Profile: Argentina's nemesis, hedge fund manager Paul Singer

Hedge Fund

Paul Singer is not your average Wall Street hedge fund manager.

He fits the stereotype in certain ways – he's incredibly rich, a recurrent funder of the Republican party and is the investor most closely associated with bringing Argentina to its latest default - but there are mitigating factors.

When a 2011 vote to legalise gay marriage in New York state was facing defeat, he persuaded a group of hedge fund managers to throw campaign funds at twitchy Republicans; his money was said to have swung the vote.

Meanwhile, as his actions have helped push Argentina towards its latest financial Armageddon, Singer has also emerged as a man with unconventional views about the whole world coming to an end.

He recently broke off from his theories on finance to reveal his concerns about an electromagnetic pulse destroying the world. In his latest note to investors in his Elliott Management hedge fund, which has been seen by the Financial Times, he wrote: "While these pages are typically chock-full of scary or depressing scenarios, there is one risk that is head and shoulders above all the rest."

"Even horrendous nuclear war, except in its most extreme form, can be a relatively localised issue, and the threat from asteroids can (possibly) be mitigated. The risks associated with an electromagnetic pulse, or EMP, represent another story entirely."

It is not quite clear where his interest in EMP comes from, although the genesis of his devotion to gay rights is very clear. His son Andrew, a doctor in New York, married his husband in Massachusetts in 2009 and Singer talked at Davos earlier this year about how his son's coming out transformed his perspective "about gender and sexuality, and I became very enthusiastic about his efforts to stop discrimination."

Still, despite the unconventional views for a Republican hedge fund billionaire, Singer remains best known as the founder of Elliott Management, which controls about $17bn (£10bn) from its New York offices, and his strategy of buying distressed debt.

The plan revolves around acquiring loans that governments have been struggling to repay and can therefore be snapped up at large discounts. Singer then aims to either sell them on for a profit when the country's circumstances improve or sue for full payment. Such investors are usually known as "vulture funds" - a term Singer is known to despise.

But whatever you call it, the strategy has proved profitable. Singer's triumphs in this sphere include spending $20m in 1995 on defaulted debt from Peru, and then successfully suing for $58m. He has also acquired a $30m debt owed by Congo-Brazzaville at a cut-down price, and was awarded more than $100m in interest in 2002 and 2003.

So Argentina merely represents his latest move in this lucrative trade.

The case has revolved around a decade-long legal fight between the Argentine government and a group of hedge funds led by Singer, who are owed debts which date back to the collapse of the Argentine economy in the early 2000s. Unlike more than 90% of the other Argentina bondholders, Singer and his group refused to restructure their investment, and argued that the country could not legally favour bondholders who restructured their debt over his group.

Singer won the court battle, resulting in the south American country defaulting again this week, as holders of the restructured debt didn't receive hundreds of millions in interest payments.

It is still unclear exactly how all this will play out, but despite Singer's track record of victories in his varied campaigns, he doesn't always end on the winning team.

In 2012 he memorably tracked the course of a Argentine navy ship, Libertad. When it arrived in Ghana, he persuaded one of the country's judges to hold the vessel in port until he was paid the millions owed to him. Argentina won that round, successfully arguing in the International Tribunal for the Law of the Sea that the ship should be returned.

Meanwhile, earlier this year the French stock market regulator AMF said it had fined Singer's Elliott Management and its UK arm Elliott Advisors €8m (£6.4m) each over insider trading relating to French motorways operator APRR. The firm said it would appeal the punishment.

Elliot Management did not respond to the Guardian's request for comment.

Powered by Guardian.co.ukThis article was written by Simon Goodley, for theguardian.com on Thursday 31st July 2014 11.44 Europe/London

guardian.co.uk © Guardian News and Media Limited 2010

 

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