Should You Follow Paul Singer Elliott Management?
Investing in the “Paul Singer portfolio” is like throwing a saddle on a shark. It’ll be a wild ride, but you know there’ll be food along the way. This is, after all, the same Paul Singer who took the entire country of Argentina to court—and won!
You can track his holdings by browsing Insider Monkey, digging through his 13-F Filings with the United States Securities and Exchange Commission, or simply by searching “Paul Singer investments” on Google.
Wait, wait, wait. Did you say he sued the entire country of Argentina?
Yes, dear reader. That’s exactly what I said.
Um, please explain.
Sure. Argentina’s debt was extremely cheap when its economy crashed. No one wanted to touch it, because the Government of Argentina might run out of money, in which case those debtholders would be screwed.
Through his investment firm, Elliott Management Corporation, Paul Singer swooped in to buy the debt. Did he do this from the goodness of his heart? No. Was he worried about other investments he had in Argentina? Not to the best of my knowledge.
Singer bought the lousy Argentinian bonds because that is what he does. He sniffs out rotten government debt. If the economy improves, then the value of the debt goes back up, and he can sell it at a profit. If the economy does not improve…
Well, then Singer takes the government to court. He has a lot of lawyers, none of whom are underpaid. Sooner or later, they force the government for full repayment of the debt.
For example, Argentina paid $2.4 billion to Elliott Management Holdings. That is retire-on-a-yacht kind of money.
5 Tips on How to Get the Paul Singer Portfolio
If you want to glimpse Paul Singer’s portfolio, try our report on Elliott Management investments.
However, if you’re looking for big-picture wisdom, stick around. Below are five pieces of investing advice from the man himself. These are windows into Singer’s brain, insights into what he thinks about capital markets. I would pay attention if I were you.
Also Read: How to Select the Best Tech Stocks
- “No security price is too high (or low) that it cannot go higher (or lower).”
In other words, stop overrating the present. Tomorrow can look extremely different from today and the worst part is that you have no idea how different. That is why investors sold Google stock at $300.00 (they didn’t think it could go higher) or why they failed to sell GoPro stock at $30.00 (they didn’t think it could go lower).
- “Turns in markets are impossible to time.”
Make sure your investment thesis lasts longer than 24 hours, because you have no idea of knowing when the market will “bottom” or “top out.” Warren Buffett says the same thing.
- “Big changes in market prices frequently occur far in advance of when the reasons for the changes become apparent, and by then it is too late to incorporate the new information into ones trading at the old prices.”
If something is obvious, it’s probably priced into the stock. You need to look around the corner in order pick up underpriced assets. That is what makes investing so difficult.
- “One of the most important reasons to avoid significant losses is to avoid the painful and sometimes terminal effect of severe adversity on the quality of money managers’ decision-making processes.”
Losing money is hard, but the worst part is you stop thinking rationally. It’s only human. The pain of seeing that money go up in smoke often means that you stop listening to your head and start listening to your heart. Try to avoid this trap by steering clear of trades with big downside risks. You risk losing more than just your money—you can actually lose your sanity.
- “A wide and deep education about the world, not just about capital structures, corporate business strategies and industry dynamics, is essential to the long-term success of money managers.”
At the end of the day, finance is a fun-house mirror of the real world. Everything is bent and twisted out of shape, but if you study enough of the real world, you may be able to understand what you’re looking at.