Looking back on Elliott's enlargement and a potential pair of prop desk launches

By Rob Copeland

Tue May 14, 2013

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Absolute Return also revisits stock picks from Gotham, JANA, Omega, T2.

One year ago

>> Elliott Management founder Paul Singer batted aside talk of small funds outperforming large ones, saying at the SALT Conference in Las Vegas that his firm's growth to $19.2 billion from $1 million had been an "unalloyed positive."

Since then, the firm has enlarged even further to $21.9 billion as of the end of April. According to investor documents, the flagship Elliott International fund was up 12.4% last year and pushed forward a further 3.7% this year through April, compared with respective gains of 12.60% and 6.01% for the Absolute Return Distressed Index during those periods.

Elliott spokesman Peter Truell declined to comment.

See also: Elliott exec honored by inner city arts charity I Elliott's winners and losers: Greece up, gold down I Singer to Washington: Stop overtaxing the rich

>> The founders of Gotham Capital, JANA Partners, Omega Advisors and T2 Partners gave a host of value stock picks at the SALT Conference.

Gotham's selections were weighted toward tech stocks like Microsoft (+8.41% in the past year) and health picks like Wellpoint (+17.71%). JANA's included Energizer (+35.44%), Coca-Cola Enterprises (+31.88%) and McGraw-Hill (+16.68%). Omega chose Apple (-19.03%), among others, and advised staying away from U.S. government bonds (+2.68%, per the Dow Jones Credit Suisse 10-Year Treasury Index).

Whitney Tilson of T2 Partners said to avoid European banks. That move would have been ill-advised; the iShares MSCI Europe Financials Sector ETF that tracks such entities has returned 40.69% during the past year.

See also: Long LOV and short Salesforce at the Value Investing Congress

Five years ago

>> Two top bank prop desk traders left with plans to start their own hedge funds.

Rick Rieder, Lehman Brothers' head of global principal strategies, set up credit fund R3 Capital Management. BlackRock bought R3 in April 2009, and Rieder is now "chief investment officer of fixed income, fundamental portfolios, and head of the firm's global credit business and credit strategies, multi-sector, and mortgage groups," according to his profile on the firm's website. Performance information for R3 was not immediately available, but the BlackRock Fixed Income Global Alpha fund is up 5.32% this year through May 6, according to a performance update distributed by HSBC Alternative Investment Group. Rieder was not available for comment.

Things went differently for Boris Ehsani, former head of Merrill Lynch's principal credit group. He left the firm following the bank's decision to cancel plans to spin off his division as a fund, but did not wind up launching independently in the midst of the financial crisis. He has since been investing privately, along with some of his former team.

"I had to make a decision in terms of our business and knowing where our edge was," Ehsani told Absolute Return this week. "Here I was facing a situation where I could only raise $75 million to $100 million, and that didn't fit with how we invested."

He said he continues to take meetings with potential anchor investors for a future launch.

ISSN: 2151-1845 / CDC10004H

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