It’s just a little money.
In his Q2 2014 investor letter, Elliott Management founder Paul Singer expressed his annoyance at the media’s obsession with his decade-long public slug fest with Argentina over $US1.3 billion of sovereign debt.
“Elliott does not seek such publicity,” Singer wrote. “Obviously, our lives would be easier if the press cared less about this particular position and/or similar positions that attract attention. The Economist ran a piece rebutting the silly and hyperbolic claim that our case will encourage lots of other investors to follow our lead, dryly noting that “There are easier ways to make money.” We think most other investors would certainly agree. As we have noted, one of the reasons that we continue to see attractive opportunities, even in the current yield-hungry environment, is that complex, labour- intensive situations are not everyone’s cup of tea.”
Singer’s hedge fund bought Argentine sovereign debt after the country defaulted in 2001. However, unlike over 90% of the bondholders, he refused to restructure his investment and take a haircut in 2005 and 2010.
For that, Argentina called him — and other hedge funds that followed his lead, known collectively as NML — “vulture” capitalists, and vowed never to pay.
An ugly lawsuit ensued that went all the way to The Supreme Court with Singer arguing that Argentine could not legally favour “exchange bondholders” who restructured their debt over he and other investors that did not. Argentina lost.
And unless some negotiation is reached, The Republic must pay Singer today or default.
Now, to Singer’s point. Of course it would have been easier for both parties if Singer had not chased Argentina’s money around the world — from Belgium, to France — for the last ten years.
A slew of messes that would have been avoided. Like the time Singer sued Elon Musk’s Space X for a ride Argentina had purchased as collateral for the country’s debt.
Or the time Singer got a Ghanaian Court to impound an Argentine naval vessel sitting in its waters. The crew on board was stuck in Ghana for about 2 months in 2012 over that one. Eventually they got to leave when the International Maritime Court of the Sea stepped in.
Yes, that’s a real thing.
And no, Singer didn’t like that The Court had to step in. In fact he wrote that he doesn’t like lawsuits at all, as they are “uncertain, expensive, difficult and time-consuming.”
Can’t argue with that.
“While many journalists and commentators often badly misunderstand what Elliott is all about, we understand that this publicity is occasionally the cost of adhering to our philosophy, which is to seek truly uncorrelated positions in which the key determinants of unlocking value are our own creativity and hard work,” Singer continued.
Uncorrelated? Creative? Can’t argue with that either.
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