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PepsiCo shares are experiencing a significant surge in premarket trading, jumping over 4% to $155.20 as of 8:44 AM EDT on September 2, 2025. The uptick comes after Elliott Investment Management, one of the world’s largest activist hedge funds, revealed a substantial $4 billion stake in the beverage and snack giant.

Elliott has sent a detailed presentation and letter to PepsiCo’s board of directors, outlining what it calls a “historic opportunity” to revitalize the company and unlock significant shareholder value through strategic restructuring and operational improvements.
 

Elliott Management Takes Aim at PepsiCo’s Underperformance

Elliott Investment Management, founded in 1977 by Paul Singer and managing approximately $76.1 billion in assets, has built a reputation as one of the most successful activist investors globally. The hedge fund disclosed its massive $4 billion position in PepsiCo, making it one of the company’s largest shareholders. Elliott’s track record includes successful campaigns at major corporations like Twitter, AT&T, and Southwest Airlines, often resulting in significant operational improvements and shareholder returns.

In its comprehensive presentation titled “Elliott’s Perspectives on PepsiCo,” the hedge fund detailed how the company has suffered from “strategic and operational challenges” leading to poor financial results and sharp stock underperformance. Elliott noted that PepsiCo’s beverage business (PBNA) has underperformed peers for over a decade, while the previously resilient foods business (PFNA) has begun to falter with slowing growth and compressed margins. The activist investor sees this disappointing trajectory as creating a rare opportunity to transform a beloved American company.

Elliott’s analysis reveals that PepsiCo, despite generating over $90 billion in revenue and operating in 200+ countries, has become a “dramatic underperformer” in the consumer packaged goods sector. The hedge fund believes the company’s problems are solvable and that with “the right mindset and an appropriately ambitious turnaround plan,” PepsiCo could deliver more than 50% upside to shareholders through strategic focus and operational excellence.

Elliot’s Five-Point Turnaround Strategy and PepsiCo’s Stock Performance

Elliott has outlined a comprehensive five-point plan to revitalize PepsiCo, starting with a structural review of its beverage operations. The hedge fund suggests evaluating the potential refranchising of PBNA’s operationally intensive bottling network, similar to what competitor Coca-Cola has successfully implemented. Additionally, Elliott recommends streamlining PFNA’s asset base and portfolio through cost realignment and divestment of non-core assets to restore appropriate profit margins and free up capital for reinvestment.

The activist investor’s strategy also emphasizes investing in profitable growth across both beverages and foods, with targeted marketing support and disciplined capital allocation. Elliott believes PepsiCo must defend its core franchises in carbonated soft drinks while selectively expanding in growing categories, and enhance investment in proven brands while pursuing accretive bolt-on acquisitions. Critical to success is clear communication of the turnaround plan with new financial targets and enhanced oversight to ensure accountability.

PepsiCo’s stock has struggled significantly, with the shares down 0.30% year-to-date compared to the S&P 500’s 9.84% gain, and showing a 10.47% decline over the past year versus the market’s 15.53% advance. Trading at a forward P/E of 18.48 and offering a 3.83% dividend yield, the stock closed at $146.98 on August 29 before surging to $155.20 in premarket trading following Elliott’s announcement. With Elliott’s involvement and detailed roadmap for improvement, investors appear optimistic about the potential for meaningful operational and financial improvements at the consumer goods giant.

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