PAUL SINGER ~ ELLIOT ACTIVISTS ~ Not Just an ORDINARY ~ RICH, WHITE MALE!

Paul Singer (businessman)
STANDING UP & DOING THE RIGHT THING (OFTEN ‘the HARD THING)
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A Fortune investigation reveals sophisticated—and often controversial—tactics that have made Elliott Management the world’s biggest, most successful activist hedge fund.
If not for the watermelons, Elliott might have won in Korea.
In the summer of 2015, the activist hedge fund founded by Paul Singer had gone to war in the Republic of Samsung to stop the South Korean conglomerate from going through with what Singer considered to be an unfair deal.
Elliott Management, the hedge fund that Singer launched 40 years ago and still leads today, was then a large investor in Samsung’s construction division.
The trouble started when Jay Y. Lee, the son of the coma-bound chairman of the Samsung chaebol, started to consolidate power over Korea’s biggest company. When the younger Lee moved to have one part of the family empire buy the construction unit for $8 billion, Elliott balked at what it considered an absurdly low price and began lobbying other shareholders to reject it.
Investing farther away from its New York home than ever before, the hedge fund faced a canny opponent with enormous influence in its home country. Samsung went so far as to publish illustrations online depicting Singer, with a vulture beak, accompanied by rhetoric that Singer perceived as anti-Semitic.
In the end, though, it was sugar that may have swayed the voters. As the meeting to approve the deal neared, Samsung representatives went door to door to meet shareholders, bearing watermelons and Korean walnut cakes, in a plea for their votes. The merger passed. Elliott, in a rare surrender, sold its shares a few weeks later.

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But the story doesn’t end there. As South Korean authorities unraveled a corruption scandal that toppled the country’s President earlier this year, the trail traced back to Samsung. In August, Lee was convicted of bribery. Prosecutors said Samsung executives had provided a range of financial favors to a key political influencer—among them, a gift of a $830,000 dressage horse to the influencer’s daughter—in order to ensure that the merger was approved and Elliott was defeated. Lee is appealing the conviction, but for now, the Samsung heir is in jail, and Elliott has been vindicated. “I had no idea when we were in the midst of this, that this situation was going to lead to the impeachment of the President,” says Jonathan Pollock, co-CEO of Elliott, alongside Singer.
It happens that in pursuing misbehaving companies, Elliott sometimes ends up sniffing out nefarious behavior: “Unfortunately, some of the people involved in these situations tend to ignore the rights of shareholders and creditors, and act entitled to do whatever they want.”
The Samsung outcome turned out to be a watershed moment not just for Elliott, but for shareholder activism. Activists use their ownership stakes in public companies to pressure them to change in order to boost returns—whether by restructuring their businesses, shaking up management, or even putting themselves up for sale.
Such shareholder agitation has become more common in recent years as a widening pool of global investors seek a competitive edge. And in that world, the 40-year-old Elliott has emerged as both the largest and most active of activist hedge funds, and one that almost always seems to get its way.

“The Elliott book of deals is probably the most instructive, and it’s also one of the most far, far-reaching​,” says Marty Lipton, founding partner of the law firm Wachtell Lipton Rosen & Katz and inventor of the poison-pill corporate defense strategy, who has lately faced Elliott more frequently and on more fronts than ever before. “They’ve been enormously successful, and they are a major factor in activism today.”
In the past five years, Elliott has launched activist campaigns at more than 50 companies—19 this year alone—in at least a dozen countries. During that span, the battle with Samsung is the only one that went all the way to a vote, and the only one in which the firm didn’t get what it wanted—a sign of just how effective Elliott is at pressuring management to agree to its demands. At the same time, Elliott’s assets have nearly doubled to roughly $39 billion, including $5 billion it raised in a 23-hour span in May, making it more than twice the size of the second-biggest activist hedge fund, Dan Loeb’s Third Point.

Nic Rapp
That war chest, along with Elliott’s 400-­person staff, has rendered the firm virtually impossible for adversaries—from industry titans to nation states—to beat in a fight. Warren Buffett learned that the hard way this summer, when Elliott used its financial might to successfully block Berkshire Hathaway’s bid for energy company Oncor, by buying up company debt and pledging to exercise its creditor veto right. And Elliott has lately sought to clone its winning strategy: It’s on track to launch about 50% more activist campaigns this year than in 2016—nearly three times as many as any other major activist fund—including, in October, two in a single day.
Elliott’s winning ways are in stark contrast to many of its activist peers, whose recent attempts to take on Fortune 500 companies have failed miserably, from Bill Ackman’s landslide loss in a proxy contest with ADP (ADP), to Greenlight Capital founder David Einhorn’s strikeout at General Motors (GM) earlier this year. Even Trian Partners’ Nelson Peltz, who narrowly won a blockbuster proxy campaign with P&G (PG) this fall, is still feuding with that company to accept him onto its board. And Elliott, whose 13.4% annual rate of return over its four-decade history is unmatched among hedge funds, has also outperformed at a time when that asset class has woefully lagged the market. The firm’s flagship fund, Elliott Associates, has returned more than 9.7% annualized over the past five years, compared with just 4.7% for hedge funds overall.
As Elliott ramps up its activism to an unprecedented scale, it is also accumulating a growing body count of deposed executives—not to mention ousted heads of state—who dared fight it.

Just last year, Elliott finally prevailed in a 15-year battle to force Argentina to repay its bonds—a saga in which the hedge fund at one point seized an Argentine navy tall ship with the sailors still on it. A few months after Elliott finally collected its $2.4 billion windfall, Argentina indicted its former President, Cristina Fernández de Kirchner, who had led her country into default in 2014 rather than pay Elliott what it owed (a decision that had also cost her party reelection). “Elliott’s the only one that has effected regime change in two different sovereign countries,” says Chris Cernich, managing director of Strategic Governance Advisors, who counsels executives on proxy contests. “They were successful at being right, and very publicly right.”

In their conviction that they’re right, however, Elliott has become adept at wielding pressure on its opponents in ways their foes say can cross ethical boundaries. Through interviews with more than 40 people who have dealt with the hedge fund—including bankers, advisers, board members of various companies, and current and former employees of the firm—Fortune has learned previously unreported details that reveal just how far Elliott will go to win.
To many observers, Elliott appeared vindicated yet again this spring, when a soccer ball showed up at Paul Singer’s door. In January, the hedge fund had publicly called for the ouster of Klaus Kleinfeld, the CEO of aerospace manufacturer Arconic (ARNC), which split from Alcoa last year. Elliott objected to the company’s poor stock returns during his tenure, along with his generous compensation. Arconic refused to fire the CEO, and the stage was set for a proxy fight.
Four months later, Kleinfeld responded in the form of that soccer ball, sent by courier directly to Singer’s office, across town from Arconic’s New York headquarters. He enclosed a letter on his personal stationery, in which he sardonically alluded to some “lastingly legendary” partying Singer had supposedly done while attending the 2006 World Cup in Berlin. In a postscript, Kleinfeld insinuated that the hedge fund manager’s alleged debauchery had included wearing Native American headgear and warbling “Singin’ in the Rain” in a public fountain. He pledged to send Singer a feathered headdress next.
By Elliott’s telling, it was the corporate equivalent of a bloody finger in a box. “We do understand Dr. Kleinfeld to be making veiled suggestions that he might intimidate or extort Mr. Singer,” Elliott’s general counsel, Richard Zabel, wrote to Arconic’s board. Less than a week later, Arconic’s board gave Kleinfeld no choice but to resign. Elliott, it seemed, had lucked into its desired outcome out of the blue, by way of its opponent’s unforced error.
Behind the scenes, however, the hedge fund had been waging a sort of Cold War with Kleinfeld and Arconic, engaging in covert espionage ranging across the Eastern seaboard and all the way to Europe, Fortune has learned.

For Kleinfeld, it started when a pair of people who identified themselves as private investigators showed up at the door of his next-door neighbor in New York’s Westchester County about a year ago, inquiring about “loud parties” at his house. As Elliott ramped up its pressure on Arconic, friends and colleagues of Kleinfeld, along with board members of Arconic, reported more suspicious run-ins: Others who live near the CEO were followed to a local restaurant by strangers who then approached the couple; they claimed to be considering investing with Kleinfeld, but first had a few questions. The German-born executive declined to speak with Fortune, but five people familiar with the events confirmed this account. They all believed Elliott to be behind it: “We thought they crossed the line,” one of the people says.
The most unnerving incident was when one of Kleinfeld’s daughters, a student at Harvard Business School, was approached on campus by someone who asked to “friend” her on Facebook; the person also spoke to her friends, fishing for information about her family. While lawyers and advisers say it’s common to hire investigators to do opposition research in the context of a proxy campaign, executives’ kids—of any age—are typically considered off-limits.

From top: John Thys—AFP/Getty Images; SeongJoon Cho—Bloomberg/Getty; Rob Kim—Getty Images; Jasper Juinen—Bloomberg/Getty Images; Munshi Ahmed—Bloomberg/Getty Images

Elliott does not seem to share those qualms: On at least three occasions, according to both court testimony and the accounts of seven people who spoke with Fortune, children of people facing the hedge fund’s attack have been pulled into the fray in some way, in an apparent bid to gain either information on or leverage against their parents. In an instance involving Norbert Essing, an Arconic PR consultant in Germany, neighbors of his children in London received visits from people asking about drug abuse by them or their father. This happened shortly after Elliott publicly blamed Essing for helping or encouraging Kleinfeld to write his soccer ball letter. (Essing denies the accusation.)
Elliott declined to comment on the use of private investigators in its activist campaigns. A person close to the firm denied that information from or about anyone’s kids was part of the scope of its Arconic research effort. Fortune reached out to Elliott to discuss those allegations and ask for its perspective on at least seven occasions, but the firm repeatedly declined to comment on the record.
After the story was published, the firm responded with a letter—an excerpt of which follows. (For Elliott’s full letter, see “Elliott Management’s Response to Fortune.”)
“In the Fortune article titled ‘Inside Elliott Management:
How Paul Singer’s Hedge Fund Always Wins,’ Fortune relayed several instances in which unnamed people allege that the adult children of various executives were contacted by individuals that they assumed to be working for Elliott Management. This assumption and the implicit allegations that Elliott sent anyone to contact the children of these executives are completely false.
“Elliott has always behaved ethically in its disputes with corporate managements and boards, and it is regrettable and disappointing that certain parties adverse to us would choose to promote false allegations about us rather than engage on the merits of our arguments in good faith.”

But in the insular world of activist hedge funds, Elliott appears to have a reputation for particularly hardball tactics, several sources say. Distaste for this no-holds-barred approach even led one prominent activist, Jeff Ubben, the CEO of hedge fund ValueAct, to stick up for Kleinfeld during a panel discussion on activism at the Milken Institute conference in May.
Still, dirt-digging and other aggressive tactics, while controversial, have the benefit of exerting power beyond what money can buy. And they shed light on just what distinguishes Elliott from its less successful peers. “To do activism really, really well, you have to be not only smart and persistent, but you have to be willing,” says David Rosewater, who advises companies as the global head of Morgan Stanley’s shareholder activism and corporate defense group, and who has previously represented Elliott as an attorney. “Not everybody is willing to be the bad guy.”

Elliott Management was founded in 1977 by Paul Elliott Singer, a lawyer by training who found he could use the court system to great gain as an investor in bankruptcy situations and arbitrage. Conservative in almost every sense of the word, the billionaire Singer, now 73, insists on hedging all his investments to reduce the risk of loss, and prizes “manual efforts”—in other words, old-fashioned elbow grease—as the defining characteristic of his investment style.
A powerful GOP donor who split with his party by funding the “Never Trump” movement—and by supporting same-sex marriage—Singer is also obsessed about his own and his employees’ physical safety, according to those who know him well.
Elliott largely bans staff from social media; with few exceptions, employees cannot post pictures of themselves online—not even an official headshot—making them virtual ghosts in the digital age. The precaution is meant to protect them from anyone who might hold a grudge against the firm.
“Paul has always been paranoid about security,” says one Elliott investor, who asked not to be identified for fear of offending Singer.
In an extreme extension of that philosophy, Singer has even hedged his Manhattan headquarters, maintaining a backup version of the five-floor offices in New Jersey, just in case.
In the 1980s and ’90s, Elliott applied its acumen primarily to distressed debt and other more esoteric securities where relatively few Wall Street investors ventured. But the modern history of Elliott’s activism begins in 2004 with the arrival of Jesse Cohn. Now 37, Cohn is Elliott’s enfant terrible; a car fanatic and triathlete from Long Island who can talk so quickly it sometimes seems like he’s on fast-forward. A self-described computer-camp geek, Cohn spent two years as an M&A banker at Morgan Stanley before joining Elliott. That’s where he started writing letters to small tech companies, urging them to put themselves up for auction to garner big gains for their shareholders.

Singer: Misha Friedman—Bloomberg/Getty Images; Cohn: Courtesy of Elliott Management

Cohn’s fanboy-meets-dealmaker affect earned him a reputation as a bit of a whippersnapper. In 2010, in a letter to the board of Novell, he boasted of earning one of the company’s IT certifications when he was 14—a charming bit of common ground that shared the pages with a hostile bid to buy the firm. The brash move worked—Novell was sold to private equity—and Cohn’s formula impressed his bosses enough that they promoted him to head all of its U.S. equity activism. Cohn’s campaigns have resulted in the takeouts or buyouts of more than a dozen companies, including BMC Software, Informatica, LifeLock and, biggest of all, EMC, which Dell acquired for $67 billion in 2015. “I don’t know if anyone has any more experience than he does prosecuting activist campaigns,” says Chris Young, head of contested situations at Credit Suisse, who has known Cohn since the latter started at Elliott.
While Singer eschews sitting on corporate boards, Cohn sits on four, and has become so integral to the firm that some of Elliott’s investors mistakenly believe Cohn is Singer’s nephew. While Singer seldom appears in public (he declined to be interviewed for this article) and rarely takes part in negotiations with companies the firm targets, Cohn is often on the front lines. “Paul is the final decision maker on lots of these issues, but Jesse is the guy, and everyone in the activist community knows who he is,” says Marc Weingarten, a partner and cochair of the shareholder activism group at law firm Schulte Roth & Zabel who has represented Elliott.
In private, people sitting across the table from Cohn have seen another side of him, that of a maestro in the art of applying strategic pressure. That aspect of him bubbled into public view with Compuware, the Detroit-based business software maker that eventually sold to private equity firm Thoma Bravo for $2.4 billion in 2014 as a result of Elliott’s campaign.
In September 2013, a delegation from the Compuware board flew to New York to meet with Elliott about its demands for the company. Cohn opened the meeting by casually flipping through a six-inch-thick manila folder of purportedly embarrassing information on his guests, which included former GM CEO Fritz Henderson. Bill Grabe, an advisory director at private equity firm General Atlantic who sat on Compuware’s board at the time, would later testify in arbitration proceedings that Cohn unabashedly brought Henderson’s daughter into the conversation. “And you know, you have a daughter that’s doing this and whatnot,” Grabe recalled Cohn saying, paraphrasing the young fund manager. “You’re dealing with somebody whose tactics it is to intimidate, to splinter, to do everything they can to be disruptive,” Grabe testified. In the same case, then–Compuware CEO Bob Paul testified that in a follow-up phone call, Cohn dropped a “veiled threat” that he knew Paul kept an Aston Martin in his garage, saying, “By the way, love that English car you’re driving.”
These encounters, first disclosed during a wrongful termination dispute with Compuware cofounder Peter Karmanos Jr., have provided ammunition for Karmanos’s current suit in Michigan state court, accusing Elliott of “blackmailing” the directors into selling the company. “Elliott is taking advantage of the situation,” Karmanos tells Fortune, “and then when they wanted to push it a little harder, they bend the rules.” Karmanos started Compuware in 1973 with a few hundred dollars in tax refund checks. He had already announced his retirement from the board when Elliott launched its campaign, but was fired as a consultant a few months later for saying publicly that he “would tell the hedge fund to go fuck themselves”—comments he says he does not regret. “It’s hard to watch it just get torn apart by those jerks in New York,” he says.

A person who was in the room when Cohn brought out the dossiers says the ploy had no influence on the board’s decisions, though it was unmistakably a threat to release damaging information. “There was no question as to what the intent was of that folder,” the person says. The directors had come to the meeting prepared, after their counterparts at rival BMC, which Elliott had come after a year earlier, warned them of similar tactics. That effort included a disturbing phone call to a BMC director’s daughter, the Compuware directors say.
Elliott declined to comment. But a person close to the firm says the shtick was designed “to be sort of funny, but sort of brutal,” a kind of shame game cataloging the board’s conflicts of interest, and conveying that the jig was up. The intel itself implicated the director, not his daughter, even if she was the source of it, the person adds: “We draw the line there. His daughter doesn’t sit on the board.”
Still, such maneuvers are concerning to investors like ValueAct’s Ubben, who worry that Elliott may undermine the ability of other activists to work with companies in good faith, whether by its indifference to the human toll of its campaigns or because of its apparent affinity for knocking companies out of existence. “Our form of activism could not be more different than Elliott,” Ubben tells Fortune. Ubben’s hedge fund’s behind-closed-doors campaign at Microsoft (MSFT), now going on five years, is credited with expediting the tech giant’s turnaround under CEO Satya Nadella. “Elliott is single-handedly making the public markets less attractive to companies,” Ubben says, “and we see it in the shrinking number of public companies and the growth in private ownership.”

While Cohn was in the trenches with Compuware, a sea change was taking hold inside Elliott. Elliott’s top brass saw Cohn’s strategy as an obvious extension of the firm’s bread-and-butter, labor-intensive investing, and five years ago they kicked it into high gear. Elliott had a generation of young managers eager to do what Cohn had done in their respective industries, from energy to metals and mining. Jonathan Pollock, who had practiced closed-end fund arbitrage in Europe and Asia, had returned to New York a few years earlier, and now fused the principles upon which Singer had built the firm into an equity strategy that could travel across Elliott and the globe.
The first big test was Hess. With a market cap of about $25 billion at the time, the family-run oil and gas empire was the largest company Elliott had ever gone after, and it occupied a nostalgic place in American culture thanks to the novelty toy trucks it released each year at Christmastime. Hess never saw Elliott coming. Elliott owned only 4% of Hess’s stock—not enough to necessitate an activist warning-shot 13D filing with the SEC—in January 2013 when the fund went public with a proxy campaign to replace five of the board’s directors. Elliott alleged that Hess was paying execs some of the highest compensation packages in the industry, while stock returns were near the bottom. It was “a sneak attack,” recalls Thomas Kean, the former Republican governor of New Jersey and one of the Hess directors in Elliott’s crosshairs.

Hess had an aura of impenetrability as one of America’s last dynastic corporations. But the hedge fund nominated an unimpeachable lineup of new directors (including former CEOs of BP and American Express), none of whom worked for Elliott, forcing shareholders to evaluate its arguments on merit. The Hess board “looked like the junior varsity B team when you compared them to the Elliott slate,” Cernich says. Elliott, Kean claims, told some institutional shareholders that failing to support its candidates would be tantamount to neglecting their fiduciary duty—an allegation with potential legal consequences.
“Elliott is single-handedly making the public markets less attractive to companies.”

Jeff Ubben, activist investor and CEO of hedge fund ValueAct
On the eve of the proxy vote at the May 2013 annual meeting, representatives of Elliott and Hess holed up counting incoming votes in the Four Seasons hotel in Houston. It was only around 10 p.m., when the outcome was still too close to call, that the two sides came together, working through the night on a settlement: At 6:30 a.m., Hess announced that it would add three of Elliott’s nominees to its board. Kean, after 23 years of service, relinquished his seat. “By taking that on, they showed that they could move up the weight class to take on bigger companies, and that’s that,” Kean says. The Hess family’s defeat also reverberated beyond Elliott, says a banker who advises companies on facing activists: “Once that broke, I think everybody was like, party on.”
Inside Elliott, the mounting victories catalyzed the activist impulse. In October 2015, the hedge fund took on its first retail company with Cabela’s, which eventually sold itself to Bass Pro Shops. For Cohn, the moment of enlightenment came with American Capital. Elliott had originally invested in the obscure financial stock as part of an arbitrage trade, but when a colleague saw that the company was laying groundwork to shield itself from activist investors, he went across the hall to Cohn for the first time.
Running the company through Elliott’s activism checklist—Is the company undervalued? Can it be fixed? Can you convince other shareholders of the need for change?—Cohn brought the idea of a campaign to Pollock and Singer, who immediately signed off. In mid-November 2015, Elliott sent a public letter to American Capital while simultaneously revealing an 8.4% stake; the company caved just nine days later, announcing it was beginning a sale process. It was the quickest turnaround of any of Elliott’s public campaigns. (Ares Capital acquired the firm six months later for $3.4 billion.) “It showed that the process really works,” says Cohn. “And it’s scalable. That’s part of what I think we’ve proven—we’re not just a group of tech people doing just tech trades; we’re a team that’s able to take what we’ve built and do it over a long period of time, and roll it out to other industries and geographies, too.”
Still, Cohn wasn’t quite satisfied with the machine he’d helped build. From his earliest days at Elliott, he’d harbored a dream that he’d frequently express over dinners with colleagues and advisers. For as many times as he’d pushed companies onto the block, as many sales as he’d secured, there was something missing: Jesse Cohn wanted to buy companies himself.

To hear Cohn tell it, he’d fallen in love. The time and effort Elliott put in to researching companies before launching campaigns often imbued the activists with an intimate knowledge of, and deep appreciation for, their targets. With EMC, for example, Elliott had spent months getting to know the data storage company, interviewing some 700 of its customers before launching a campaign urging it to pursue M&A opportunities. But when computing giant Dell, with financing from its private equity owner Silver Lake, bought EMC, Elliott was shut out of the deal. One day, Cohn hoped, Elliott would be big enough to afford whales of its own.
Cohn’s dream finally came true this fall, when Elliott acquired cybersecurity firm Gigamon for $1.6 billion, less than six months after unveiling a position in the stock. It was the first time Elliott had taken an entire public company private by itself, a major milestone for its relatively new Silicon Valley–based private equity arm, Evergreen Coast Capital.
But in a bit of high-finance irony, Elliott’s reputation for sharp elbows, Cohn realized, could be a liability in achieving these new goals. Cohn is now often sourcing leads for deals from the very bankers and lawyers who sat across from him during tough negotiations in the past. And with that adjustment, people who’ve worked with him say, has come a newfound sensitivity to how both he and Elliott are perceived.
At Athenahealth, for example, which Elliott targeted this spring, Cohn has been polite and even complimentary in his interactions with management, despite being a “regular drumbeat” of a presence, according to people close to the health IT company. On occasion, Cohn has been known to let a tinge of guilt creep in when he reflects on his more swashbuckling days. “Our tactics probably evolved over time,” says Pollock, who is Cohn’s boss. “We’re looking more toward this constructive engagement approach.”
“Our tactics probably evolved over time. We’re looking more toward this constructive engagement approach.”

Jonathan Pollock, co-CEO, Elliott Management
That’s why Elliott’s attack on Arconic this year ruffled feathers inside and outside the firm. Led by 38-year-old portfolio manager Dave Miller, the campaign rhetoric packed more vitriol than any of Elliott’s campaigns in recent memory. Elliott’s 336-slide deck, distributed to Arconic shareholders and released publicly, depicted Kleinfeld as the Monopoly man, running away with money bags. It also alluded to Kleinfeld having personality abnormalities (a claim Arconic dismissed as an “unsubstantiated” ad hominem attack), prompting some to observe that Elliott could have a split personality of its own. “The problem is, I don’t know whether I’m going to get the mensch or the schmuck,” Joele Frank, of the eponymous public relations firm that has helped companies fight Elliott and other activists, commented at a panel at a Tulane law school event in March. (Miller, for his part, was promoted to head of U.S. restructuring at Elliott this spring.)

The Arconic campaign also illustrated Elliott’s power to deploy a seemingly bottomless amount of resources. In May, nearly a month after Kleinfeld resigned, Elliott did something no one has done before or since. Along with paper proxy-vote cards, the hedge fund mailed rechargeable video players, slightly smaller than an iPad, loaded with a four-minute attack ad—alleging Kleinfeld “has the worst track record of any CEO in the S&P 500 over his tenure”—that played automatically when investors opened the package. Sent to tens of thousands of large retail shareholders, the gimmick alone cost Elliott as much as $3 million, proxy contest advisers estimate. While Arconic disclosed it spent $58 million defending itself, it’s likely the hedge fund spent nearly as much if not more in the attack, according to people who worked on the campaign. After two failed rounds of settlement talks in which Singer made a rare personal appearance, Arconic ultimately agreed to add three of Elliott’s four picks to its board. “When Elliott shows up, it’s a completely different ball game,” says Weingarten, the Schulte lawyer. “They are relentless. They have the money, and they will spare no expense to ensure that they win.”

Jonathan Pollock, co-CEO of Elliott Management, at Elliott’s New York City offices in a 2015 photo. Pollock belongs to the younger generation of Elliott principals that has doubled down on activist campaigns.Joshua Bright—The New York Times/Redux
JOSHUA BRIGHT—THE NEW YORK TIMES/REDUX
From Elliott’s perspective, the approach was warranted, given the resistance they’d encountered. Pollock notes that Arconic was one of just a handful of its campaigns, along with Hess and Samsung, where a true battle ensued. “I don’t count the three or four as a success, necessarily,” he says. (Adds someone close to Arconic, “We didn’t decide to take them on, we just said we disagree.”)
Bankers say the Arconic presentation has made the rounds in other companies’ board rooms, and looms large over Elliott’s subsequent campaigns, a warning of what can happen to those who resist its overtures. Whether it fits the firm’s ideals or not, Elliott’s ruthless legacy continues to color its endeavors. Unlike the activist firms run by Bill Ackman or Dan Loeb, the fund Paul Singer founded has raised an army of activists who can influence corporate fiefdoms everywhere. “There’s some sense that there’s an institution that survives the founder,” says Cernich, the governance adviser, “and that it expands and multiplies the power and effectiveness of the organization.”
Promises Pollock, “We’ll be around for a while.” Boards, beware.
Updates: This article was updated on Dec. 13 to include a response that Elliott Management submitted after the article was published. It was updated on Dec. 15 to more clearly describe the allegations and verdict in the South Korean bribery case against Jay Y. Lee.
Paul Singer
Paul Elliott Singer (born August 22, 1944) is an American billionaire hedge fund manager, activist, investor, vulture capitalist, and philanthropist.
A Fortune investigation reveals sophisticated—and often controversial—tactics that have made Elliott Management the world’s biggest, most successful activist hedge fund.
If not for the watermelons, Elliott might have won in Korea.
In the summer of 2015, the activist hedge fund founded by Paul Singer had gone to war in the Republic of Samsung to stop the South Korean conglomerate from going through with what Singer considered to be an unfair deal. Elliott Management, the hedge fund that Singer launched 40 years ago and still leads today, was then a large investor in Samsung’s construction division. The trouble started when Jay Y. Lee, the son of the coma-bound chairman of the Samsung chaebol, started to consolidate power over Korea’s biggest company. When the younger Lee moved to have one part of the family empire buy the construction unit for $8 billion, Elliott balked at what it considered an absurdly low price and began lobbying other shareholders to reject it. Investing farther away from its New York home than ever before, the hedge fund faced a canny opponent with enormous influence in its home country. Samsung went so far as to publish illustrations online depicting Singer, with a vulture beak, accompanied by rhetoric that Singer perceived as anti-Semitic.
In the end, though, it was sugar that may have swayed the voters.
As the meeting to approve the deal neared, Samsung representatives went door to door to meet shareholders, bearing watermelons and Korean walnut cakes, in a plea for their votes.
The merger passed. Elliott, in a rare surrender, sold its shares a few weeks later.

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From Schneider Electric

But the story doesn’t end there. As South Korean authorities unraveled a corruption scandal that toppled the country’s President earlier this year, the trail traced back to Samsung. In August, Lee was convicted of bribery. Prosecutors said Samsung executives had provided a range of financial favors to a key political influencer—among them, a gift of a $830,000 dressage horse to the influencer’s daughter—in order to ensure that the merger was approved and Elliott was defeated. Lee is appealing the conviction, but for now, the Samsung heir is in jail, and Elliott has been vindicated. “I had no idea when we were in the midst of this, that this situation was going to lead to the impeachment of the President,” says Jonathan Pollock, co-CEO of Elliott, alongside Singer. It happens that in pursuing misbehaving companies, Elliott sometimes ends up sniffing out nefarious behavior: “Unfortunately, some of the people involved in these situations tend to ignore the rights of shareholders and creditors, and act entitled to do whatever they want.”
The Samsung outcome turned out to be a watershed moment not just for Elliott, but for shareholder activism. Activists use their ownership stakes in public companies to pressure them to change in order to boost returns—whether by restructuring their businesses, shaking up management, or even putting themselves up for sale. Such shareholder agitation has become more common in recent years as a widening pool of global investors seek a competitive edge. And in that world, the 40-year-old Elliott has emerged as both the largest and most active of activist hedge funds, and one that almost always seems to get its way.

“The Elliott book of deals is probably the most instructive, and it’s also one of the most far, far reaching,” says Marty Lipton, founding partner of the law firm Wachtell Lipton Rosen & Katz and inventor of the poison-pill corporate defense strategy, who has lately faced Elliott more frequently and on more fronts than ever before. “They’ve been enormously successful, and they are a major factor in activism today.”
In the past five years, Elliott has launched activist campaigns at more than 50 companies—19 this year alone—in at least a dozen countries. During that span, the battle with Samsung is the only one that went all the way to a vote, and the only one in which the firm didn’t get what it wanted—a sign of just how effective Elliott is at pressuring management to agree to its demands. At the same time, Elliott’s assets have nearly doubled to roughly $39 billion, including $5 billion it raised in a 23-hour span in May, making it more than twice the size of the second-biggest activist hedge fund, Dan Loeb’s Third Point.

Nic Rapp
That war chest, along with Elliott’s 400-­person staff, has rendered the firm virtually impossible for adversaries—from industry titans to nation states—to beat in a fight.
Warren Buffett learned that the hard way this summer, when Elliott used its financial might to successfully block Berkshire Hathaway’s bid for energy company Oncor, by buying up company debt and pledging to exercise its creditor veto right.
And Elliott has lately sought to clone its winning strategy: It’s on track to launch about 50% more activist campaigns this year than in 2016—nearly three times as many as any other major activist fund—including, in October, two in a single day.
Elliott’s winning ways are in stark contrast to many of its activist peers, whose recent attempts to take on Fortune 500 companies have failed miserably, from Bill Ackman’s landslide loss in a proxy contest with ADP (ADP), to Greenlight Capital founder David Einhorn’s strikeout at General Motors (GM) earlier this year. Even Trian Partners’ Nelson Peltz, who narrowly won a blockbuster proxy campaign with P&G (PG) this fall, is still feuding with that company to accept him onto its board. And Elliott, whose 13.4% annual rate of return over its four-decade history is unmatched among hedge funds, has also outperformed at a time when that asset class has woefully lagged the market. The firm’s flagship fund, Elliott Associates, has returned more than 9.7% annualized over the past five years, compared with just 4.7% for hedge funds overall.
As Elliott ramps up its activism to an unprecedented scale, it is also accumulating a growing body count of deposed executives—not to mention ousted heads of state—who dared fight it. Just last year, Elliott finally prevailed in a 15-year battle to force Argentina to repay its bonds—a saga in which the hedge fund at one point seized an Argentine navy tall ship with the sailors still on it. A few months after Elliott finally collected its $2.4 billion windfall, Argentina indicted its former President, Cristina Fernández de Kirchner, who had led her country into default in 2014 rather than pay Elliott what it owed (a decision that had also cost her party reelection). “Elliott’s the only one that has effected regime change in two different sovereign countries,” says Chris Cernich, managing director of Strategic Governance Advisors, who counsels executives on proxy contests. “They were successful at being right, and very publicly right.”

In their conviction that they’re right, however, Elliott has become adept at wielding pressure on its opponents in ways their foes say can cross ethical boundaries. Through interviews with more than 40 people who have dealt with the hedge fund—including bankers, advisers, board members of various companies, and current and former employees of the firm—Fortune has learned previously unreported details that reveal just how far Elliott will go to win.
To many observers, Elliott appeared vindicated yet again this spring, when a soccer ball showed up at Paul Singer’s door. In January, the hedge fund had publicly called for the ouster of Klaus Kleinfeld, the CEO of aerospace manufacturer Arconic (ARNC), which split from Alcoa last year. Elliott objected to the company’s poor stock returns during his tenure, along with his generous compensation. Arconic refused to fire the CEO, and the stage was set for a proxy fight.
Four months later, Kleinfeld responded in the form of that soccer ball, sent by courier directly to Singer’s office, across town from Arconic’s New York headquarters. He enclosed a letter on his personal stationery, in which he sardonically alluded to some “lastingly legendary” partying Singer had supposedly done while attending the 2006 World Cup in Berlin. In a postscript, Kleinfeld insinuated that the hedge fund manager’s alleged debauchery had included wearing Native American headgear and warbling “Singin’ in the Rain” in a public fountain. He pledged to send Singer a feathered headdress next.
By Elliott’s telling, it was the corporate equivalent of a bloody finger in a box. “We do understand Dr. Kleinfeld to be making veiled suggestions that he might intimidate or extort Mr. Singer,” Elliott’s general counsel, Richard Zabel, wrote to Arconic’s board. Less than a week later, Arconic’s board gave Kleinfeld no choice but to resign. Elliott, it seemed, had lucked into its desired outcome out of the blue, by way of its opponent’s unforced error.
Behind the scenes, however, the hedge fund had been waging a sort of Cold War with Kleinfeld and Arconic, engaging in covert espionage ranging across the Eastern seaboard and all the way to Europe, Fortune has learned.

For Kleinfeld, it started when a pair of people who identified themselves as private investigators showed up at the door of his next-door neighbor in New York’s Westchester County about a year ago, inquiring about “loud parties” at his house. As Elliott ramped up its pressure on Arconic, friends and colleagues of Kleinfeld, along with board members of Arconic, reported more suspicious run-ins: Others who live near the CEO were followed to a local restaurant by strangers who then approached the couple; they claimed to be considering investing with Kleinfeld, but first had a few questions. The German-born executive declined to speak with Fortune, but five people familiar with the events confirmed this account. They all believed Elliott to be behind it: “We thought they crossed the line,” one of the people says.
The most unnerving incident was when one of Kleinfeld’s daughters, a student at Harvard Business School, was approached on campus by someone who asked to “friend” her on Facebook; the person also spoke to her friends, fishing for information about her family. While lawyers and advisers say it’s common to hire investigators to do opposition research in the context of a proxy campaign, executives’ kids—of any age—are typically considered off-limits.

From top: John Thys—AFP/Getty Images; SeongJoon Cho—Bloomberg/Getty; Rob Kim—Getty Images; Jasper Juinen—Bloomberg/Getty Images; Munshi Ahmed—Bloomberg/Getty Images
Elliott does not seem to share those qualms: On at least three occasions, according to both court testimony and the accounts of seven people who spoke with Fortune, children of people facing the hedge fund’s attack have been pulled into the fray in some way, in an apparent bid to gain either information on or leverage against their parents. In an instance involving Norbert Essing, an Arconic PR consultant in Germany, neighbors of his children in London received visits from people asking about drug abuse by them or their father. This happened shortly after Elliott publicly blamed Essing for helping or encouraging Kleinfeld to write his soccer ball letter. (Essing denies the accusation.)
Elliott declined to comment on the use of private investigators in its activist campaigns. A person close to the firm denied that information from or about anyone’s kids was part of the scope of its Arconic research effort. Fortune reached out to Elliott to discuss those allegations and ask for its perspective on at least seven occasions, but the firm repeatedly declined to comment on the record.
After the story was published, the firm responded with a letter—an excerpt of which follows. (For Elliott’s full letter, see “Elliott Management’s Response to Fortune.”)
“In the Fortune article titled ‘Inside Elliott Management: How Paul Singer’s Hedge Fund Always Wins,’ Fortune relayed several instances in which unnamed people allege that the adult children of various executives were contacted by individuals that they assumed to be working for Elliott Management. This assumption and the implicit allegations that Elliott sent anyone to contact the children of these executives are completely false.
“Elliott has always behaved ethically in its disputes with corporate managements and boards, and it is regrettable and disappointing that certain parties adverse to us would choose to promote false allegations about us rather than engage on the merits of our arguments in good faith.”

But in the insular world of activist hedge funds, Elliott appears to have a reputation for particularly hardball tactics, several sources say. Distaste for this no-holds-barred approach even led one prominent activist, Jeff Ubben, the CEO of hedge fund ValueAct, to stick up for Kleinfeld during a panel discussion on activism at the Milken Institute conference in May.
Still, dirt-digging and other aggressive tactics, while controversial, have the benefit of exerting power beyond what money can buy. And they shed light on just what distinguishes Elliott from its less successful peers. “To do activism really, really well, you have to be not only smart and persistent, but you have to be willing,” says David Rosewater, who advises companies as the global head of Morgan Stanley’s shareholder activism and corporate defense group, and who has previously represented Elliott as an attorney. “Not everybody is willing to be the bad guy.”

Elliott Management was founded in 1977 by Paul Elliott Singer, a lawyer by training who found he could use the court system to great gain as an investor in bankruptcy situations and arbitrage. Conservative in almost every sense of the word, the billionaire Singer, now 73, insists on hedging all his investments to reduce the risk of loss, and prizes “manual efforts”—in other words, old-fashioned elbow grease—as the defining characteristic of his investment style.
A powerful GOP donor who split with his party by funding the “Never Trump” movement—and by supporting same-sex marriage—Singer is also obsessed about his own and his employees’ physical safety, according to those who know him well. Elliott largely bans staff from social media; with few exceptions, employees cannot post pictures of themselves online—not even an official headshot—making them virtual ghosts in the digital age. The precaution is meant to protect them from anyone who might hold a grudge against the firm. “Paul has always been paranoid about security,” says one Elliott investor, who asked not to be identified for fear of offending Singer. In an extreme extension of that philosophy, Singer has even hedged his Manhattan headquarters, maintaining a backup version of the five-floor offices in New Jersey, just in case.
In the 1980s and ’90s, Elliott applied its acumen primarily to distressed debt and other more esoteric securities where relatively few Wall Street investors ventured. But the modern history of Elliott’s activism begins in 2004 with the arrival of Jesse Cohn. Now 37, Cohn is Elliott’s enfant terrible; a car fanatic and triathlete from Long Island who can talk so quickly it sometimes seems like he’s on fast-forward. A self-described computer-camp geek, Cohn spent two years as an M&A banker at Morgan Stanley before joining Elliott. That’s where he started writing letters to small tech companies, urging them to put themselves up for auction to garner big gains for their shareholders.

Singer: Misha Friedman—Bloomberg/Getty Images; Cohn: Courtesy of Elliott Management

Cohn’s fanboy-meets-dealmaker affect earned him a reputation as a bit of a whippersnapper. In 2010, in a letter to the board of Novell, he boasted of earning one of the company’s IT certifications when he was 14—a charming bit of common ground that shared the pages with a hostile bid to buy the firm. The brash move worked—Novell was sold to private equity—and Cohn’s formula impressed his bosses enough that they promoted him to head all of its U.S. equity activism. Cohn’s campaigns have resulted in the takeouts or buyouts of more than a dozen companies, including BMC Software, Informatica, LifeLock and, biggest of all, EMC, which Dell acquired for $67 billion in 2015. “I don’t know if anyone has any more experience than he does prosecuting activist campaigns,” says Chris Young, head of contested situations at Credit Suisse, who has known Cohn since the latter started at Elliott.
While Singer eschews sitting on corporate boards, Cohn sits on four, and has become so integral to the firm that some of Elliott’s investors mistakenly believe Cohn is Singer’s nephew. While Singer seldom appears in public (he declined to be interviewed for this article) and rarely takes part in negotiations with companies the firm targets, Cohn is often on the front lines. “Paul is the final decision maker on lots of these issues, but Jesse is the guy, and everyone in the activist community knows who he is,” says Marc Weingarten, a partner and cochair of the shareholder activism group at law firm Schulte Roth & Zabel who has represented Elliott.
In private, people sitting across the table from Cohn have seen another side of him, that of a maestro in the art of applying strategic pressure. That aspect of him bubbled into public view with Compuware, the Detroit-based business software maker that eventually sold to private equity firm Thoma Bravo for $2.4 billion in 2014 as a result of Elliott’s campaign.
In September 2013, a delegation from the Compuware board flew to New York to meet with Elliott about its demands for the company. Cohn opened the meeting by casually flipping through a six-inch-thick manila folder of purportedly embarrassing information on his guests, which included former GM CEO Fritz Henderson. Bill Grabe, an advisory director at private equity firm General Atlantic who sat on Compuware’s board at the time, would later testify in arbitration proceedings that Cohn unabashedly brought Henderson’s daughter into the conversation. “And you know, you have a daughter that’s doing this and whatnot,” Grabe recalled Cohn saying, paraphrasing the young fund manager. “You’re dealing with somebody whose tactics it is to intimidate, to splinter, to do everything they can to be disruptive,” Grabe testified. In the same case, then–Compuware CEO Bob Paul testified that in a follow-up phone call, Cohn dropped a “veiled threat” that he knew Paul kept an Aston Martin in his garage, saying, “By the way, love that English car you’re driving.”
These encounters, first disclosed during a wrongful termination dispute with Compuware cofounder Peter Karmanos Jr., have provided ammunition for Karmanos’s current suit in Michigan state court, accusing Elliott of “blackmailing” the directors into selling the company. “Elliott is taking advantage of the situation,” Karmanos tells Fortune, “and then when they wanted to push it a little harder, they bend the rules.” Karmanos started Compuware in 1973 with a few hundred dollars in tax refund checks. He had already announced his retirement from the board when Elliott launched its campaign, but was fired as a consultant a few months later for saying publicly that he “would tell the hedge fund to go fuck themselves”—comments he says he does not regret. “It’s hard to watch it just get torn apart by those jerks in New York,” he says.

A person who was in the room when Cohn brought out the dossiers says the ploy had no influence on the board’s decisions, though it was unmistakably a threat to release damaging information. “There was no question as to what the intent was of that folder,” the person says. The directors had come to the meeting prepared, after their counterparts at rival BMC, which Elliott had come after a year earlier, warned them of similar tactics. That effort included a disturbing phone call to a BMC director’s daughter, the Compuware directors say.
Elliott declined to comment. But a person close to the firm says the shtick was designed “to be sort of funny, but sort of brutal,” a kind of shame game cataloging the board’s conflicts of interest, and conveying that the jig was up. The intel itself implicated the director, not his daughter, even if she was the source of it, the person adds: “We draw the line there. His daughter doesn’t sit on the board.”
Still, such maneuvers are concerning to investors like ValueAct’s Ubben, who worry that Elliott may undermine the ability of other activists to work with companies in good faith, whether by its indifference to the human toll of its campaigns or because of its apparent affinity for knocking companies out of existence. “Our form of activism could not be more different than Elliott,” Ubben tells Fortune. Ubben’s hedge fund’s behind-closed-doors campaign at Microsoft (MSFT), now going on five years, is credited with expediting the tech giant’s turnaround under CEO Satya Nadella. “Elliott is single-handedly making the public markets less attractive to companies,” Ubben says, “and we see it in the shrinking number of public companies and the growth in private ownership.”

While Cohn was in the trenches with Compuware, a sea change was taking hold inside Elliott. Elliott’s top brass saw Cohn’s strategy as an obvious extension of the firm’s bread-and-butter, labor-intensive investing, and five years ago they kicked it into high gear. Elliott had a generation of young managers eager to do what Cohn had done in their respective industries, from energy to metals and mining. Jonathan Pollock, who had practiced closed-end fund arbitrage in Europe and Asia, had returned to New York a few years earlier, and now fused the principles upon which Singer had built the firm into an equity strategy that could travel across Elliott and the globe.
The first big test was Hess. With a market cap of about $25 billion at the time, the family-run oil and gas empire was the largest company Elliott had ever gone after, and it occupied a nostalgic place in American culture thanks to the novelty toy trucks it released each year at Christmastime. Hess never saw Elliott coming. Elliott owned only 4% of Hess’s stock—not enough to necessitate an activist warning-shot 13D filing with the SEC—in January 2013 when the fund went public with a proxy campaign to replace five of the board’s directors. Elliott alleged that Hess was paying execs some of the highest compensation packages in the industry, while stock returns were near the bottom. It was “a sneak attack,” recalls Thomas Kean, the former Republican governor of New Jersey and one of the Hess directors in Elliott’s crosshairs.

Hess had an aura of impenetrability as one of America’s last dynastic corporations. But the hedge fund nominated an unimpeachable lineup of new directors (including former CEOs of BP and American Express), none of whom worked for Elliott, forcing shareholders to evaluate its arguments on merit. The Hess board “looked like the junior varsity B team when you compared them to the Elliott slate,” Cernich says. Elliott, Kean claims, told some institutional shareholders that failing to support its candidates would be tantamount to neglecting their fiduciary duty—an allegation with potential legal consequences.
“Elliott is single-handedly making the public markets less attractive to companies.”

Jeff Ubben, activist investor and CEO of hedge fund ValueAct
On the eve of the proxy vote at the May 2013 annual meeting, representatives of Elliott and Hess holed up counting incoming votes in the Four Seasons hotel in Houston. It was only around 10 p.m., when the outcome was still too close to call, that the two sides came together, working through the night on a settlement: At 6:30 a.m., Hess announced that it would add three of Elliott’s nominees to its board. Kean, after 23 years of service, relinquished his seat. “By taking that on, they showed that they could move up the weight class to take on bigger companies, and that’s that,” Kean says. The Hess family’s defeat also reverberated beyond Elliott, says a banker who advises companies on facing activists: “Once that broke, I think everybody was like, party on.”
Inside Elliott, the mounting victories catalyzed the activist impulse. In October 2015, the hedge fund took on its first retail company with Cabela’s, which eventually sold itself to Bass Pro Shops. For Cohn, the moment of enlightenment came with American Capital. Elliott had originally invested in the obscure financial stock as part of an arbitrage trade, but when a colleague saw that the company was laying groundwork to shield itself from activist investors, he went across the hall to Cohn for the first time.
Running the company through Elliott’s activism checklist—Is the company undervalued? Can it be fixed? Can you convince other shareholders of the need for change?—Cohn brought the idea of a campaign to Pollock and Singer, who immediately signed off. In mid-November 2015, Elliott sent a public letter to American Capital while simultaneously revealing an 8.4% stake; the company caved just nine days later, announcing it was beginning a sale process. It was the quickest turnaround of any of Elliott’s public campaigns. (Ares Capital acquired the firm six months later for $3.4 billion.) “It showed that the process really works,” says Cohn. “And it’s scalable. That’s part of what I think we’ve proven—we’re not just a group of tech people doing just tech trades; we’re a team that’s able to take what we’ve built and do it over a long period of time, and roll it out to other industries and geographies, too.”
Still, Cohn wasn’t quite satisfied with the machine he’d helped build. From his earliest days at Elliott, he’d harbored a dream that he’d frequently express over dinners with colleagues and advisers. For as many times as he’d pushed companies onto the block, as many sales as he’d secured, there was something missing: Jesse Cohn wanted to buy companies himself.

To hear Cohn tell it, he’d fallen in love. The time and effort Elliott put in to researching companies before launching campaigns often imbued the activists with an intimate knowledge of, and deep appreciation for, their targets. With EMC, for example, Elliott had spent months getting to know the data storage company, interviewing some 700 of its customers before launching a campaign urging it to pursue M&A opportunities. But when computing giant Dell, with financing from its private equity owner Silver Lake, bought EMC, Elliott was shut out of the deal. One day, Cohn hoped, Elliott would be big enough to afford whales of its own.
Cohn’s dream finally came true this fall, when Elliott acquired cybersecurity firm Gigamon for $1.6 billion, less than six months after unveiling a position in the stock. It was the first time Elliott had taken an entire public company private by itself, a major milestone for its relatively new Silicon Valley–based private equity arm, Evergreen Coast Capital.
But in a bit of high-finance irony, Elliott’s reputation for sharp elbows, Cohn realized, could be a liability in achieving these new goals. Cohn is now often sourcing leads for deals from the very bankers and lawyers who sat across from him during tough negotiations in the past. And with that adjustment, people who’ve worked with him say, has come a newfound sensitivity to how both he and Elliott are perceived.
At Athenahealth, for example, which Elliott targeted this spring, Cohn has been polite and even complimentary in his interactions with management, despite being a “regular drumbeat” of a presence, according to people close to the health IT company. On occasion, Cohn has been known to let a tinge of guilt creep in when he reflects on his more swashbuckling days. “Our tactics probably evolved over time,” says Pollock, who is Cohn’s boss. “We’re looking more toward this constructive engagement approach.”
“Our tactics probably evolved over time. We’re looking more toward this constructive engagement approach.”

Jonathan Pollock, co-CEO, Elliott Management
That’s why Elliott’s attack on Arconic this year ruffled feathers inside and outside the firm. Led by 38-year-old portfolio manager Dave Miller, the campaign rhetoric packed more vitriol than any of Elliott’s campaigns in recent memory. Elliott’s 336-slide deck, distributed to Arconic shareholders and released publicly, depicted Kleinfeld as the Monopoly man, running away with money bags. It also alluded to Kleinfeld having personality abnormalities (a claim Arconic dismissed as an “unsubstantiated” ad hominem attack), prompting some to observe that Elliott could have a split personality of its own. “The problem is, I don’t know whether I’m going to get the mensch or the schmuck,” Joele Frank, of the eponymous public relations firm that has helped companies fight Elliott and other activists, commented at a panel at a Tulane law school event in March. (Miller, for his part, was promoted to head of U.S. restructuring at Elliott this spring.)

The Arconic campaign also illustrated Elliott’s power to deploy a seemingly bottomless amount of resources. In May, nearly a month after Kleinfeld resigned, Elliott did something no one has done before or since. Along with paper proxy-vote cards, the hedge fund mailed rechargeable video players, slightly smaller than an iPad, loaded with a four-minute attack ad—alleging Kleinfeld “has the worst track record of any CEO in the S&P 500 over his tenure”—that played automatically when investors opened the package. Sent to tens of thousands of large retail shareholders, the gimmick alone cost Elliott as much as $3 million, proxy contest advisers estimate. While Arconic disclosed it spent $58 million defending itself, it’s likely the hedge fund spent nearly as much if not more in the attack, according to people who worked on the campaign. After two failed rounds of settlement talks in which Singer made a rare personal appearance, Arconic ultimately agreed to add three of Elliott’s four picks to its board. “When Elliott shows up, it’s a completely different ball game,” says Weingarten, the Schulte lawyer. “They are relentless. They have the money, and they will spare no expense to ensure that they win.”

Jonathan Pollock, co-CEO of Elliott Management, at Elliott’s New York City offices in a 2015 photo. Pollock belongs to the younger generation of Elliott principals that has doubled down on activist campaigns.Joshua Bright—The New York Times/Redux
JOSHUA BRIGHT—THE NEW YORK TIMES/REDUX
From Elliott’s perspective, the approach was warranted, given the resistance they’d encountered. Pollock notes that Arconic was one of just a handful of its campaigns, along with Hess and Samsung, where a true battle ensued. “I don’t count the three or four as a success, necessarily,” he says. (Adds someone close to Arconic, “We didn’t decide to take them on, we just said we disagree.”)
Bankers say the Arconic presentation has made the rounds in other companies’ board rooms, and looms large over Elliott’s subsequent campaigns, a warning of what can happen to those who resist its overtures. Whether it fits the firm’s ideals or not, Elliott’s ruthless legacy continues to color its endeavors. Unlike the activist firms run by Bill Ackman or Dan Loeb, the fund Paul Singer founded has raised an army of activists who can influence corporate fiefdoms everywhere. “There’s some sense that there’s an institution that survives the founder,” says Cernich, the governance adviser, “and that it expands and multiplies the power and effectiveness of the organization.”
Promises Pollock, “We’ll be around for a while.” Boards, beware.
Updates: This article was updated on Dec. 13 to include a response that Elliott Management submitted after the article was published. It was updated on Dec. 15 to more clearly describe the allegations and verdict in the South Korean bribery case against Jay Y. Lee. His hedge fund, Elliott Management Corporation (EMC)—specializes in distressed debt acquisitions.[6]:301[7] Singer is also the founder and CEO of NML Capital Limited, a Cayman Islands-based offshore unit of Elliott Management Corporation.[8] In 2017 Forbes rated Singer’s net worth as $2.9 billion.[
Singer’s philanthropic activities include financial support for LGBTQ rights.[
He has provided funding to the Manhattan Institute for Policy Research & is a strong opponent of raising taxes for the wealthiest 1% of taxpayers and opposes aspects of the Dodd-Frank Act.
Singer is active in Republican Party politics and Singer and others affiliated with Elliott Management are collectively “the top source of contributions” to the National Republican Senatorial Committee.[14]
Fortune magazine described Singer as one of the “smartest and toughest money managers” in the hedge fund industry.[13] A number of sources have branded him a “vulture capitalist”, largely on account of his role at EMC, which has been called a vulture fund.[4][The Independent has described him as “a pioneer in the business of buying up sovereign bonds on the cheap, and then going after countries for unpaid debts.”[8] In 1996 Singer began using the strategy of purchasing sovereign debt from nations in or near default—such as Argentina,[13][18][19][20] and Peru[8][21][22]—through his NML Capital Limited[8] and Congo-Brazzaville through Kensington International Inc.[17] Singer’s practice of purchasing distressed debt from companies and sovereign states and pursuing full payment through the courts has led to criticism.[20][23] Singer and EMC defend their model[4] as “a fight against charlatans who refuse to play by the market’s rules”,[18] and supporters of the practice have said it “help[s] keep kleptocratic governments in check.”

Contents

External linksEducation and early career[edit]
Singer was born in 1944, and grew up in Teaneck, New Jersey in a Jewish family,[25][26][27] one of three children of a Manhattan pharmacist and a homemaker.[13] He obtained his B.S. in psychology from the University of Rochester in 1966[28] and a J.D. from Harvard Law School in 1969.[13][29] In 1974 Singer went to work as an attorney in the real estate division of the investment bank Donaldson, Lufkin & Jenrette.[13][29]
Career[edit]
Elliott Management[edit]
Main article: Elliott Management Corporation
In 1977, with a convertible arbitrage “winning formula,” Singer left law to create his own investment company. He founded the hedge fund Elliott Associates L.P. with US$1.3 million in seed capital from various friends and family members.[11][13] According to The Telegraph in 2011, Elliott is “one of the oldest hedge funds on Wall Street.”[30] Singer is also the founder and CEO of NML Capital Limited, a Cayman Islands-based offshore unit of Elliott Management Corporation.[8]
According to Fortune, Elliott has been involved “in most of the big post-crash restructurings.”[13] In 2009 The Guardian reported that Singer “through a brilliantly complex financial manoeuvre, took control of Delphi Automotive, the sole supplier of most of the auto parts needed by General Motors and Chrysler.” Ultimately, the US Treasury paid Elliott Management “$12.9 billion in cash and subsidies from the US Treasury’s auto bailout fund.”[31] In December 2011 Elliott Associates sued Vietnam’s state-owned shipbuilder Vinashin in the UK for defaulting the year before on a US$600 million syndicated loan.[32]
As of February 2014 Elliott controlled $23bn (£19bn) of funds and was the ninth largest investor on Wall Street.[33]
In June 2015 Elliott was an active activist investor with Citrix Systems, pushing for various changes.[34] In May 2014 the French Financial Markets Regulator fined Elliott a record €14 million ($22 million) for insider trading, a ruling which the company appealed.[35] In a long-standing dispute between Singer and members of the Lee family over a merger between Samsung and Cheil Industries, in 2015 Samsung published numerous cartoons of Singer as an anthropomorphic vulture on its corporate website. The cartoons were denounced by Singer and others as antisemitic.[25] Samsung responded several days later denouncing antisemitism,[25] and pulled the images from their website.[36]
Forbes rated Singer’s net worth as $2.1 billion in 2015[4][15][25][37] and $2.2 billion in 2016.[9] As of November 2015 Elliott Management Corporation oversees Elliott Associates and Elliott International Limited, which together have more than $27 billion in assets under management in a “multi-strategy fund.”[11][37] The corporation includes a private equity division.[38] Termed a “specialist in activism in technology companies” by the Wall Street Journal in June 2015,[34] Elliott Management’s varied portfolio also includes a prominent tech component.[38] The company pursued “more than 40 campaigns aimed at tech companies” between 2004 and 2015, according to Reuters.[38] in 2018, Elliott Management took control of Italian football club A.C. Milan.[39]
Sovereign debt[edit]
In 1996 Elliott bought defaulted Peruvian debt for $11.4 million.[22] Elliott won a $58 million judgment[18] and Peru had to repay the sum in full under the pari passu rule.[21] When former president of Peru Alberto Fujimori was attempting to flee the country due to human rights abuses and corruption, Singer confiscated his jet and offered to let him leave the country in exchange for the $58 million payment from the treasury. Fujimori accepted.[19][40][32] In the 1990s the Kensington International division of EMC purchased US$30 million (£18m) of “Congolese sovereign debt… allegedly for less than $20m.” Kensington subsequently spent years trying to be paid in full through the courts.[16] In 2008 Kensington and the Republic of Congo settled for an undisclosed amount.[32]
After Argentina defaulted on its debt in 2002, the Elliott-owned company NML Capital Limited refused to accept the Argentine offer to pay less than 30 cents per dollar of debt.[13] Elliott sued Argentina for the debt’s value,[41] and the lower UK courts found that Argentina had state immunity. Elliott successfully appealed the case to the UK Supreme Court, which ruled that Elliott had the right to attempt to seize Argentine property in the United Kingdom, and on October 2, 2012, Singer arranged for a Ghanaian Court order to detain an Argentine naval vessel in a Ghanaian port in an effort to force Argentina to pay the debt, but was rebuffed when the seizure was barred by the International Tribunal for the Law of the Sea.
In February 2013 the U.S. appeals court heard Argentina’s appeal in the case of its default and debt to NML.[
In March 2013 Argentina offered a new plan,[49] which was dismissed first by the lower courts and then the United States Court of Appeals for the Second Circuit on August 23, 2013, and then again in June 2014 in the U.S. Supreme Court.[50][51] In March 2014 NML Capital unsuccessfully attempted to satisfy court awards by suing SpaceX, seeking the rights to two satellite-launch contracts bought by Argentina valued at $113 million.[18]:2[52][53][54][55] In early 2016 US courts ruled that Argentina must make full payments to holdout bondholders by February 29.
In February 2016 Argentina reached an agreement with Singer.~
Business and investment model[edit]
According to Fortune, Singer focused from early times “on distressed assets,” buying up bankrupt firms’ debt and acquiring “a reputation for strong-arming his way to profit.”[13] Fortune noted in 2012 that losses sustained early in Singer’s career led to a “risk aversion that still guides his investing today. Thanks to his caution, by 2012 Elliott had “only two down years” since 1977, rising “4.2% in 2011, a year in which most hedge funds lost money.”[13] Describing him as “one of the smartest and toughest money managers in the business”, the article further notes that his firm “is so influential that fear of its tactics helped shape the current 2012 Greek debt restructuring.”[13]
Elliott was termed by The Independent as “a pioneer in the business of buying up sovereign bonds on the cheap, and then going after countries for unpaid debts.”[8] Singer describes his business model as “a fight against charlatans who refuse to play by the market’s rules,”[18] and in 2013 Singer told Alpha Magazine that “we’ve made the point over and over again that sovereigns that could pay their debts and choose not to may be attempting to save some money but are harming their people and their economies by making investing in their countries more risky and more problematic and by discouraging foreign investment.”[4] In response, The Washington Post wrote in 2014 that “in Singer’s view, he isn’t just forcing indebted companies and countries to pay up. He’s trying to create a world where distressed debt doesn’t exist. Depending on your own views, that makes Singer an activist investor, or a ‘vulture capitalist.'”[4]
Philanthropy
Singer signed The Giving Pledge, which signals a commitment by individuals to donate more than half of their wealth within their lifetime to address society’s “most difficult moral and economic challenges.”[10]
Singer founded the Paul E. Singer Family Foundation, which supports charitable causes including the Harvard Graduate School of Education Singer Prize for Excellence in Secondary Teaching,[62] VH1 Save The Music Foundation,[63]
the Food Bank For New York City, National Gay and Lesbian Task Force Action Fund, the American Unity Fund, the New York City Police Foundation[
and MarineParents.com.[14][66] He and The Paul E. Singer Family Foundation are behind The Philos Project, a pro-Israel Christian organization.[67] In 2016, Singer partnered with the Museum of the Bible to fund Passages Israel, a program to take college students to Israel.[68] He is a “longtime supporter of hawkish pro-Israel causes” and a major funder for the conservative think tank Foundation for Defense of Democracies.[69] In November 2018, after the Pittsburgh synagogue shooting, the Paul E. Singer Family Foundation announced it would donate $1 million to upgrade security at Jewish institutions in New York. The funds will be gifted to the United Jewish Appeal – Federation of New York, which will then distribute the money as needed to individual synagogues, day schools, and community centers to cover safety reviews and enhanced precautions.[70]
Singer also serves on the Board of Fellows of Harvard Medical School and the board of directors of Commentary Magazine.[71][72]
Political activity[edit]
Singer is an active participant in Republican Party politics.
According to The New York Times, he supports “like-minded candidates who often share his distaste for what they view as governmental over-meddling in the financial industry.”[7
Singer has contributed more than $1 million to the political efforts of the Koch brothers.[75][76] In 2014, Singer led a group of major Republican donors to form the American Opportunity Alliance, a group that brings together wealthy Republican donors who share Singer’s support for LGBTQ rights, immigration reform and Israel.
During the 2016 Presidential election campaign Singer supported Marco Rubio and donated a million dollars in March to the Our Principles PAC, a PAC attempting to derail Donald Trump’s election campaign.[78][79][80][81] He also started the American Unity PA.
He supported Trump’s inaugural committee with $1 million together with 25 other billionaires.[83]
Singer was a major contributor to George W. Bush’s presidential campaigns.[
On March 14, 2008, Singer hosted a Republican National Committee luncheon in his home for 70 guests that raised $1.4 million for Bush.[85][86][87] Bush appointed Singer to serve on the Honorary Delegation to accompany him to Jerusalem for the celebration of the 60th anniversary of the State of Israel in May 2008.
In 2007 Singer was one of Rudolph Giuliani’s most important fundraisers in Giuliani’s bid for the Republican presidential nomination.
In 2007, Singer led a financial industry fund-raising effort for Giuliani, first as regional finance chair and later as senior policy adviser.[90][91] Singer lent Giuliani his private jet.[91][92] That same year, Singer at $175,000 was the sole contributor to a campaign to support a petition drive for a proposed California initiative to apportion the state’s 55 electoral votes by congressional district. At least 19 of the state’s 53 congressional districts were expected to vote for a GOP presidential candidate, enough to change the national results in a close election.[89][93]
Singer was one of the largest donors of the 2010 midterm election cycle, contributing more than $4 million to support Republican candidates.[86]

In 2011 Singer donated $1 million to Restore Our Future, a Super PAC created to support Mitt Romney in the 2012 U.S. Presidential election.[94] In 2013, Singer gave $100,000 to the Club for Growth, a 501(c)4 organization that supports Tea Party candidates.[95] He has also donated millions of dollars to organizations that advocate for a strong military and for supporting Israel.[96][97][98]
In 2012 Singer founded the nonprofit Start-up Nation Central, inspired by the publication of the 2009 New York Times bestseller Start-Up Nation. An NGO, Start-up Nation Central aims to develop collaboration between Israel’s tech sector, outside investors and innovators.[99][100] Bloomberg has described it as “a foreign ministry for Israel’s tech industry”. Since 2012 Singer has invested around $20 million into it.[101] Start-Up Nation Central is based in Tel Aviv.[102]
Singer is a member of the Committee on Capital Markets Regulation, a non-governmental, nonpartisan research organization.[103] He is chairman of the board of trustees for the Manhattan Institute for Policy Research, a conservative think tank in New York City,[104] and on the board of directors of the Republican Jewish Coalition, a political lobbying group in the United States that promotes Jewish Republicans.[63] He also served on the board of directors for the Jewish Institute for National Security Affairs.[105]
In 2016 Singer invested $500,000 in a PAC supporting John Faso, a Congressional candidate in New York’s 19th congressional district opposing progressive candidate and Wall Street critic Zephyr Teachout. Teachout responded to the donation by challenging Singer to come to the district and debate her.[106]

LGBTQ rights
As well as contributing to private initiatives, Singer also actively seeks to persuade other Republicans to support gay marriage.[11][107] He has joined other Wall Street executives in support of LGBT equality and stated that same-sex marriage promotes “family stability” and that in a time when “the institution of marriage in America has utterly collapsed,” the fact that gay couples want to marry “is kind of a lovely thing and a cool thing and a wonderful thing.”[108][109]
Singer, whose son Andrew married his husband Corey Morris in a same-sex marriage in Massachusetts in 2009, has also financially supported the legalization of gay marriage in New York[110] and Maryland.[1
In 2011 this advocacy included supporting legislation allowing same-sex marriage in the state of New York.[112]
In 2012 Singer provided $1 million to start a Political Action Committee named American Unity PAC. According to the New York Times, the PAC’s “sole mission will be to encourage Republican candidates to support same-sex marriage, in part by helping them to feel financially shielded from any blowback from well-funded groups that oppose it.”[113] In 2014 Singer urged Republicans to pass the Employment Non-Discrimination Act. This bill requires workplace protections to extend to the LGBT community.[114] As of June 2014 Singer had donated an estimated $10 million to the gay rights movement.[11]
In 2015 Singer, Tim Gill and Daniel Loeb helped fund Freedom For All Americans to promote LGBT issues in states and local communities in the United States.[115][non-primary source needed]
The Washington Free Beacon
Main article: The Washington Free Beacon
According to an October 27, 2017, article in The New York Times, the initial sponsor of anti-Trump opposition research conducted by the controversial Washington D.C. firm Fusion GPS was The Washington Free Beacon, a conservative political journalism website that is “funded in large part” by Singer.[116]
Writings and commentary~
Singer has written columns in the Wall Street Journal.[71] In 2009 he wrote “Free-Marketeers Should Welcome Some Regulation,” a column in which he argued that “It’s true that monetary policy was too lax for too long, and the government encouraged lending to people who were unlikely to repay their loans. But this crisis was primarily caused by managements and individuals throughout the financial system who exercised extremely poor judgement. The private sector, not the public sector, is where t he biggest mistakes were made.”[117] Among other topics, he has written against raising taxes for the wealthiest taxpayers (“the 1%”) and aspects of the Dodd-Frank Act.[13]
At a September 2006 financial conference in New York City, Singer delivered a speech called “Complexity Made Simple,” advising that the purchase of collateralized debt obligations (CDOs) was a serious mistake, and anticipating the downturn of the housing market by nearly a year before the $770 billion taxpayer-funded bailout.[29]
Hedge fund manager Jim Chanos said in an August 2009 radio interview that he and Singer had met with G7 finance ministers in 2007 to warn them that the global financial system was increasingly unstable and approaching a catastrophe, with banks on the verge of sinking the global economy. The pair argued that decisive action was called for, but Chanos claims they were met with indifference.[118]
Personal life[edit]
In 2015 Singer was 327th on the Forbes 400 list of richest Americans, 1006th among the world’s billionaires, 350th of American billionaires, and the 16th highest earning hedge fund manager.[25][37] Singer has been divorced since 1996. He has two sons, Andrew and Gordon.[119] He lives on New York City’s Upper West Side and has a house in Aspen, Colorado.[13]
Singer began studying classical piano at the age of 10, and forms part of a family band, together with “one of his sons on guitar, the other on drums”, and “his son-in-law on saxophone.” He enjoys Led Zeppelin and has played onstage with Meat Loaf.[13] He is a fan of Arsenal F.C.[11]
See also[edit]

List of University of Rochester people
List of Harvard Law School alumni
List of libertarians in the United States
50 Most Influential (Bloomberg Markets ranking)

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