The Man Behind Elliott Management Holdings
“All hell will break loose,” sounds more like a cheesy action movie line than an assessment of the U.S. stock market, but what else do you expect from Paul Singer? He is a firebrand, and it’s served him well so far. Just look up “Paul Singer net worth” or “Paul Singer portfolio” if you doubt that.
The numbers will knock your socks off.
Singer became a billionaire through investing, much like Warren Buffett or George Soros. But unlike Buffett, he hasn’t constructed a “friendly uncle” persona that liberal reporters eat up.
He is a hard-charging alpha male. Singer will kick down your door and take the money under your mattress if he feels it’s owed to him. He’s famous for suing the entire country of Argentina because it failed to pay its debt obligations.
These mafioso tactics have turned Paul Singer’s Elliott Management Corporation into the Corleone family of Wall Street. But you wouldn’t guess any of this looking at the man himself.
He doesn’t look the part of a tough guy. Not with those glasses and that neatly trimmed facial hair. He looks more like your dad’s accountant.
But don’t be fooled, this is a man who built a billionaire-dollar empire with his bare hands.
A Brief History of Elliott Management Investments
Singer didn’t sue the government of Argentina by accident.
He makes a business of buying up distressed debt, particularly from troubled nations. He then waits for the country’s financial circumstances to improve, in which case he sells the debt at a profit or he sues the country for full payment.
It’s not as crazy as it sounds. Argentina paid Singer’s firm $2.4 billion, which, even though it took almost 15 years to negotiate, is an extraordinary sum of money.
And under Singer’s leadership, Elliott only suffered two down years from a grand total of 40.
No wonder his wealth keeps growing.
Data Source: Forbes
Part of Singer’s success comes from not pigeonholing his firm as a “bull market” or a “bear market” firm. Activism is the only game plan, be it friendly…or not quite so friendly.
At present, he is brawling with aerospace part-maker Arconic Inc (NYSE:ARNC), BHP Billiton Limited (ADR) (NYSE:BHP), Samsung Electronics, and Akzo Nobel. Oh, and Warren Buffett. (More on that below.)
Just to give you an understanding of how ruthless Singer can be, listen to what happened at Arconic. Singer was bumping heads with the CEO, Klaus Kleinfeld, so he sent his lawyers to the United States Securities and Exchange Commission (SEC).
They delivered a 322-slide “PowerPoint” presentation, making Kleinfeld look like the scum of the Earth. With careful wording, they “implied” that he breached SEC regulations and was hostile to constructive criticism.
Six days later, Kleinfeld was fired.
The other board members rationalized their mutiny by saying they fired Kleinfeld to gain concessions from Elliott…but Singer and his band of mercenaries can smell blood in the water.
Knowing that the board had no leverage, Singer turned up the heat. He demanded a say in hiring the new CEO, the right to sell shares whenever, and an oversight committee to review the board of directors. But get this, he wanted control of the oversight board!
Only a man with ICE in his veins can push his luck this far. Then again, maybe it isn’t luck…because three days before shareholders would vote, the board surrendered! Singer won, by sheer force of will. He punched Arconic in the face (figuratively, of course), called them in for a hug, then punched them in the face again.
It turns out this is common practice at Elliott Management Corporation. But hey, who are we to argue with results? Paul Singer’s portfolio is worth following precisely because he does the unspeakable. He is the real Wolf of Wall Street.
Paul Singer vs Warren Buffett
Another example of the Singer’s brazen personality is his feud with Warren Buffett. Seriously, who has a feud with that loveable old geezer? Buffett is the affable grandpa of investors, a wizened elder statesman who gives sage advice in his annual letters. He’s a phenomenal money-maker to be sure, but he’s not a bare-knuckled brawler like Singer.
That said, the two billionaires are now going toe-to-toe over a massive business deal. (Source: “Paul Singer Could Finally Get Warren Buffett to Punch Back,” Bloomberg, July 11, 2017.)
At the heart of their fight is an EXTREMELY boring company—a Texas utility called Oncor Electric Delivery—whose parent company Warren Buffett is trying to buy.
Buffett offered $9.0 billion for the company. It seemed like a fair offer because Oncor’s value is tied to natural gas prices. And we all know what happened to natural gas prices after 2008.
Oncor became a shadow of itself after natgas fell apart, which is why Warren Buffett is interested in the company—he loves down-and-out companies.
But just as the deal looked finished, Singer’s Elliott Management showed up. Not so fast, they said. (Paraphrased, of course.) We own a ton of Oncor’s debt. We know we’re not getting all our money back, but we also know you hate to bargain, Mr. Buffett. So how about an extra $300.0 million? Or else you can kiss your amazing deal goodbye.
You don’t see this everyday, folks. Singer is so good at being bad that he may actually convince Warren Buffett, the Warren Buffett, to increase his offer for Oncor’s parent company.
Buffett never does that! He hates messiness. Heck, he walked away from a $15.0-billion deal earlier this year because the firm tried to sandbag him. But this is a really good deal…Singer isn’t asking for that much more money (relatively speaking)…so maybe it’s worth it.
If Buffett increases the offer, Singer will walk away with more money. That’s the material point, because it speaks to his savviness as an investor. He would have beaten the Oracle of Omaha.
So here’s the bottom line: I wouldn’t want Singer as a friend. I wouldn’t want him as an enemy. But I’d LOVE him as a business partner.
So take a look at Paul Singer’s portfolio, because there’s a good chance that he will make these investments succeed, sometimes by sheer force of will.
Paul Singer Elliott Management Holdings
|Name||Shares||% of Portfolio||Share Price|
|Citrix Systems, Inc.||7,091,000||4.44%||$80.99|
|CDK Global Inc||8,110,000||3.68%||$63.89|
*Note: This list omits options and private holdings.