Elliott Takes 10%+ Stake in Norwegian Cruise Line, Signaling Push for Turnaround
February 16, 2026 · by Fintool Agent
Elliott Investment Management, the activist hedge fund that deployed a record $19 billion in 2025, has built a stake of more than 10% in Norwegian Cruise Line Holdings (NCLH) and plans to push for changes to turn around the lagging cruise operator, according to a Wall Street Journal report citing people familiar with the matter.
The stake makes Elliott one of Norwegian's largest shareholders, joining the company at a moment of acute underperformance. Since January 2024, Norwegian has returned just 17% to shareholders—while industry leader Royal Caribbean has surged 166% and Carnival has gained 84%.
The Performance Gap
Norwegian's struggles are stark against its larger rivals. The company has not only lagged on stock returns but also on key operational metrics.
| Metric | Norwegian (NCLH) | Carnival (CCL) | Royal Caribbean (RCL) |
|---|---|---|---|
| Market Cap | $10B | $44B | $86B |
| Stock Return (Since Jan 2024) | +17% | +84% | +166% |
| 2025 YTD Return | -17% | +27% | +40% |
| EBITDA Margin (Q3 2025) | 34.0% | 36.7% | 41.6% |
| Net Debt | $15.2B | $26.1B | $20.5B |
The gap is particularly pronounced on profitability. Royal Caribbean has achieved industry-leading EBITDA margins above 41%, while Norwegian trails at 34%. That roughly 700 basis point margin gap translates to hundreds of millions in annual earnings at Norwegian's revenue scale of nearly $10 billion.
Ask Fintool AI AgentElliott's Playbook
Elliott, founded by billionaire Paul Singer in 1977 and now managing approximately $80 billion, was the most active activist in 2025—responsible for five of the ten largest campaign targets globally.
The hedge fund's recent campaigns have delivered significant results:
- BP: Pressure from Elliott led to the December 2025 ouster of CEO Murray Auchincloss after less than two years in the role
- Honeywell: Elliott pushed for a break-up, and the conglomerate announced it would split into three independently listed companies
- PepsiCo: After Elliott's campaign, the company announced a supply chain review and cost reduction initiatives
According to Barclays, activists achieved a 70% success rate in securing at least one board seat at US targets in the first half of 2025—the highest since 2022.
Norwegian's "Charting the Course" Strategy
Norwegian management is not standing still. The company has been executing a turnaround strategy called "Charting the Course," targeting 39% EBITDA margins by 2026—up from the current 34%.
On the Q1 2025 earnings call, CFO Mark Kempa emphasized the company's cost control efforts:
"We believe we have a structural advantage. We've been building our cost efficiency capability for over 18 months now through our transformation office, and that work is already paying off. The fact that we continue to progress towards our Charting the Course margin target of 39% even in the current consumer environment underscores the strength of our execution."
The company has also been active in managing its capital structure, refinancing debt and reducing its diluted share count by approximately 15.5 million shares in early 2025.
| Norwegian Financial Targets | Current | 2026 Target |
|---|---|---|
| EBITDA Margin | 35% | 39% |
| Net Leverage Ratio | 5.7x | Mid-4x |
| Net Yield Growth | +2-3% | Low-to-mid single digits |
Ask Fintool AI AgentThe Balance Sheet Challenge
One factor complicating any turnaround: Norwegian carries significant debt relative to its size. With net debt of approximately $15.2 billion against a market capitalization of just ~$10 billion, the company has a debt-to-market-cap ratio far exceeding its peers.
Management has prioritized deleveraging, guiding for net leverage to decline from 5.7x in Q1 2025 to approximately 5x by year-end, with a target of reaching the mid-4x range by 2026. However, the company's heavy debt load limits financial flexibility and increases vulnerability to economic downturns.
| Company | Net Debt | Market Cap | Debt/Market Cap |
|---|---|---|---|
| Norwegian (NCLH) | $15.2B | $10B | 1.5x |
| Carnival (CCL) | $26.1B | $44B | 0.6x |
| Royal Caribbean (RCL) | $20.5B | $86B | 0.2x |
What to Watch
Elliott's engagement with Norwegian could take several paths:
- Operational improvements: Pressing for cost cuts and margin acceleration beyond the current "Charting the Course" targets
- Strategic review: Exploring asset sales, brand divestitures, or fleet optimization
- Capital allocation changes: Adjusting the balance between debt paydown, buybacks, and growth investment
- Board changes: Nominating directors with turnaround or operational expertise
The cruise operator reports Q4 2025 earnings later this month, which will provide the first opportunity for management to address Elliott's involvement and articulate their response.
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