(Refiles to change "opened" to "registered" London office in para 26)
By Maiya Keidan, Arno Schuetze and Agnieszka Flak
LONDON/FRANKFURT/MILAN, May 3 (Reuters) - U.S. hedge fund Elliott is stepping up its activities in Europe, a Reuters review of data shows, as it sees more opportunities to unlock value for shareholders by pushing through management changes, company break-ups and merger deals.
Filings with regulators show that eight of Paul Elliott Singer's activist fund's 15 disclosed positions in the first four months of 2018 were in Europe, compared to three out of eight in the same period of 2017.
Activist hedge funds rarely disclose reasons behind their strategy. But, four sources familiar with Elliott's thinking said Europe offered a lot of scope, as fewer activist funds operated there than in the United States, and European companies have been subject to the attentions of activists for less time.
The first quarter was the most active in Europe for Elliott in at least five years, separate data from research group Activist Insight showed.
Last month, Elliott bought British bookshop chain Waterstones, disclosed stakes in software firm Micro Focus , shopping centre operator Hammerson and hotel and coffee-shop company Whitbread, and upped its holdings in Sky and Telecom Italia (TIM).
Industry experts say Elliott appears to be acting on a plan to open up a region that until recently was regarded as less fertile ground for activist funds.
"I think it's a concerted effort that there is too much money to be made here and (they're) not going to be deterred by the structural or cultural defences (anymore)," said Chris Young, who works with companies on the receiving end of activist campaigns at Credit Suisse in New York.
"I think that Elliott - given their size, their relative aggressiveness versus other activists – are saying we've got the capital, we've got the patience that's necessary and we're going to try to now unlock Europe," said Young, who is working with Telecom Italia (TIM) where Elliott is attempting to overhaul the board at a shareholder meeting on Friday.
Elliott has accused the Italian company's top shareholder Vivendi of serving only its own interests, while Vivendi says Elliott is looking for short-term financial gains.
A spokesman for Elliott said: "Our activity in Europe is not a specific strategy shift. It’s just a function of the way this market is growing."
He said there had been a change in the way people view activism. "There has just been a shift in the last few years in thinking and you're seeing it now in terms of capital deployed."
The fund, which in London is led by Singer's son Gordon, manages $35 billion in assets, dwarfing European rivals, like TCI Fund Management, with $17.5 billion, and Cevian Capital, with assets of more than 13 billion euros ($15.6 billion).
It is among the biggest global activists by assets, with peers Icahn Enterprises and Third Point managing around $32 million and $18 billion respectively.
Since it was founded in 1977, Elliott has made gains of 13.3 percent annually after tax, only ever ending a year down in 1998 and 2008, according to an investor letter seen by Reuters. Not all of its positions are activist, as in the case of its investment in Italian football club AC Milan.
As well as making returns, activists say they improve long-term performance.
More traditional investors say Elliott's swoop on a company does not necessarily mean better returns for long-term shareholders.
"Any time an activist like Elliott comes in, the stock jumps as everyone is betting on some strategic changes happening soon. In reality, it takes much longer than that if it ever gets to that," said a U.S. investment fund which also owns TIM stock and fears the fight with Vivendi may drag on and harm the company.
The U.S. market, where investors like Singer, Boone Pickens and Carl Icahn sprang up in the 1970s and 1980s, has a long history of so-called "activists".
Similar moves were not made in Europe until the 1990s and 2000s, when Elliott, TCI and Cevian all set up there.
Europe has long been considered a more difficult place for activists due to cultural and structural impediments.
Many European companies have bylaws, including voting right caps, loyalty schemes and other legal mechanisms that protect management, as well as a deep distrust of activists.
Deutsche Boerse's Chief Executive Werner Seifert once called TCI's Chris Hohn the leader of a swarm of locusts in a book about the exchange's battle with the hedge fund.
The Elliott spokesman said things had started to change and activist investors were getting a better reception.
"In the last 12 months, a lot more shareholders are willing to consider that maybe management doesn’t know best."
Elliott registered its London office with the UK regulator in 2004. It does not have another base in Europe, but flies its traders in and out of various countries as necessary.
"Corporate constitutions in some European jurisdictions can make it more difficult to yield the right results for activist investors versus the U.S., but for Elliott they know the vagaries of European corporate laws and defence tactics very well," said Ian Harris, senior analyst at Elevation Securities.
Last year, Elliott failed in its push for Dutch paint maker Akzo Nobel to accept a bid from rival PPG Industries and oust Chairman Antony Burgmans.
Last week, Whitbread yielded to pressure from Elliott and U.S. hedge fund Sachem Head to spin off Costa Coffee, while German activist fund Shareholder Value Management's slate of board candidates at Italy's Retelit was approved.
Sources told Reuters government thinking in Europe is gradually changing.
Shortly after Elliott's investment in TIM became known, state lender CDP bought a 4.8 percent stake, a move seen as political endorsement of the activist investor.
Additional reporting by Sudip Kar-Gupta in Paris and Toby Sterling in Amsterdam Editing by Giles Elgood