Elliott Management

Every hedge fund says the same thing. We don't lose money. Most of them are lying, or at least exaggerating. Elliott Investment Management (“Elliott”) is one of the few that actually backs it up.

It its nearly 50-year history, Elliott has only two down years. Today it manages roughly $80 billion and holds the title of oldest hedge fund still standing. People on Wall Street admire Elliott. They also fear it.

This is the story of a lawyer who blew up his savings in a bear market and built one of the most feared activist shops on the planet. It's also the story of the people who built it with him.

We'll cover Paul Elliott Singer, his right hand man Jonathan Pollock, the activism wunderkind Jesse Cohn, how Elliott's process has changed as the firm has grown, and the long list of managers who came out of Elliott to start their own funds.

The Loss That Shaped Everything

Paul Elliott Singer grew up in Teaneck, New Jersey, one of three kids raised by a pharmacist father and a stay-at-home mother. He studied psychology at the University of Rochester, graduating in 1966. Then, for no clear reason, he went and got a law degree from Harvard in 1969.

In the early 1970s, Singer and his father traded mining and tech stocks together. Options, on margin. The 1974 bear market wiped him out. He lost his mother's savings stash and money borrowed from his best friend. He later called it genuine devastation.

That single experience shaped one of his core philosophies as an investor that remains today: Don’t lose money. Decades of Elliott's investing DNA trace back to that empty drawer.

In 1974, Singer joined investment bank Donaldson, Lufkin & Jenrette in the real estate division as an attorney.

In 1977, he struck out on his own, launching Elliott Associates L.P. with $1.3 million raised from friends and relatives. Choosing his middle name as the brand.

From Bond Arbitrage to Corporate Warfare

Elliott’s first strategy was convertible bond arbitrage, the same play that launched the careers of Carl Icahn and Izzy Englander, founder of Millennium Management.

Through the 1980s and 1990s, Elliott shifted toward distressed debt and other esoteric credit plays.

That's where the firm’s combative reputation took root. When issuers of the convertible bond defaulted, Elliott fought things out in bankruptcy court, landing in brawls over the likes of TWA (which involved Carl Icahn), Lehman Brothers, Drexel Burnham Lambert, and Caesars that cemented its image as a firm that plays for keeps.

In 2004, Elliott stepped into the high profile world of public equity activism, led by a 30-something Wharton prodigy we'll get to shortly.

Today Elliott runs activist equity positions, corporate and structured credit, private equity, commodities, real estate, and more.

Singer trained as a lawyer and he has never once hesitated to use every legal weapon available to get his way. The financial press has called Elliott the most feared hedge fund in the world for good reason. Singer is uncompromising. He insists on doing things his way, and Elliott will go to war to control its own destiny.

The firm has made headlines for global legal battles and boardroom fights. Seizing an Argentine naval vessel. The Arconic clash. The Athenahealth standoff that involved President George W. Bush’s cousin. We'll walk through the Argentina story in full later in this article. The other campaigns have already been covered extensively elsewhere, so I'll point you to the coverage I found most entertaining rather than rehash it here.

More to come:

• The Elliott playbook
• Jonathan Pollock: From Lunch Orders to Singer's Right-hand Man
• Jesse Cohn: The Website Builder Who Built an Activism Machine
• Argentina: The Fight That Built the Legend
• The "Elliott Cubs"