When Paul and Gordon Singer are owed money, they don’t just send out polite invoices and hope that a cheque comes back in the post.
In 2012, the father and son decided it was about time the government of Argentina repaid a debt to their famously rapacious hedge fund, Elliott Advisors. So they persuaded a court in Ghana to impound one of the South American country’s naval vessels.
The good ship ARA Libertad and its 326 sailors, who where visiting Africa on a training mission, were duly detained in the sweltering port of Tema. A local judge then banned the 130m-long, three-masted frigate from receiving fuel deliveries needed to power its electricity, plumbing, food storage and fire safety systems.
It took two months for Argentina to persuade a U.N. court to order its release, by which time its then president, Cristina Fernández de Kirchner, had suffered the humiliation of being forced to evacuate her marooned matelots.
When Paul (pictured) and Gordon Singer are owed money, they don’t just send out polite invoices and hope that a cheque comes back in the post
Though she denounced the Singers as ‘unscrupulous financiers’, ‘vultures’ and ‘financial terrorists’ during the kerfuffle, Elliott Advisors had the last laugh: Argentina’s debts, which it had acquired for a knockdown $117 million during the country’s 2001 financial crisis, were settled soon afterwards, netting the hedge fund a tidy $2.3 billion profit.
The saga, which helped drive Kirchner from office, cemented the reputation of the secretive duo, and their 400-odd employees, as some of Wall Street’s most aggressive enforcers — an outfit of feared corporate raiders who have built a multi-billion-dollar fortune by treating business like hand-to-hand combat.
Just before Christmas, Fortune Magazine wrote another chapter in the firm’s controversial history by publishing a lengthy investigation into the culture and methods of Elliott, based on court filings and interviews with more than 40 people who had suffered the often bruising experience of crossing it.
The article claimed, among other things, that executives at several companies in dispute with the hedge fund believed it had hired private investigators to make inquiries about them.
The article went on to claim that neighbours of one CEO were asked on their doorstep about ‘loud parties’ held at his home. The daughter of another CEO was allegedly approached at university by someone seeking to ‘friend’ her on Facebook in order to access information.
London-based children of a German businessman who had upset Elliott said their neighbours were visited by someone asking questions about their father.
In 2013, according to filings in a wrongful termination lawsuit quoted in the article, one of Singer’s senior lieutenants, Jesse Cohn, met directors of Compuware, a software firm it wanted put up for sale.
‘Cohn opened the meeting by casually flipping through a 6in-thick manila folder of purportedly embarrassing information on his guests.’
Gordon Singer (left) has his sights set on the British engineering giant GKN (he is pictured in Beverly Hills)
Elliott denied the article’s claim that its private investors targeted children, and insisted that it had ‘always behaved ethically in its disputes’.
But whatever the truth, the allegations only hardened the 40-year-old firm’s reputation as, to quote one headline, ‘the world’s most ruthless hedge fund’.
It’s also one of the most secretive. The company’s 400 employees are largely banned from social media, and prevented from posting images of themselves online, making them, as Fortune put it ‘virtual ghosts in the digital era’.
Gordon Singer, 44, who runs its UK operations, lives with his 41-year-old wife Jennifer in a gated mansion — on a leafy street near St John’s Wood Tube station in North London — which the couple bought for £4.9 million in 2006.
Beyond that, little is known of him. The only photographs of him that appear to exist outside of family albums are at the 2011 Golden Globes party, where he met actresses Jane Seymour, a former Bond girl, and Melissa Leo, who won Best Supporting Actress for The Fighter.
Paul, a divorced 72-year-old father of two grown-up sons who founded the firm in the Seventies, has homes in the elite ski resort of Aspen, Colorado, and in The Beresford, an exclusive apartment building in New York Upper West side which is also home to comedian Jerry Seinfeld and actress Glenn Close.
His firm’s investment in GKN is in some ways a typical hedge-funder’s approach: they hope to bank a quick profit from the increase or ‘bump’ in value that a successful bid will provide to the firm’s share price — something that is known in the trade as ‘bumpitrage’.
Although most of Elliott’s 3.4 per cent shareholding in GKN was acquired very recently, they also get a say in this week’s vote to decide whether the takeover should go ahead.
Many business leaders believe this should not be allowed, since it means they and other global hedge funds which invested recently — hedge funds now own around a quarter of GKN’s share ownership — will now have a huge level of influence over the 259-year-old British firm’s future.
‘I do not believe short-term shareholders that have been holding shares for a number of weeks should have the right to vote on a long-term strategic business for the country,’ complains the industrialist Sir John Parker.
He told The Sunday Times that only long-term investors, who have held a firm’s stock for more than six months, ought to be allowed to take part in such a ballot.
Whether the Government shares that view is unclear, although supporters of GKN hope that its position will not be swayed by the fact that Elliott Advisors are longstanding donors to the Conservative Party.
In 2008, they gave Boris Johnson £5,000, while in 2016 they handed the Party £10,000, according to the company’s UK accounts.
On the political front, Paul Singer is also a longstanding donor to the Republican party in the U.S. He is not a fan of Donald Trump, however, and has fallen out with social conservatives after becoming an advocate of lesbian, gay, bisexual and transgender rights a few years back, when the younger of his two sons, Andrew, came out as homosexual and married his partner, a doctor.
Regardless of how things play out this week, bruising disputes are meat and drink to Singer Snr, who has grown his firm from nothing into a $40 billion behemoth with offices in New York, London and Hong Kong, becoming a billionaire twice over in the process.
In addition to being a past master at the art of ‘bumpitrage’, he’s also regarded in financial circles as one of the world’s most combative ‘activist’ investors — who likes to build up stakes in underperforming businesses in order to force them to restructure, sack senior executives or even put themselves up for sale.
Indeed, Elliott Advisors (which has returned average profits of almost 10 per cent a year for the past five years) is, by market capital, the world’s largest ‘activist’ fund.
Often, corporate raids are by their very nature hostile. Indeed, the Singers have in recent years engaged in ugly disputes with bosses of a raft of companies which they have sought to reform, from Alliance Trust, whose British boss Katherine Garrett-Cox was forced out after Elliott accused her of being overpaid and incompetent, to the owners of Dulux Paint, who it recently hauled into court.
During disputes, Singer’s firm will batter its rivals with legal threats or publish withering public critiques of their alleged shortcomings. And sometimes, Singer’s sparring partners are even goaded into a response.
Samsung, for example, once published images of him online with a photoshopped vulture’s beak, during a row over a bid to sell off its engineering arm.
In 2008, they gave Boris Johnson £5,000, while in 2016 they handed the Party £10,000, according to the company’s UK accounts
Meanwhile, the CEO of a manufacturing company called Arconic, whom Elliott was seeking to remove, last year had a football delivered to Singer’s office, along with a handwritten note alluding to ‘lasting legendary’ partying that took place during the 2006 World Cup.
The note referred to an incident famed in financial circles which allegedly saw Singer Snr (a longstanding Arsenal fan) don a Native American head-dress before performing Singin’ In The Rain in a public fountain.
In years gone by, Elliott have also been accused of using highly paid lawyers to recover debts owed to them. In the late Nineties, for example, the firm acquired Congolese government debt though a Cayman Islands vehicle and set about clawing money back through the London courts in a campaign over several years, eventually winning £78 million.
As that episode showed, corporate raiding can be very lucrative indeed. The firm’s latest UK accounts show that in 2016 it paid £65 million in wages and salaries to 79 employees in Britain, meaning its average staffer earned more than £800,000.
In 2013, which was regarded as a particularly good year, its highest-paid UK director trousered an astonishing £38 million.
Whether 2018 will end with a similar payday for the people behind the world’s most ruthless hedge fund depends, at least in part, on whether its wish for GKN to be sold off is granted.