Elliott Management Corp.'s Paul Singer recently cut his stake in NRG Energy Inc. (NRG) by a third, but don't expect that the move will mean the activist fund has given up on its oversight of the Houston-based company.

Elliott's campaign was a key contributor to a recent NRG stock price surge that can be traced to a settlement reached between the company and officials at the fund in February. The agreement installed the fund's then-partner, John Wilder, executive chairman of Dallas-based PE firm Bluescape Partners on its board and established a business strategic review committee. At the time two other directors also stepped off the board.

Setting up a review committee and putting Wilder on it was a key part of the plan. Wilder had previously led a turnaround attempt of TXU Corp., an energy company formerly known as Texas Utilities and now known as Energy Future Holdings. The turnaround included asset sales and cost-cutting and ultimately resulted in a sale of the whole business to a consortium of private equity businesses, though Energy Future later went bankrupt. 

At NRG, five months after the Elliott settlement, in July, NRG's stock price shot upwards, rising from $16.30 to $23 immediately after the company and the strategic review panel, led by Wilder, announced a major cost cutting, asset sale and debt reduction plan. The company said it will generate between $2.5 billion and $4 billion with its asset sales.

The move was directly in response to Elliott's efforts. But the insurgent manager will be watching carefully. NRG said it plans to hold an analyst and investor day in either late 2017 or first quarter 2018 with an update. The fund reported last week that it had cut its stake from 6.9% to 4.4%, though the smaller stake's value at $345 million is larger than the total value of the fund's original larger investment in January, of $317 million. In addition, Wilder's Bluescape recently hiked his stake to 2.9% from 2.5%, suggesting that he expects NRG will execute on the strategic plan he helped formulate, and the result will be higher share prices.

Also, there is a possibility that Elliott Management could be back in 2018 with a director-election proxy contest if the company doesn't execute on key aspects of its plan. A cooperation agreement the fund has with NRG expires at the end of 2017 and Singer is not shy about seeking to elect directors if a corporation's plan is not focused on shareholder returns. 

The fund will be keeping a close eye on what NRG does with a 47% economic interest it owns in NRG Yield Co. (NYLD), a diversified portfolio of energy assets, including fossil fuel, solar and wind power generation farm facilities.

Activists often target companies to sell divisions when they believe the market isn't accurately representing the value of all the units that make up a business. Elliott has been pushing for a sale of the renewable energy businesses, including the Yield Co stake, which reportedly has drawn interest from utility giant NextEra Energy Inc. and investment fund Global Infrastructure Partners. Blackstone Group LP, GIC Pte, Borealis Infrastructure Management and KKR & Co., are also considering bids.

And a sale is likely. NRG said it expects to generate between $2.5 billion and $4 billion from a sale of 6 gigawatts of conventional generation and from a sale of between 50% and 100% of NRG Yield and NRG's renewables business. In July, the company said it was "well underway" in its process to explore strategic alternatives for the investment and on an Aug. 3 analyst call, company officials said they expect to have asset sale announcements in either the late third or early fourth quarter of 2017.

A sale of the renewable energy businesses could also make NRG simpler to understand and more attractive to private equity buyers down the road.

For now, NRG appears to be moving in the footsteps of Wilder's foray at TXU. But if the situation changes look for Elliott to step in once again.

More from Mergers and Acquisitions

Goldman Sachs vs. Morgan Stanley: The Battle for M&A Dollars

Goldman Sachs vs. Morgan Stanley: The Battle for M&A Dollars

Boeing Inks Freighter Deal, Lifts Industry Demand Forecast

Boeing Inks Freighter Deal, Lifts Industry Demand Forecast

Jim Cramer on Broadcom-CA: This Is the Antithesis of a Semiconductor Deal

Jim Cramer on Broadcom-CA: This Is the Antithesis of a Semiconductor Deal

Boeing Stock Soars on New Zealand Deal, Saudi Arabian Airlines Report

Boeing Stock Soars on New Zealand Deal, Saudi Arabian Airlines Report

Boeing to Take Control of Embraer's $4.75 Billion Commercial Business

Boeing to Take Control of Embraer's $4.75 Billion Commercial Business