Elliott Management Corporation
Encyclopedia
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
.
. However, since the 1987 stock market crash and early 1990s recession, the firm has focused primarily on distressed debt investing. 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, 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, London, Tokyo and Hong Kong and is one of the oldest hedge funds under continuous management.
, 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. According to the Borsen Zeitung, Elliott said its goal was to "protect the rights of minority shareholders."
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. 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. Elliott eventually participated in purchasing ShopKo at $29 per share.
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. 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.
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. 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. 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.
Elliott Associates
-History: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...
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
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
. From inception Elliott has generated for its investors a 14.6% net compound annual return, compared to 10.9% for the S&P 500
S&P 500
The S&P 500 is a free-float capitalization-weighted index published since 1957 of the prices of 500 large-cap common stocks actively traded in the United States. The stocks included in the S&P 500 are those of large publicly held companies that trade on either of the two largest American stock...
stock index, and now has more than US$16 billion in assets under management
Assets under management
Assets under management is a financial term used denote the market value of funds being managed by a financial instutition on behalf of its clients, investors, depositors, etc. This metric is a sign of size and success against competition...
.
Overview
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 arbitrageConvertible arbitrage
Convertible arbitrage is a market-neutral investment strategy often employed by hedge funds. It involves the simultaneous purchase of convertible securities and the short sale of the same issuer's common stock....
. However, since the 1987 stock market crash and early 1990s recession, the firm has focused primarily on distressed debt investing. 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
S&P 500
The S&P 500 is a free-float capitalization-weighted index published since 1957 of the prices of 500 large-cap common stocks actively traded in the United States. The stocks included in the S&P 500 are those of large publicly held companies that trade on either of the two largest American stock...
. 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, London, Tokyo and Hong Kong and is one of the oldest hedge funds under continuous management.
Investments
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 TWATwa
The Twa are any of several hunting peoples of Africa who live interdependently with agricultural Bantu populations, and generally hold a socially subordinate position: They provide the farming population with game in exchange for agricultural products....
, MCI
MCI
MCI may refer to:* 1101 in Roman numerals*mCi, millicurie, 1/1000 of a curie, a non-SI unit of radioactivity*MCi, megacurie, 1,000,000 times a curie-Company:...
, WorldCom, and Enron
Enron
Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. Before its bankruptcy on December 2, 2001, Enron employed approximately 22,000 staff and was one of the world's leading electricity, natural gas, communications, and pulp and paper companies, with...
as well as overseas companies including Telecom Italia SpA
Telecom Italia
Telecom Italia is the largest Italian telecommunications company, also active in the media and manufacturing industries. Now a private concern listed on the Borsa Italiana, it was founded in 1994 by the merger of several state-owned telecommunications companies, the most important of which was...
and Elektrim
Elektrim
Elektrim SA, a Polish public company trading from 1992 on the Warsaw Stock Exchange, is the result of the privatization of the former PHZ Elektrim...
.
In 2003, Elliott believed P&G was not offering a fair price to all preferred shareholders for German hair products company Wella
Wella
Wella is a German company, and one of the world’s leading cosmetics suppliers. Founded in 1880 by Franz Stroher, with its headquarters in Darmstadt, Germany, the company is represented in over 150 countries....
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 Borsen Zeitung, Elliott said its goal was to "protect the rights of minority shareholders."
In April 2005, Wisconsin-based retail chain Shopko announced that it had agreed to be acquired for approximately $1 billion by a private equity
Private equity
Private equity, in finance, is an asset class consisting of equity securities in operating companies that are not publicly traded on a stock exchange....
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 the price was too low and had concerns about conflicts of interests on the board. Elliott eventually participated in purchasing ShopKo at $29 per share.
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. 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.
A small portion of Elliott's distressed securities
Distressed securities
Distressed securities are securities of companies or government entities that are either already in default, under bankruptcy protection, or in distress and heading toward such a condition. The most common distressed securities are bonds and bank debt...
trading has been in sovereign debt, most recently Argentina
Argentina
Argentina , officially the Argentine Republic , is the second largest country in South America by land area, after Brazil. It is constituted as a federation of 23 provinces and an autonomous city, Buenos Aires...
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. 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. In March 2010, Elliott bid $5.75 per share for software company Novell
Novell
Novell, Inc. is a multinational software and services company. It is a wholly owned subsidiary of The Attachmate Group. It specializes in network operating systems, such as Novell NetWare; systems management solutions, such as Novell ZENworks; and collaboration solutions, such as Novell Groupwise...
. Although the company rejected the offer, Novell announced that it would conduct a sale of the company.