Hi, I'm TJ, and I am CEO of Alpha Advisors!

Today, I want to break down one of the most detailed activist campaigns we've seen in Asia this year. Elliott Management, one of the world's most prominent activist investors, just went public with a 49 page presentation targeting Daikin Industries, the global leader in HVAC. If you're interested in activist investing, this is a masterclass in how it's done.

Many of our clients at Alpha aspire to work at firms like Elliott, yet most have never seen an activist campaign up close. So let's walk through what's actually happening on the front lines of activist investing, and what it takes to build a career at a fund like this.

Daikin Industries – Elliott Investment Management L.P. | Letters

Elliott Investment Management L.P. | Letters

Elliott Deploys Roughly $1 Billion Into Daikin: What Are They Proposing?

Elliott acquired approximately 3% of Daikin's outstanding shares (roughly $1 billion) and released a detailed public presentation on April 27, 2026. The thesis is straightforward.
"Daikin is an exceptional company and the undisputed global leader in HVAC, but there is significant room to improve profitability and capital efficiency."

Let's look at the numbers.
Daikin commands the world's No.1 HVAC market share (approximately 14%) and operates across more than 170 countries. It also stands to benefit from the structural tailwind of rising data center cooling demand.
Yet over the past five years, the stock has underperformed the TOPIX index by 115% and its global peers (Trane, Carrier, Lennox, and others) by 208%.

Its EV/EBITDA multiple sits at 8.9x, a 48% discount to the peer average of 17.4x.

Elliott attributes this to a persistent decline in ROE.
Daikin's ROE has fallen from above 15% to roughly 9% over the past eight years, and its operating margin of 8.5% lags far behind peers at 16%.
This is where Elliott sees the opportunity.

The $1.7 Billion to $2.7 Billion Operating Profit Improvement Plan

Elliott's roadmap consists of four pillars.

1. SG&A Optimization (+$500 million to $850 million):

In the U.S., six separate business units each maintain their own back office functions. In China, administrative functions are duplicated across regions. Daikin operates 53 R&D sites, compared to 39 at Carrier. Elliott proposes introducing shared services and consolidating management layers, which could improve margins by 110 to 200 basis points.

2. Capital Expenditure Rationalization (+$250 million to $350 million):

Daikin's capex to sales ratio is 6.8%, roughly three times the peer average of 2.3%. Yet its revenue growth is in line with competitors, suggesting poor investment efficiency. Elliott recommends normalizing capex intensity to approximately 4%, in line with Daikin's own historical average.

3. Manufacturing Footprint Optimization (+$200 million to $350 million):

Of 129 global production sites, many are running well below capacity. The Waller, Texas plant operates at 60% to 70% utilization, and the Polish heat pump facility runs at just 30% to 40%. Post acquisition integration has been limited. In North America alone, Daikin operates 23 plants versus 11 at Carrier and 8 at Lennox.

4. Product and Revenue Enhancement (+$700 million to $1 billion):

This includes shifting from copper to aluminum in certain product lines, standardizing SKUs, enforcing pricing discipline, and shifting the mix toward higher margin service contracts and industrial applications.

Beyond these four pillars, Elliott has also flagged three business units accounting for roughly 10% of revenue as divestiture candidates: AAF (filtration, approximately $1 billion in revenue), AHT (refrigerated display cases, approximately $600 million), and the hydraulics business (approximately $500 million). Elliott also suggests that the chemicals division ($1.75 billion in revenue at a 17.5% operating margin) may be better run as a standalone entity.

PE Grade Due Diligence Sets This Campaign Apart

What makes this presentation stand out is the depth of analysis behind it.
Elliott conducted expert interviews with former Daikin senior executives and former divisional CXOs. It partnered with a leading management consulting firm for operational benchmarking. It produced plant by plant comparisons against Carrier, Trane, Lennox, Bosch, Vaillant, Gree, Midea, and Mitsubishi Electric. This is the kind of granular work you'd expect in a private equity buyout, not a typical activist white paper.

Equally notable is Elliott's tactical sophistication in framing its proposals.
Daikin's own CFO acknowledged at an earnings call that "we recognize ROE has been declining." Management has publicly stated that "we were too focused on topline growth" and signaled a "shift toward profitability and capital efficiency." Rather than positioning itself as adversarial, Elliott is aligning with the direction management has already articulated and providing the detailed playbook to get there. This is a textbook example of constructive activist engagement designed to create value through dialogue, not confrontation.

What Does It Take to Get Into a Fund Like Elliott?

So what does it actually take to build a career at a firm like Elliott?

The 49 page Daikin presentation itself tells you everything you need to know. The baseline is strong financial analysis, but what really matters is a deep understanding of industry structure, operational insight, strategic frameworks, and the ability to synthesize all of that into an actionable, investable thesis.

The most common path in is through investment banking, particularly M&A and restructuring groups. The vast majority of Elliott's team comes from IBD backgrounds, which speaks volumes.
At a global fund like Elliott, you also need the ability to analyze businesses across multiple geographies and communicate at a high level in English (and ideally other languages for Asia focused roles).

But the most fundamental skill is the ability to identify hidden value in a business and translate it into concrete, executable recommendations.
In the Daikin case, that means answering the question: "Why is the world's No.1 HVAC company not being rewarded by the market?" Elliott answered that by decomposing ROE, benchmarking plant networks against global peers, and conducting on the ground expert interviews to understand operational realities.
Developing this kind of multi layered analytical thinking is the key to unlocking a career in activist investing.

Breaking into activist funds remains one of the most opaque career paths in finance, and the preparation required is often underestimated. At Alpha Advisors, we provide individualized coaching backed by 18 years of experience for professionals targeting roles at global investment banks, hedge funds, and activist funds. If you're serious about making a career move, reach out to us for a consultation.

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About TJ, Founder of Alpha Advisors

TJ: Began his career at Sumitomo Corporation, one of Japan's largest global trading and investment conglomerates, where he worked in the Corporate Accounting Department overseeing budgeting, financial reporting, and performance management for the parent company and over 800 subsidiaries, as well as investor relations. Selected as the youngest trainee for a rotation at Sumitomo Corporation of Americas (New York), where he contributed to the turnaround of a U.S. steel mini mill subsidiary. Subsequently moved to the Project Finance Division, structuring large scale financings for infrastructure projects in emerging markets and financing for J:COM (Jupiter Telecommunications). Selected for the company's competitive MBA sponsorship program. Earned his MBA from the University of Chicago Booth School of Business, concentrating in Finance, Entrepreneurship, and Organizational Management. Founded The University of Chicago Japanese Association. Conceived and led the first ever "JAPAN TRIP" at Chicago Booth, which became an annual tradition. Joined Goldman Sachs Investment Banking Division, advising on numerous M&A transactions and capital markets offerings (including IPOs) across the media and consumer sectors, as well as private equity investments and corporate restructuring engagements. Selected as one of six participants (from over 200 applicants) for the 4th Entrepreneurship Program hosted by the Japan Association of Corporate Executives (Keizai Doyukai). Alpha Advisors has a proven track record of guiding candidates to admission at top MBA programs (Harvard, Stanford, Wharton, and other leading programs across the U.S., Europe, and Asia), as well as graduate schools, undergraduate programs, and boarding schools. The firm has also coached professionals to offers at leading institutions including McKinsey, Goldman Sachs, BlackRock, Google, Big 4 consulting and advisory firms, and major global corporations. Alpha also provides intensive one on one coaching for the TOEFL, GMAT, IELTS, and GRE. TJ is known for designing clear goals, relentlessly pursuing the highest standards of quality, and delivering results. Demand for TJ as a personal advisor continues to grow.