REVEALED: How the Vulture Lord (and his son) make billions for world’s most ruthless hedge fund
THERE was a sulphurous whiff of Gordon Gekko when Wiktor Sliwinski, an executive at Elliott Advisors – one of the world’s most ruthless hedge funds – took the floor at last month’s shareholder meeting of Dulux paintmaker Akzo Nobel.
Sliwinski had been sent to the conference centre just outside Amsterdam by his billionaire bosses, who want to force Dulux’s owner into submitting to a £22.5bn takeover bid.
Elliott has a playbook of highly aggressive manoeuvres that it uses to bludgeon its targets into submission – and Sliwinski was about to give a demonstration. As he cleared his throat, other shareholders began heckling in disgust. ‘I expected that reaction,’ he said ominously, before badgering Akzo’s 70-year-old chairman to call a meeting to orchestrate his own dismissal.
The politeness of Sliwinski’s tone did little to disguise the menace of his barbs at Akzo’s veteran chairman Antony Burgmans – a grandee used to being treated with the utmost deference. But then you don’t get ahead at Elliott without being prepared to strangle a few puppies.
The firm is run by Paul Singer, a 72-yearold New York billionaire, and his son Gordon, 43, who leads the London operation. With his snowy white beard and grandpa specs, Singer Snr looks as though he could have a seasonal job playing Santa.
Appearances are deceptive. The former president of Argentina, Cristina Fernandez de Kirchner, memorably described him as ‘The Vulture Lord’ and a ‘bloodsucker’.
Gordon Singer is one of three big movers and shakers in London: the others are 40year-old Mark Levine and Franck Tuil, also aged 40, plus up-and-coming executives such as Sliwinski.
Gordon is so secretive and obsessed with privacy – to the point of reclusiveness – that 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.
ALITTLE more is known about his father Paul, who put his head above the parapet in the US where he has become an advocate of lesbian, gay, bisexual and transgender rights after the younger of his two sons, Andrew, came out as homosexual and married his partner, a doctor.
He has homes in the elite ski resort of Aspen, Colorado, and in The Beresford, an exclusive apartment building in New York. Unusually for an American, he is a dedicated football fan who follows Arsenal. His wealth is put at about £2bn by Forbes Magazine – though in truth there has been no accurate reporting of his worth, so jealously does he guard his personal privacy. Similarly, there is no information in the public domain about how much son Gordon is worth.
Corporate documents show Elliott’s highest paid London director, who was not named, received £2.6m in 2015, the most recent figure available. That is small beer compared with the rewards in a good year: such as 2013, when the best paid executive – again, their identity was not disclosed – received a phenomenal £38m.
Such secrecy is typical. Elliott casts a cloak of discretion over its workings, and those on the receiving end are either too traumatised or too terrified to talk. But scrutinise several of its attacks and a pattern is discernible. ‘There is definitely a modus operandi,’ said one well-placed source. ‘They can look like bullies, and they are – but it’s not thuggish, it is all coldly strategised to the N-th degree.’
Father and son have honed their techniques of corporate torture to the level of fine art. They turn the thumbscrews through stage-managed public showdowns and letterwriting campaigns. They drag victims through the courts and infiltrate boardrooms with their own hand-picked directors.
Few companies can withstand Elliott’s brutal and accusatory campaigns – not least because the Singers are prepared to carry on literally for years to get their way, long after others would have thrown in the towel.
The firm is nothing if not thorough. It spends millions on hired guns to research possible Achilles heels at target companies. It uses head-hunters to find candidates to serve as its directors and it deploys specialist firms to go around canvassing shareholders for votes in bid battles. That’s without even mentioning the army of lawyers growing fat on fees from the hyper-litigious hedgies.
It has to be said that, whatever one makes of its tactics, Elliott makes shedloads of money for its investors. And shareholders in its target companies also often benefit, as Elliott’s arrival can result in a shot of adrenaline and a rise in the share price. Its two funds are worth just under $33bn. Since it was set up 40 years ago it has had only two losing years and has made annual returns of 13.5pc.
That’s a phenomenal record, but at what cost? At Akzo Nobel, an Elliott-backed deal would put 3,300 British jobs and 80,000 pension fund members at risk – not to mention the future of the Dulux dog. Elliott habitually uses courtrooms as boxing rings where it pummels its opponents. This week it hauled Akzo into the Dutch courts to turn up the pressure to oust Burgmans.
Paul Singer’s best known legal battle is a marathon campaign to force Argentina to pay out on bonds he bought at a knockdown price in 2001. He finally succeeded in getting a $4.6bn payout last year. He has also been accused of profiting at the expense of other impoverished nations, namely Peru and Congo-Brazzaville, a West African country where most live in dire poverty. Singer 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 £78m.
Then there is Lehman Brothers. The image of staff clutching boxes as they filed out of the bust bank was one of the most potent of the credit crisis. But to Elliott it was an opportunity to snap up debt on the cheap. It now stands to benefit from a court judgment in London this week that will leave more money in the pot for it to share with other creditors.
Another trick is to bombard victims with letters detailing their perceived failings.
ELLIOTT has done this to mining giant BHP Billiton, posting inflammatory letters on a website it set up called ‘Fixing BHP’. These include a screed claiming the management is guilty of ‘an entrenched “do nothing” approach’ and ‘chronic underperformance’. The letter was sent shortly before BHP chief executive Andrew Mackenzie was due to speak at a mining conference at Barcelona in order to create maximum embarrassment for him.
Such is the fearsome reputation Elliott has acquired that even some of the very largest companies on the planet quail at the prospect of a drawn-out battle. Its successes include wringing out a sweetened offer in the multibillion-pound merger between mega-brewers SAB Miller and AB InBev last summer.
The firm is also a past master at ‘bumpitrage’ – or taking a stake in a bid target with the aim of making the buyer bump up their offer. That’s what happened with Poundland last summer. South African retailer Steinhoff, which was taking over the British discount chain, found it prudent to improve its offer when Elliott hoved into view.
Another form of arm-twisting is to oust existing board members and replace them with its own Trojan Horse directors.
Katherine Garrett-Cox, who was chief executive of investment house Alliance Trust until Elliott came along, knows this to her cost. She had been nicknamed Katherine the Great for her stellar achievements, but that was no protection against Elliott, which managed to unseat her.
Is the Elliott playbook morally dubious? Maybe, but it’s highly profitable. The firm has just attracted another $5bn of capital from adoring investors and is hiring new staff, because Paul Singer thinks the markets are like a ‘coiled spring’ about to be hit by serious turmoil.
That will spell misery for many companies and their employees – but the predators at Elliott are gearing up for another bout of feasting on the carrion.