Hedge fund Elliott Management Corp. has obtained a large stake in Twitter and is advocating for changes, including possibly replacing CEO Jack Dorsey, a source familiar with the matter confirmed to CNN Business.
Elliott has nominated four directors to Twitter’s board in an attempt to fill three vacant seats at this year’s annual meeting, according to sources.
It’s not clear how big a stake Elliott has in Twitter or who it wants to replace Dorsey with, Reuters and Bloomberg reported.
The source added that Elliott was open to the possibility of Dorsey being the full-time CEO as long as he was willing to give up his other job as CEO of payments technology company Square (SQ). The source conceded though that Dorsey was unlikely to do that, and this is the reason why Twitter should search for a new full-time CEO.
Many tech companies, like Facebook and Google, issue multiple classes of stock. But Twitter only issues common stock, giving shareholders equal voting rights, while also leaving the company more vulnerable to activist shareholders who can buy up a large amount of shares. While Jack Dorsey leads Twitter, he only owns a small percentage of the company’s shares.
Twitter turned its first annual profit in 2018, but it still suffered from a declining user base. The social media network has been slower than its rivals like Facebook (FB) and Snapchat (SNAP)at expanding new features. In a 2018 interview with CNN Business, Dorsey said “we’re ready to question everything” about the social networking site as it sought to quell criticism over spam, abuse and misinformation.
Elliott is widely viewed as one of the most successful activist investors, a type of investment firm that aims to persuade management teams to make sweeping changes aimed at reviving stock prices.
In early February, Elliott revealed that it built a “substantial” stake in SoftBank, the firm run by billionaire Masa Son, and had held private talks with the company. SoftBank recently attracted scrutiny for its investments in WeWork, Uber and dog walking startup Wag.
The SoftBank campaign is the biggest move by Elliott since its investment last year in AT&T (T). (AT&T (T) owns CNN’s parent company WarnerMedia.) AT&T (T) and Elliott reached a truce last October that included a pledge by the company not to make any major acquisitions.
CNN Business’ Matt Egan and Paul R. La Monica contributed to this report.