Elliott Management Corporation
|Founded||New York City|
|AUM||US$35 billion (2018)|
It serves as the management affiliate of American hedge funds flagship Elliott Associates L.P. and Elliott International Limited. The Elliott Corporation was founded by Paul Singer, who also serves as CEO of the management company, based in New York City. From inception, Elliott has generated for its investors a 14.6% net compound annual return, compared to 10.9% for the S&P 500 stock index, and now has more than US$34 billion in assets under management. As of the first quarter of 2015, Elliott's portfolio is worth over $8 billion. By 2009 "more than one-third of Elliott’s portfolio was concentrated in distressed securities, typically in the debt of bankrupt or near-bankrupt companies." Elliott has widely been described as a vulture fund.
Paul Singer created Elliott Associates in January 1977, starting with $1.3 million from friends and family. Choosing the Elliott brand as it is his middle name. In its earliest years, the firm focused on convertible arbitrage. Since the 1987 stock market crash and early 1990s recession, however, the firm has transitioned into a multi-strategy hedge fund. Elliott Associates manages $8.6 billion and is Elliott Management's primary domestic fund.
Elliott is noted for its relatively high returns and low volatility. The New York Times has called Paul Singer "one of the most revered" hedge fund managers on Wall Street. Elliott returns have generally outpaced the annual growth of the S&P 500. Describing Singer in 2012 as "one of the smartest and toughest money managers in the business," Fortune noted that over the previous 35 years, he had "produced an extraordinary 14% average annual return after fees, nearly double the price appreciation of the S&P 500." From inception, Elliott has generated for its investors a 14.6% net compound annual return, compared to 10.9% for the S&P 500 stock index, while having only one-third of the index's volatility. The firm is currently closed to new investors. As of mid-2008, Elliott counted 175 employees in New York City, London, Tokyo and Hong Kong and is one of the oldest hedge funds under continuous management.
In a November 2014 investment letter, Elliott described optimism about U.S. growth as unwarranted. "Nobody can predict how long governments can get away with fake growth, fake money, fake jobs, fake financial stability, fake inflation numbers and fake income growth," Elliott wrote. "When confidence is lost, that loss can be severe, sudden and simultaneous across a number of markets and sectors."
In 2015, Institutional Investor/Alpha magazine gave Elliott an A grade and the #9 ranking among hedge funds worldwide.
Elliott has four equity partners. Paul Singer and Jon Pollock are co-chief investment officers; Gordon Singer, Paul Singer's son, runs Elliott’s London office. Steven Kasoff, formerly the firm's senior portfolio manager, was also given the title of equity partner in January 2015.
Affiliates and unitsEdit
- Hambledon, Inc. is a Cayman Islands corporation controlled by Singer.
- NML Capital is a subsidiary of Elliott Management.
- Kensington International Ltd. is a subsidiary of Elliott Management.
- Maidenhead LLC and Warrington LLC are US entities that are controlled by Singer.
- Elliott Advisors (UK) Ltd. is "a London-based advisor to Elliott."
- Elliott Advisors (HK) Limited is "the Hong Kong arm of Elliott Management."
- Manchester Securities Corporation.
Early in its history, Elliott focused on convertible arbitrage, refocusing primarily on distressed debt investing following the 1987 stock market crash and early 1990s recession. Elliott is known for restructuring such U.S. firms as TWA, MCI, WorldCom, and Enron as well as overseas companies including Telecom Italia SpA and Elektrim.
In 2003, Elliott believed P&G was not offering a fair price to all preferred shareholders for the German hair products company Wella AG. Elliott joined other funds in opposing the deal, including Germany's second-largest fund manager, Deka Investments. After several years of legal and shareholder battles, P&G raised its offer for Wella AG for all preferred shareholders. According to the Börsen-Zeitung, Elliott said its goal was to "protect the rights of minority shareholders."
In April 2005, the Wisconsin-based retail chain Shopko announced that it had agreed to be acquired for approximately $1 billion by a private equity firm at a price of $24 per share. This and a subsequent offer at $25 were rejected, according to the Milwaukee Business Journal, "after several dissident shareholders threatened to vote down the transaction, claiming the bid was too low." Elliott joined other hedge funds in opposing the sale because it felt the price was too low and because it had concerns about conflicts of interests on the board. Elliott eventually participated in purchasing ShopKo at $29 per share.
The human resource consulting company Adecco announced in January 2006 it had secured a 35 percent stake in DIS AG, at a price of €54.5 per share, making an offer at that price for all shares. The company also announced that the DIS CEO and CFO had signed lucrative management agreements that eventually would make them CEO and CFO, respectively, of Adecco. Adecco attempted to de-list DIS but was blocked in court by a number of hedge funds, including Elliott. The funds also raised concerns about conflict of interest by the CEO and CFO. Eventually Adecco offered €113 per share, which was accepted.
In December 2011, it was reported that Elliott was suing the Vietnamese shipbuilding firm Vinashin in a British court. The company had defaulted a year earlier on a $600 million loan backed by the Vietnamese government, then offered to pay bondholders 35 cents on the dollar. Elliott sued for the full amount. In April 2012 Elliott dropped the case.
In late 2012, Elliott criticized the oil company Hess for its use of capital and for being "distracted" from oil exploration and production by other activities. In January 2013, Elliott called on Hess to sell certain assets and asked Hess investors to vote for five new directors as part of an effort to reconfigure the oil firm and thus boost its share price. "Buried within Hess Corp. is one of the premier U.S. resource play-focused companies," Elliott wrote.
In March, Hess announced that it was acting on some of Elliott's suggestions, but Elliott said that Hess's changes fell far short of what was needed. In April, it was reported that Hess would close its London office on Elliott's advice. Hess has been a "top pick" for Elliott since 2013. As of the fourth quarter of 2014, Elliott owned 17.8 million shares of Hess, worth $1.3 billion, making it Elliott's largest holding.
In late 2013 Elliot took control of the bankrupt Japanese shipowner Sanko and proceeded to close the majority of the overseas offices of that Company. Elliot eventually asset stripped the Company's overseas properties and any equity left in the Companies vessels. On April 1st 2012 Sanko had either managed or owned a fleet of 185 ships, which included 46 tankers and 27 dry bulk carriers. By early 2019 this had been reduced to just 5 bulk carriers.
In summer 2014, Elliott disclosed a 6.7% stake in Interpublic Group of Companies, an ad agency holding company, and "a person briefed on the matter said Elliott planned to call on the company to sell itself to one of its competitors".
Solar projects in UKEdit
In February 2015, the Telegraph reported that Elliot Management's UK arm, Elliott Advisors (UK) Limited, had put money into half a dozen unnamed solar-power projects in that country, and that it had "hedged its bets by taking out short positions in five other renewable energy funds listed on the London stock market."
In September 2015, Elliott purchased a 1,940,642-share stake in Comcast, a Philadelphia-based mass media company, for an average price of $58.68 a share. This transaction had a 1.65% impact on Elliott's portfolio.
CDK Global LLCEdit
On May 4, 2016, Elliott sent a letter to CDK Board of Directors outlining steps they felt were required in order to meet projected ROI and margins. Quoting "a plan for CDK to optimize its business operations and drive a meaningful improvement in shareholder value."
On June 8, 2016, Elliott sent a letter to CDK Board of Directors advising that "CDK adopt the steps in the Value-Maximizing Plan without delay" due to share-holder support of the plan in the May 4th letter.
In May 2018, Elliott Management won a battle for control of Telecom Italia, controlling two-thirds of Telecom Italia's board seats.
In the summer of 2015, Elliott, then a major investor in Samsung's construction division, opposed efforts by acting Samsung head Jay Lee who sought to have one part of the firm purchase the construction unit for $8 billion. Despite Elliott's opposition, the merger went through and Elliott sold its shares. Two years later, Lee was convicted of bribery and imprisoned after it was shown he had bribed a friend of South Korea's president to secure the merger.
In October 2015, Elliott disclosed an 11.1 percent stake in Cabela’s, an outdoor recreation and clothing retailer, reporting that it is seeking to engage the company's board to discuss strategies and a potential sale of the company.
In July 2016, Elliott persuaded the PulteGroup, a home builder in which it owns 4.7%, to add three new board members, cut investments in new land, and buy back shares.
After buying a stake in Alcoa (now Arconic) that earned it three board seats, Elliott forced a restructuring, after which Elliott was able to sell its stake at a 104% profit.
Energy Future HoldingsEdit
As of August 2017, Elliott owned enough of Energy Future Holdings's debt to block a Berkshire Hathaway takeover bid, which had made an offer the previous month to salvage the heavily indebted firm.
Mentor Graphics Corp.Edit
NXP Semiconductors NVEdit
Oncor Electric DeliveryEdit
In August 2017, Akzo Nobel, a Dutch paint and chemicals company, said it had ended a dispute with Elliott. PPG Industries, an American rival, had sought to take over Akzo Nobel, Elliott had urged talks between the two and eventually took legal action as part of an effort to replace Akzo Nobel’s chairman, Antony Burgmans. During the conflict, Elliott became Akzo Nobel’s top shareholder, with a stake of about 9%.
In April 2018, Elliott bought a majority stake in Waterstones, leaving Alexander Mamut's Lynwood Investments with a minority holding. The sale completed in May 2018. James Daunt will remain as chief executive.
In July 2018, Elliott Management was confirmed as the official proprietor of Italian football club AC Milan with 99.93% of the stakes of the club, after erstwhile owner Li Yonghong defaulted on his €415M debt to Elliott. Elliott immediately started dismissing board members at Rossoneri Sport Investment Lux, which is the company that controls AC Milan. On 10 July 2018, Paul Singer declared in an official statement to implant €50M of equity capital to stabilize the finances within the club.
Barnes & NobleEdit
Since 2010, Elliott Management has expanded into investing in distressed real estate. It has been active in Japanese and German real estate and in 2015 viewed Spain and Italy as offering attractive investment opportunities. Now, according to the New York Times, it has "teams of analysts and portfolio managers in London, Hong Kong and Tokyo and investments worth more $2 billion." In the U.S., it "has focused on filling in the gap where banks have had to rein in their lending by participating in direct financing with developers."
In 2013, Elliott Management teamed up with Time Equities on a 63-story commercial and real estate project in New York, and took an ownership stake in Silverpeak Real Estate Finance, a commercial real estate lender.
The New York Times reported in May 2014 that Elliott Management was financing the development of 5 Beekman Street, a 130 year-old building at the site of one of Manhattan’s first skyscrapers, into a 287 room hotel and 46-story condominium called the Beekman. The project would be carried out by GFI Capital Resources, a New York real estate company.
After Argentina defaulted on its sovereign debt in 2002, Elliott, which owned Argentinian bonds with a nominal face value of $630 million now worth $2.3 billion, refused to accept Argentina's offer of less than 30 cents on the dollar. Elliott won judgments against Argentina in U.S. and U.K. courts but did not collect payment. In October 2012, an Elliott subsidiary, NML Capital, arranged for the seizure in Ghana of the ARA Libertad, an Argentinian naval vessel, which it intended to confiscate in accordance with court judgments awarding it over $1.6 billion in Argentinian assets. A November 2012 New York trial, which ended in a ruling for NML and against Argentina; legal experts called it the "sovereign debt trial of the century." In a letter published in the Financial Times, legal experts Andreas F. Lowenfeld and Peter S. Smedresman defended NML's position.
Elliott exposed corruption in the Republic of the Congo in its efforts to enforce judgments totaling more than $100 million in defaulted bank debt. In 2008, Elliott bought $32.6 million in loan debt incurred by Congo. In 2002 and 2003, a British court awarded Elliott more than $100 million for these debts. During the case, US President George W Bush used a constitutional clause preventing seizure of Congolese assets in the United States by the hedge fund. Brice Mackosso, a campaigner for greater transparency and against corruption in the Congo Republic's government, stated that if it were not for funds like Elliott, "we would not know any facts about the way our country’s wealth is being taken away." After Elliott's investigations produced evidence of corruption, the government settled for an estimated $90 million on debt for which Elliott paid less than $20 million.
In 1995, Elliott bought $20 million face value of defaulted Peruvian bank debt. After extensive litigation and numerous attempts by Elliott to settle, the court awarded the hedge fund $58 million, including past due interest.
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