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David Shaw | Main | S. Donald SussmanPaul Singer Elliott Associates Founded in 1977 $118.1 MILLION (what $1 million invested on |
day one would be worth now)
No hedge fund manager has proved the power of compounding more than Paul Singer, founder of New York-based Elliott Management Corp. His firm's flagship Elliott Associates partnership has delivered a 14 percent net annualized return since 1977, beating the S&P 500 index by 300 basis points a year with just one third of the volatility. Singer, 69, was born in Miami Beach; grew up in the New York City suburb of Teaneck, New Jersey; and started investing in the late 1960s while attending Harvard Law School. After graduation he worked as a corporate lawyer but continued to trade stocks for his family, suffering huge losses in the 1973-'74 bear market. Determined to never lose money again, Singer in January 1977 quit his job in the real estate group at investment bank Donaldson, Lufkin & Jenrette to start Elliott with $1.3 million from family and friends. A pioneer in convertible arbitrage, a low-risk strategy that involves buying a company's convertible bonds while shorting its common stock, Singer is best known for investing in distressed securities. He especially likes complicated and opaque situations in which he can control risk by controlling the outcome. Elliott was an active investor in the bankruptcy of Lehman Brothers Holdings, buying securities on the cheap, then fighting to get on the Official Committee of Unsecured Creditors. Elliott has also been a high-profile investor in the debt of emerging-markets countries, including Peru and Argentina. Even as he has grown his firm to $22 billion in assets, Singer has continued to focus on the twin goals of preserving capital and managing risk. "Constant skepticism and an existential sort of humility are very useful in risk control." -- Paul Singer
Alpha: How did you become interested in investing?
Singer: My dad convinced me that investing was a good thing to do. When I was in law school, in the years'66 through'69, he and I traded stocks long and short, with very, very tiny amounts of money. A lot of people back then enjoyed participating in the capitalist system, even if they only had $1,000 or $2,000 to be trading....