When hedge fund Elliott Management’s Paul Singer took his 3.6 percent stake in Twitter earlier this year, he might have thought CEO Jack Dorsey was the only big ego he would have to contend with.
But now the social media giant Dorsey heads is embroiled in a battle with President Trump that began after Twitter fact-checked Trump’s recent tweets alleging that voting by mail would create a “rigged election.” Using a new fact-checking tool, Twitter alerted its users that Trump was not telling the truth about voting by mail and posted links to several articles on the topic.
That happened Tuesday, and by Thursday, Trump was crafting an executive order threatening to clip Twitter’s wings. The stock was down 4.4 percent Thursday, closing at $31.60 a share — lower than the price of $33.20 it closed at the day Elliott announced its stake.
At the time it targeted Twitter, Elliott said it wanted to oust Dorsey and make changes to boost the social media giant’s flagging growth.
Elliott’s public demands made no mention of the site’s content, or what critics have alleged is Trump’s use of the platform to spread lies and hate. However, Twitter’s new policy of fact checking and flagging incendiary comments on the site is hardly likely to spur more growth.
Singer’s hedge fund ended up settling for a single board seat, held by Jesse Cohn, who spearheads Elliott’s activist practice, after tech investor Silver Lake agreed to make a $1 billion investment that will be used to buy back shares — an increasingly controversial practice. Twitter is also putting Silver Lake co-CEO Egon Durban, a supporter of Dorsey, on the board. Dorsey got a reprieve to remain as CEO at least until the end of the year.
Both Silver Lake and Elliott said they would not “comment on or influence, or attempt to influence, directly or indirectly, any Twitter policies or rules, or policy or rule enforcement decisions, related to the Twitter platform.”
Though the activist battle was settled quickly, Twitter’s new war with Trump appears to put Singer in an awkward position.
A major Republican donor, Singer has never been a particularly vocal fan of Trump’s. In fact, he was one of the original NeverTrumpers during the 2016 campaign. Once Trump received the party’s nomination, however, Singer backed him. He even donated $1 million to Trump’s inauguration committee, which won Singer an invitation to the White House.
This year, however, public records show that Singer, while donating $4 million to various groups supporting Republicans in Congressional and Senate races, hasn’t given a dime to Trump. Once ranked near the top in political contributions, he has sunk to 21st place, according to the Center for Responsive Politics.
Singer also doesn’t appear to have been on a recent telephone conversation Trump held with a number of financial executives, which reportedly included Blackstone Group CEO Steve Schwarzman and Third Point CEO Dan Loeb, one of Singer’s friends.
A spokesman for Singer declined to comment.
It is not clear what impact Trump’s new order, which seeks to strip Twitter’s liability protection for the content on its site, would have on the social media giant. As the New York Times reported Thursday, such a change could make it more unlikely for Twitter to allow false and defamatory posts, including those of the president, to remain. The order, which would similarly affect other social media companies, is expected to be challenged in court.
In the meantime, the stock’s downdraft could affect a number of other hedge funds who also jumped into Twitter during the same time frame as Elliott — though it’s not clear if it was before or after Singer and crew showed up. It’s also not known if these funds are still holding those shares.
At the end of the third quarter, however, David Tepper’s Appaloosa had an even bigger stake than Elliott, with more than 5 million shares. The stake was a new position established during the first three months of the year, according to its recent 13F filing with the Securities and Exchange Commission.
Tepper, by the way, has been a consistent critic of Trump, once calling him “the father of lies.”
Tremblant Capital Group, Millennium Management, Two Sigma, and Kerrisdale Advisers were among several other new Twitter shareholders during the quarter.
