Elliott keeps gains going for 2010
August 26, 2010
Michelle Celarier
Paul Singer's winning and losing positions revealed.
Paul Singer is a hard man to please. In his most recent investor letter, the typically cynical Singer takes a dim view of his fund's own performance, saying that recent economic uncertainty has created an environment that "is not yet providing the kind of complicated new large restructuring situations we find appealing."
But the firm's performance isn't quite as lackluster as those words might convey, though it trails Elliott Associates' stellar 2009 gains. Last year's government bailouts were a boon to Singer, and Elliott turned in a greater than 30% return.
For the first half of 2010, Elliott Associates was up 5.3%, having gained 0.4% for the second quarter, according to the letter. That still bests its peers. The AR Multistrategy Index rose 1.83%, while the AR Distressed Index was up 4.68% through June 30.
Elliott has produced a compound annual return of 14.5% since its 1977 inception, the kind of long-term showing that helped Elliott raise $1.1 billion through July 1.
A second, unspecified fundraising tranche closes October 1. The firm now manages $16.9 billion.
During the quarter, Elliott profited from performing debt and convertibles but lost on distressed securities, among others (see chart). "Opportunities are actually low across the board," the 26-page letter said. "We feel confident that when the environment changes, we will be able to deploy money in a cornucopia of attractive situations to fill up whatever capital we have available." Elliott noted that its large situational positions in Argentinean debt, the Lehman Brothers bankruptcy and Delphi Holdings equity "continue to develop" but won't be resolved this year.
A noted conservative, Singer bashed government policies and is betting things will fall apart eventually.
"History is replete with these ebbs and flows of supply and demand for complicated securities and for the process-driven situations that are Elliott's meat and potatoes," the letter said. "In the meantime, we certainly prefer our mix of activities over hoping for the best with regular stocks and bonds."
—Michelle Celarier
Elliott's Second Quarter Winners and Losers
