| Type | Holding company |
|---|---|
| Industry | Investment banking |
| Founded | New York City 1977 |
| Founder(s) | Paul Singer (businessman) |
| Website | Elliottmgmt.com |
Elliott Management Corporation is the management affiliate of hedge funds Elliott Associates L.P. and Elliott International Limited. Elliott was founded by Paul Singer, who also serves as CEO of the management company, which is 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$16 billion in assets under management.[1]
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Paul Singer created Elliott Associates in January 1977, starting with $1.3 million from friends and family. In its earliest years, the firm focused on convertible arbitrage. However, since the 1987 stock market crash and early 1990s recession, the firm has focused primarily on distressed debt investing.[2] 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. 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,[1] while having only one-third of the index's volatility.[3] The firm is currently closed to new investors. As of mid-2008, Elliott counted 175 employees in New York, London, Tokyo and Hong Kong[2] and is one of the oldest hedge funds under continuous management.[4]
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 working hard to restructure 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 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.[2] According to the Borsen Zeitung, Elliott said its goal was to "protect the rights of minority shareholders."[5]
In April 2005, 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.[6] 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 the price was too low and had concerns about conflicts of interests on the board.[7][8] Elliott eventually participated in purchasing ShopKo at $29 per share.[9]
Staffing 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.[10] 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.[11] 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.[10]
A small portion of Elliott's distressed securities trading has been in sovereign debt, most recently Argentina and Congo-Brazzaville. Elliott is well-known for its investment in the distressed debt of Peru. In 1995, Elliott bought $20 million face value of defaulted Peruvian bank debt. After extensive and costly litigation and numerous attempts by Elliott to settle, the Court awarded $58 million to Elliott, including past due interest. More recently, Elliott's efforts to enforce judgments against Congo-Brazzaville totaling more than $100 million in defaulted bank debt have contributed to exposing corruption in the country.[12] Elliott states that it only targets countries that can afford to pay, but have decided not to, and has emphasized its efforts to root out corruption in countries like the Republic of Congo.[4] In March 2010, Elliott bid $5.75 per share for software company Novell. Although the company rejected the offer, Novell announced that it would conduct a sale of the company.[13]