| Paul Singer, Elliott Management (Bloomberg) |
Paul Singer’s New York-based Elliott Management Corp. has raised $2.5 billion in just two weeks, the target amount it was seeking, according to a person familiar with the fund raising.
The multistrategy manager, which is best known for its activist activities, had told investors on July 6 it was hoping to raise this sum of money. This was the firm’s sixth fundraising since 2006.
As previously, the money will be called when Elliott needs it. The firm likes to have dry powder ready to access when it sees an opportunity.
Elliott is not raising the money simply because it thinks it is a relatively easy time to attract capital in the current environment, according to a person with knowledge of the fundraising. Rather, the effort is more specific to Singer’s and the firm’s macro outlook.
Elliott thinks there are plenty of opportunities in a rising market, especially among potential activist targets. By the same token, Elliott thinks that in a declining market there will be plenty of opportunities to buy distressed assets, another of its specialties.
This year Elliott’s two main funds have struggled somewhat, gaining 2 percent to 2.5 percent in the second quarter after being essentially flat in the first quarter.
Since Singer founded the firm 38 years ago, Elliott Associates has compounded at a remarkable 13.7 percent annual rate, exceeding the 11.3 percent annualized gain posted by the Standard & Poor’s 500 index during that period. Elliott International has compounded at 12.3 percent since its December 23, 1994 inception, compared with 6.61 percent for the S&P 500. At the beginning of the year, it had $25.6 billion under management, making it the 17th-largest hedge fund firm in the world.
In the first quarter the hedge funds made money from distressed securities, performing debt and commodities trading, and lost money from portfolio protection trades related to rates, credit and equities.
In its first-quarter letter, obtained by Alpha, Elliott told clients that it was positioning for what it calls the next Big Short.
“Today, six-and-a-half years after the collapse of Lehman, there is a Bigger Short cooking,” the firm told clients. “That Bigger Short is long-term claims on paper money, i.e., bonds.”
The firm argued that “extreme value” is being created by the risky monetary policies orchestrated by a number of central banks.
The firm’s second-quarter letter is not available yet.
In June, Elliott fired off a letter to the board of directors of Citrix Systems explaining why it believes the software maker’s stock is worth as much as 50 percent more than its price at the time.
In May, Elliott disclosed it owned 7.6 percent of activist target CDK Global, a software company that serves the auto industry and was spun off from Automatic Data Processing last October.
Last year, Singer made $200 million, ranking No. 18 on Alpha’s annual Rich List ranking of the world’s top-earning hedge fund managers.
