Activist investor Elliott Investment Management on Tuesday revealed it has built up a more than 10% stake in Norwegian Cruise Line and plans to launch a turnaround effort at the struggling ship operator.
Norwegian – the world’s fourth-largest cruise operator by number of passengers worth roughly $10 billion – has lagged behind fellow mass-market rivals like Royal Caribbean and Carnival, even as consumer demand has rebounded in the years following the pandemic.
Elliott, which has led ambitious activist campaigns at Southwest Airlines and Phillips 66, is now one of Norwegian’s top investors – and said in a letter to the company’s board that it believes it can execute a successful turnaround.
“Over the past decade, the company has fallen from a best-in-class cruise operator at the time of its initial public offering to a clear industry laggard, suffering from inconsistent strategy, weak execution, inaccurate guidance and poor cost discipline,” Elliott said in the Tuesday letter.
“With the right strategy and strong execution, we see a clear path for the stock to reach $56 per share, or 159% higher than current levels.”
Share in Norwegian jumped 8.3% Tuesday. Prior to those gains, the stock was down about 20% over the past 12 months and among the worst-performing in the S&P 500 over the past five years.
“Our board of directors and management team regularly engage with our shareholders to hear their views on our strategy and progress, and we appreciate their perspectives,” a spokesperson at Norwegian Cruise Line Holdings told The Post.
“Of note, this is the first we are hearing from Elliott Investment Management.”
Last week, the Miami-based cruise operator – the brands of which include Oceania Cruises and Regent Seven Seas – announced that its CEO Harry Sommer was stepping down.
The company appointed John Chidsey, the former CEO of Subway restaurants and a previous Norwegian board member, to take the reins – a shakeup that sent shares in Norwegian down more than 7%.
“What might confuse investors is Norwegian is being run by someone with zero ties to the cruise industry,” analysts at Stifel wrote in a note to clients.
In its letter, Elliott accused Norwegian’s board of failing “to fulfill any of its fundamental responsibilities, including its most important obligation – to select the right leadership.”
The activist investor has been looking for new independent directors to nominate to the board, including Adam Goldstein, the former president and chief operating officer of Royal Caribbean, The Wall Street Journal reported Tuesday.
The deadline for shareholders to nominate board candidates ends next month, ahead of Norwegian’s annual meeting.
Along with changes to the board, Elliott – which boasts more than $79 billion in assets under management – also proposed a review of current executive leadership and a new business plan.
Norwegian’s competitors have found notable success in attracting new customers with their private island offerings.
The company already owns Great Stirrup Cay in the Bahamas – one of the largest private islands owned by the cruising industry – but development plans have been slow-moving.
