay’s share price underperformance, the rapid deterioration in its valuation reflects a profound loss of confidence by investors,” said Elliott partner Jesse Cohn.

"eBay is at a critical moment, embarking on several major platform initiatives while grappling with inconsistent execution, a loss of investor confidence and a rapidly evolving e-commerce landscape," said the fund.

"We firmly believe that now is the time to undertake the necessary actions” in the hedge fund’s plan “and to establish the right foundation for a streamlined eBay to be successful in these efforts."

As of 1515 GMT, eBay shares had shot up 8.19% to $33.54 each.