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  "documentTitle": "Cognizant Technology Solutions (CTSH)",
  "authorId": "02_Elliott_Management",
  "authorName": "Jesse Cohn",
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  "presentationDate": "2016-11-28 00:00:00",
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  "notes": "The slide uses a combination of a line chart for historical NTM P/E and a waterfall-style bar chart to show the shift in valuation premiums/discounts over time.",
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      "text": "Cognizant's operations and capital allocation strategies are remnants of its history as a nascent industry “challenger” that invested at all costs to gain share. Today, however, Cognizant has evolved into a scale industry leader, and its business choices must also evolve to reflect this reality.",
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      "text": "Cognizant's NTM P/E Multiple Premium / (Discount) vs. Peers",
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      "text": "NTM P/E - Cognizant vs. S&P 500 Since 2010",
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      "text": "1) Profitability and Efficiency: Cognizant continues to practice and swear by a strategy that was developed nearly two decades ago, when revenues were over 200x smaller, to keep operating margins in the 19%-20% range. 2) Capital Allocation: Despite growing into a scale market leader with stable and significant cash flows, Cognizant has remained unwilling to establish a capital return program.",
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      "text": "NTM P/E Multiple: 14.9x",
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      "text": "Elliott is far from the first to identify these issues and propose actionable steps to rectify them. In fact, they have steadily become the primary concern among investors, precipitating the sharp loss of confidence illustrated in the charts above. The quotes below represent just a small sample of the commentary on this point:",
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      "kind": "paragraph",
      "text": "This profound share price and valuation underperformance is made even starker by the facts that Cognizant is an industry leader, an above-average grower and a high-quality franchise. The drivers of this deep and material underperformance are as follows:",
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      "kind": "paragraph",
      "text": "the broader market. However, Cognizant's valuation premium has now entirely eroded. Despite maintaining an industry-leading growth outlook, Cognizant now trades at near parity to its Indian heritage peers and at a significant discount to both Accenture and the S&P500 for the first time.",
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      "text": "Cognizant's operations and capital allocation strategies are remnants of its history as a nascent industry “challenger” that invested at all costs to gain share. Today, however, Cognizant has evolved into a scale industry leader, and its business choices must also evolve to reflect this reality.",
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