Elliott Management, this fund that has been shaking states and multinationals for 45 years


(BFM Bourse) – Founded in 1977, Elliott Management is one of the oldest “alternative investment funds” in the world. For 45 years, the fund led by Paul Singer has fought ruthlessly against heavily indebted states, companies with failing management or, more recently, institutions like the London Metal Exchange. Elliott Management is claiming more than 456 million dollars and intends to bend the London institution with the support of the courts, in accordance with its modus operandi.

Eliott Management has taken legal action against the London Metal Exchange (LME). The activist fund accuses the London institution of having canceled transactions in the midst of chaos on the nickel market on March 8, 11 days after the outbreak of the conflict between Ukraine and Russia. Nickel prices have indeed exploded since the beginning of the conflict due to the importance of Russia in the production of the silvery white metal.

But on March 8, the price of the metal essential for the production of batteries for electric cars soared to more than 100.00 dollars against 20,000 at the start of 2022. Faced with the runaway prices, speculators who had bet on a drop in the silver-white metal rushed to liquidate their positions by buying futures. Including the Chinese nickel giant Tsingshan. Other investors who have also bet on a decline in nickel prices are canceling their bets, amplifying the panic on board and the rise in prices. To extinguish the fire, the LME made use of its short circuit and purely and simply canceled the orders placed between March 7 and 8, arguing that it was its duty to act to avoid the bankruptcy of certain investors.

Elliott Management is insensitive to the argument presented by the London Metal Exchange. The activist fund founded by Paul Singer is claiming more than $450 million in damages from him for having used an illegal method intended to interrupt trade.

The two-faced savior

The hedge fund is not at its first attempt. Known for its aggressive and customary approach to legal proceedings, Elliott Management – named after the middle name of its founder – is feared by market participants. The Elliott Management method is simple: the investment fund has built its reputation as a vulture fund on the purchase for a pittance of the debts of States in difficulty. Then, accompanied by his team of lawyers, he sets in motion the judicial apparatus to force the debtor states to repay their debts in full. Elliott is not satisfied with the crumbs that can be obtained during the renegotiations of debts proposed by the States. Argentina made the bitter experience of this by defaulting on payment in July 2014, bending under the yoke of Paul Singer. The boss of Eliott Management had presented himself as the savior of the third economy of Latin America in the grip of its most serious economic crisis on the eve of Christmas 2001.

The country had declared itself in default of payment due to the impossibility of reimbursing the colossal debt of nearly 100 billion dollars, inherited from the dictatorship of the generals (1976-1983) and the financing of the peg of the Argentinian peso on the dollar in the 1990s. Argentinians could no longer withdraw money from their bank accounts and the country changed its president five times in a few days… What was a dramatic episode for an entire country appears to be an incredible opportunity for Paul Singer to buy cheap sovereign debt from an Argentina on the verge of bankruptcy.

In the Argentinian case, the boss of Elliott Management would have made a tumble of 1,600% at the end of a procedure which will have lasted 14 years. Argentina folded without which, the country would not have been able to have access to the financial markets to finance itself again. The very patient fund had already exercised itself a few years earlier with battered countries such as Peru, Zambia and the Congo which gave in to the intransigence of Elliott Management. In 1996, he seized Peruvian loans paid at a bargain price before recovering nearly 60 million dollars from Peru … after having acquired them for 11 million dollars a few years earlier. Later, he repeated the Peruvian success, this time bringing the Democratic Republic of Congo to its knees after buying the country’s debt for a pittance.

The Wolf in the Sheepfold

Troubled states are no longer Elliott Management’s only playground. The activist fund invites itself into the capital of companies that are weakened or show flaws in their organization and then engage in an iron fist with their management in order to win their case. It’s his trademark. It must be said that before sowing terror in the financial markets, Paul Singer, a Harvard graduate in his pocket, exercised his talents as a business lawyer on Wall Street.

Among the prey of this investment fund, we can mention eBay. Elliott Mangement had asked the famous e-commerce platform, in which he held 4% of the capital, to reorganize its activities and sell some of them in order to double its stock market value in the next two years. At the end of 2018, the fund managed by Paul Singer was invited to take a 2.5% stake in Pernod Ricard. The fund considered the results of the operational performance improvement plans launched internally to be disappointing insofar as Pernod Ricard posted “an operating margin five points lower than that of Diageo, the closest competitor.”

The goal is always the same: to put pressure on the management of the targeted companies as long as the results do not meet Elliott Management’s expectations. If necessary, the investment fund does not bother to be gentle with its interlocutor. In Italy, he managed to have the head of Vincent Bolloré whom he ousted from the board of directors of Telecom Italia in May 2018. The king of stock market raids found himself this time in the position of the sprinkler watered… for the greatest pleasure of the American ogre.

Sabrina Sadgui – ©2022 BFM Bourse



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