Meet Elliott Management, the Hedge Fund That Toppled Arconic CEO Klaus Kleinfeld
19 April 2017 - 1:26AM
Dow Jones News
By David Benoit
Elliott Management Corp. has a long history of needling its
opponents. Now it has baited one into a career-ending reply.
Klaus Kleinfeld resigned Monday as chief executive of Arconic
Inc. amid accusations that he sent a threatening letter to the
hedge fund, which was fighting to oust him and install four
directors on the specialty parts maker's board.
Public spats like the Arconic campaign are nothing new for Paul
Singer's $33 billion hedge fund, which is famous for a lucrative
15-year crusade to get Argentina to pay up on its defaulted bonds.
It has also launched activist campaigns against a raft of giant
companies, including data-storage giant EMC Corp., energy producer
Hess Corp. and software company Citrix Systems Inc.
Mr. Singer founded Elliott in 1977 and made his fortune
investing in bankrupt and distressed companies and convertible
bonds. The firm later branched into corporate activism, pressing
companies to make changes designed to boost their stock.
Last year, when other big activists paused or were nursing
losses, Elliott continued firing at even big companies. It has been
particularly busy this year.
The hedge fund often targets technology companies, particularly
those whose growth has slowed. In recent years, Elliott launched
campaigns at BMC Software Inc., Brocade Communications Systems and
Riverbed Technology Inc., to name a few.
The hedge fund has lost some fights. It dropped an attempt to
disrupt Family Dollar Stores Inc.'s 2015 sale to Dollar Tree Inc.
and last year tried unsuccessfully to shake up the board of Swiss
biotech Actelion Ltd.
Unlike other activist investors, Elliott isn't afraid to venture
outside the U.S. The hedge fund is juggling a number of big
campaigns around the globe, most recently calling on Australian
mining giant BHP Billiton Ltd. to spin off its U.S. petroleum
assets.
It is also pressing Dutch paint company Akzo Nobel NV to
consider a $24 billion deal with U.S. rival PPG Industries Inc. and
has launched a campaign to shake up Samsung Electronics Co., the
world's largest maker of smartphones.
Elliott has touted its ability to invest around the world while
avoiding traps that have ensnared other hedge funds. Its
long-running Argentine quest is a case in point.
The hedge fund bought bonds issued by the South American nation
at a steep discount. After Argentina defaulted in 2001, Elliott and
other hedge funds fought in courts around the globe to get
paid.
The fight took a bizarre turn in 2012, when Elliott persuaded
authorities in Ghana to block an Argentine Navy ship from leaving
its waters.
Following a big legal setback, Argentina in 2016 agreed to pay
$4.65 billion to Elliott and three other hedge funds to settle
their claims on the defaulted debt. Elliott got $2.4 billion, a
gain of roughly 10 to 15 times its original investment.
Write to David Benoit at david.benoit@wsj.com
(END) Dow Jones Newswires
April 18, 2017 11:11 ET (15:11 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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