Dow -1.78% S&P -1.64% Nasdaq -2.57% Russell -2.78% VIX +23.1%
White House political risk has risen from a simmer to an open flame over the past 24 in the wake of alleged interference by Pres Trump into the FBI investigation of former NSA Flynn. The presidential crisis has sunk so deep that the appointment of a special counsel Mueller to head the Russia probe on Wednesday evening is treated as a positive development, helping US equity futures regain some ground.: Big Risk off on US market with Market closing on absolute low in heavy volume. SPX closed below its 50d MA VIX +23% . Bank & Semi Weighted on mkt -4%. Today macro wise we have Jobless Claims, Philly Fed, and Leading Index - also Fed's Mester speaks, EPS wise we have Wal-Mart, salesforce, Applied Material, McKesson, Ross Stores, Autodesk, Gap. US After Hours LB +6.4%, SNPS +2% following earnings/guidance, P +8% and SIRI +1% on M&A speculation... ASNA -31%, SMRT -24%, CSCO -7.5% following earnings/guidance. Asian Market following the US in a Risk Off move. Nikkei is underperforming against the backdrop of a stronger yen. Templeton's Mobius: No doubt there's risk in China, but govt will insulate SOEs
Nikkei -1.40% Hang Seng -0.29% CSI -0.40% Shanghai -0.45%
Eur$ 1.1143 CNH 6.8818 CNY 6.8913 JPY 111.20 GBP 1.2964 CHF 0.9804 RUB 57.2204 WTI$ 48.95 -0.24%
S&P +0.22% EuroStoxx -0.40% Dax -0.36% FTSE -0.30% SMI -0.33%
Macro :
- U.S. Airlines to Carry Record 234.1 Million Summer Passengers
- SALT WRAP: Neuberger’s Rachlin Likes ETE; Investors Talk Trump
- SALT: Bernanke Says U.S. Economy Has Approached Capacity Limit
- U.K. Conservatives 45%, Labour 32%: YouGov/Times Poll
Keep an eye on :
- ABE SM : Atlantia Offers to Pay 100% of Abertis Bid in Cash: Expansion
- BLT LN : Elliott Says Held ’Constructive’ Barcelona Talks With BHP CEO
- CABK SM : CaixaBank Studies Making Offer for Popular: El Pais
- CG US : Kraft Heinz Said to Mull Colgate-Palmolive Buy: Street Insider
- DL NA : Delta Lloyd 1Q Gross Written Premiums EU447m
- EDF FP : EDF to Set Up Nuclear-Plant Engineering Co. With Areva NP
- FB US : Facebook to Be Fined in EU Probe Over WhatsApp Takeover: FT
- FCA IM : U.S. Said to Ready Lawsuit Over Fiat Chrysler Diesel Emissions
- G IM : Generali Outperformance Suggests Some Profit Taking: Mediobanca
- ILD FP : Iliad 1Q Revenue EU1.22b
- ISAT LN : Inmarsat to Focus on Network Expansion Before Deals, CEO Says
- DEC FP : JCDecaux Wins 5-Year Outdoor Advertising Contract in Rotterdam
- LR FP : Legrand in For Best M&A Year in More Than 10 Years: Berenberg
- MRK GY : Merck KGaA 1Q Adjusted Ebitda Matches Est.
- MRL SM : Banco Popular Sells Merlin Properties Shares at EU10.725/Share
- NN NA : NN 1Q Solvency Ratio 238%
- NYR BB : Nyrstar COO Rittner Buys EU0.52m of Zinc Producer’s Stock
- POP SM : Popular Set to Post More Losses in Second Quarter: Expansion
- RWAY IM : RAI Way Valuation Fair, Has M&A/Releveraging Optionality: MS
- RL US : Ralph Lauren Options Setup Into 4Q Earnings Implies a 8.6% Move
- RIO LN : Rio Tinto to Improve Payment Terms for Some Smaller Suppliers
- SCHP VX : Schindler CEO Wants to Boost Global M&A Activity: Luzerner
- TEVA IT : Teva in Final Stages of Talks to Hire Non-Israeli CEO: Calcalist
- VALN SW : Valora CEO Mueller Eyes Growth in Healthy Foodstuffs: HZ
- VOW3 GY : VW to Bid to Become German DFB Soccer Assn Sponsor: FAZ
- VOW3 GY : Volkswagen Gets Final Approval for Settlement on Diesel Cars
- WDI GY : Wirecard Sees FY Ebitda EU382m To EU400m
- ZO1 GY : Zooplus Sees FY Pretax EU17m To EU22m
>>> Up
*Evonik Raised to Buy at Baader-Helvea, PT EU41
*Gjensidige Raised to Neutral at Credit Suisse
*Hanover Raised to Market Perform at KBW, PT $81
*LISI Raised to Buy at Natixis
*TalkTalk Raised to Outperform at RBC, PT 225p
*Telefonica Raised to Buy at Goldman, PT EU11.60
*Tryg Raised to Outperform at Credit Suisse
>>> Down
*ABN Amro Cut to Equal-weight at Morgan Stanley, PT EU26.50
*Generali Cut to Neutral at MedioBanca, PT EU16
*Mail.ru Group Cut to Underweight at JPMorgan, PT $22.50
*Moncler Cut to Hold at HSBC, PT EU23
*Saras Cut to Neutral at Macquarie
*Schneider Cut to Equal-weight at Morgan Stanley
*Scor Cut to Reduce at Kepler Cheuvreux, PT EU34.50
*SKF Cut to Underweight at Morgan Stanley
*Unipol Cut to Neutral at MedioBanca
*Victrex Cut to Market Perform at Bernstein, PT 2,160p
>>> Initiation
*Centamin New Outperform at Exane, PT 210p
*Fresnillo New Neutral at Exane, PT GBP15
*Galenica Sante New Neutral at Citi, PT CHF45
*Galenica Sante New Buy at Deutsche Bank, PT CHF50
*Gulf Keystone Petroleum New Buy at Peel Hunt, PT 250p
*RAI Way New Equal-weight at Morgan Stanley, PT EU4.70
*Randgold New Outperform at Exane, PT 8,100p
Asia Mid-Session Market Update: Japan GDP up for 5 straight quarters for the first time in 11 years
***US Session Highlights***
- (US) MBA MORTGAGE APPLICATIONS W/E MAY 12TH: -4.1% V +2.4% PRIOR
- (US) Rep Al Green (D-TX) says he will call on Congress to start impeachment proceedings against Pres Trump
- (US) House GOP caucus meeting today said to not focus on Pres Trump's issues; no indication of breaking point with Pres Trump - AP
- (US) House Speaker Ryan (R-WI): want facts before rushing to judgment on Trump-Comey reports; there are clearly a lot of politics being played
- Stocks lost their foothold as investors began to doubt the capability of the Trump administration to enact its economic agenda. Last night's news that memos indicate President Trump asked the FBI to drop the Flynn investigation created an overall lack of confidence in the markets. Blue chips and the broader S&P dropped close to 2%, for the largest one-day drop since Mar 21st. Volume at 3:30pm for the S&P was 17% above 3-month average, with decliners leading advancers 3 to 1. The worst hit sectors in the S&P were Financials and Techs, down 3.1% and 2.6% respectively. The VIX was up 34%, hitting its highest intraday level since April 21st.
***US markets on close: Dow -1.8%, S&P500 -1.8%, Nasdaq -2.6%***
- Best Sector in S&P500: Financials
- Worst Sector in S&P500: Real Estate
- Biggest gainers: CL +5.7%; EXR +4.9%; BF.B +3.6%
- Biggest losers: MU -7.0%; CFG -6.8%; NVDA -6.6%
- At the close: VIX 15.6 (+4.9pts); Treasuries: 2-yr 1.26% (-2bps), 10-yr 2.22% (-11bps), 30-yr 2.90% (-9bps)
**US movers afterhours***
- LYC: GMI-1271 receives FDA Breakthrough Therapy Designation for Adult Relapsed/Refractory Acute Myeloid Leukemia; +37.1% afterhours
- LB: Reports Q1 $0.33 v $0.29e, R$2.44B v $2.46Be; Guides Q2 $0.40-0.45 v $0.45e; Raises FY17 $3.10-3.40 v $3.19e; +6.8% afterhours
- CSCO: Reports Q3 $0.60 v $0.58e, R$11.9B v $11.9Be- Guides Q4 $0.60-0.62 v $0.63e, Rev -6% to -4% y/y v -1%e, gross margin 63-64% ; -7.7% afterhours
- GMED: Receives FDA letter saying company had not sufficiently addressed the FDA’s questions regarding the 510(k) submission for the Excelsius GPS robotic guidance and navigation system - filing; -10.5% afterhours
- ASNA: Guides Q3 EPS $0.04-0.06 v $0.11e, SSS -8% y/y; -33.0% afterhours
***Key economic data***
- (CN) CHINA APR PROPERTY PRICES M/M: RISE IN 58 OUT OF 70 CITIES VS 62 PRIOR; Y/Y: RISE IN 69 OUT OF 70 CITIES V 68 PRIOR; avg all-70 new home prices m/m: 0.7% v 0.6% prior; y/y: 10.7% v 11.3% prior
- (JP) JAPAN Q1 PRELIMINARY GDP Q/Q: 0.5% V 0.5%E; ANNUALIZED GDP: 2.2% V 1.7%E; 5th consecutive quarter of growth for the first time in 11 years
- (JP) JAPAN Q1 HOUSING LOANS Y/Y: 3.3% V 3.1% PRIOR
- (AU) AUSTRALIA APR EMPLOYMENT CHANGE: +37.4K (2nd straight increase; best 2-month rise since late 2015) V +5.0KE; UNEMPLOYMENT RATE: 5.7% (3-month low) V 5.9%E
- (AU) AUSTRALIA MAY CONSUMER INFLATION EXPECTATION: 4.0% V 4.1% PRIOR; matches 5-month low
- (NZ) NEW ZEALAND MAY ANZ CONSUMER CONFIDENCE INDEX: 123.9 V 121.7 PRIOR; M/M: +1.8% V -2.8% PRIOR; First increase in 4 months
***Asia Session Notable Observations, Speakers and Press***
- Asian equity indices are down across the board, tracking the biggest US market decline of the year. White House political risk has risen from a simmer to an open flame over the past 24 in the wake of alleged interference by Pres Trump into the FBI investigation of former NSA Flynn. The presidential crisis has sunk so deep that the appointment of a special counsel Mueller to head the Russia probe on Wednesday evening is treated as a positive development, helping US equity futures regain some ground.
- In FX, USD index has now erased all of its post-election gains, while the 10-2 Treasury spread was below 1% for the first time since Trump was elected last year. Predictably, Financials sector was the worst performer on THE S&P500 as long-end Treasuries rose on safe-haven demand. Nikkei225 is among the biggest decliners in Asia as USD/JPY fell as low as 110.50. USD selling is also sufficiently pronounced to boost commodity currencies despite the risk-off mode - AUD/USD was supported into the US market close and then rallied some 30pips on strong Australia employment data. MXN fell for the 2nd straight day however, with USD/MXN rising above 19 level.
- In economic data, Aussie employment change was much higher than expected and unemployment rate fell back to 5.7% for a 3-month low despite participation rate remaining unchanged. Japan Q1 GDP was also constructive with a beat on q/q annalized. Sequentially, Japan grew for the 5th straight quarter - the longest such streak since 2006. Capex was the standout component, rising 0.2% against expected 0.4% decline. Also of note, China house price growth continued to retreat in the wake of property curb measures by regulators - Y/Y growth across top 70 cities slowed to 10.7% from 11.3%.
China
- (CN) Templeton's Mobius: No doubt there's risk in China, but govt will insulate SOEs - press
- (CN) China said to be considering excluding some industries from carbon permit trade
- (CN) China Banking Regulator (CBRC) to increase protections after recently global cyber attack - local press
- (CN) Fitch: Rapid growth in China investment companies is building risks - press
Japan
- (JP) BOJ Dep Gov Iwata: No details of policy exit have been decided - press
- (JP) Credit Suisse: Pace of Japan GDP growth may slow - press
***Asian Equity Indices/Futures (00:30ET)***
- Nikkei -1.6%, Hang Seng -0.2%, Shanghai Composite -0.2%, ASX200 -1.2%, Kospi -0.5%
- Equity Futures: S&P500 +0.2%; Nasdaq +0.3%, Dax +0.3%, FTSE100 +0.3%
***FX ranges/Commodities/Fixed Income (00:30ET)***
- EUR 1.1145-1.1175; JPY 110.50-111.20; AUD 0.7410-0.7465; NZD 0.6925-0.6950
- June Gold +0.1% at 1,260/oz; June Crude Oil -0.3% at $48.92/brl; July Copper -0.8% at $2.52/lb
- (CN) PBOC to inject combined CNY80B v CNY140B prior in 7-day and 14-day reverse repos
- (CN) PBOC SETS YUAN MID POINT AT 6.8612 V 6.8635 PRIOR; Strongest Yuan setting since Feb 7th; 6th consecutive firmer fix
- (JP) Japan's MoF sells ¥0.9T in 0.7% (0.7% prior) 20-year JGBs; Avg yield: 0.560% v 0.562% prior; bid-to-cover: 3.84x v 4.06x prior
***Asia equities notable movers***
Australia
- Sirtex (SRX) -28.6%; Announces combined Foxfire analysis; primary endpoint of overall survival superiority not met in mCRC
- Virgin Australia (VAH) -2.8%; Reports Q3
- Fairfax (FXJ) +6.6%; Receives takeover offer from Hellman&Friedman consortium at $1.225-1.250/shr cash
- James Hardie (JHX) -5.6%; Reports FY16/17
Japan
- Sumitomo Mitsui (8316) -3.0%; Guides FY20
- Nintendo (7974) -0.4%; Switch sales
- Senko Group (9069) -1.3%; Cut at Nomura
Hong Kong
- Tencent (700_ +3.9%; Q1 result
- Parkson Retail Group (3368) +1.0%; Q1 result
- TPV Technology Ltd (903) -7.7%; Q1 result
- Johnson Electric Holdings (179) +8.1%; Q1 result
Closing Market Summary: Stocks Sell Off Following NY Times ArticleEquities sold off on Wednesday following a New York Times article that claims President Trump asked former FBI Director James Comey in February to shut down the bureau's investigation of former National Security Advisor Michael Flynn. The S&P 500 posted its worst one-day performance in nearly a year, losing 1.8%. The Dow (-1.8%) finished in line with the benchmark index while the Nasdaq and the Russell 2000 took the biggest hits, losing 2.6% and 2.8%, respectively. The major indices all closed at their session lows.
The NY Times cited a memo that James Comey wrote following a February 14 meeting with President Trump in the Oval Office. The White House has denied that Mr. Trump asked Mr. Comey to end the investigation with White House Press Secretary Sean Spicer saying the account relayed in the NY Times is "not accurate." Nonetheless, some lawmakers and legal experts believe this alleged incident may qualify as an obstruction of justice, which is considered an impeachable offense.
For investors, the concern at hand is that an investigation into the matter could derail tax reform efforts, which have already been slow to get on track. The stock market has risen sharply since the election, bolstered to a large degree by the belief that tax reform, deregulation, and infrastructure spending will fuel stronger economic and earnings growth.
That view has manifested itself in stretched equity valuations; therefore, the assumption today that the Trump Administration's pro-growth policy agenda could be at risk of not coming to fruition drove a broad-based selling effort as valuations got called into question.
The financial sector (-3.0%), which led the stock market's post-election rally, suffered the biggest loss today among the economic sectors. A flattening of the yield curve didn't help matters for the financial sector as it triggered worries about a compression of net interest margins and banks' earnings prospects.
U.S. Treasuries finished solidly higher across the board with the back end of the yield curve leading the way. The 10-yr yield dropped eleven basis points to 2.22% while the 2-yr yield fell six basis points to 1.24%.
The top-weighted technology sector settled just behind the financial group with a loss of 2.8%. Mega-cap technology stocks like Apple (AAPL 150.25, -5.22), Microsoft (MSFT 67.48, -1.93), Facebook (FB 144.85, -4.93), Alphabet (GOOGL 942.17, -22.44), and Amazon (AMZN 944.76, -21.31) were all on the defensive, posting losses between 2.2% and 3.4%.
The PHLX Semiconductor Index fared even worse, dropping 4.4% as profit-taking hit hard in the semiconductor industry. Including today's decline, the PHLX Semiconductor Index is still up 61.2% over the last 12 months.
Outside of financials and technology, the industrials (-2.1%) and materials (-2.1%) groups exhibited relative weakness, but most of the remaining laggards finished roughly in line with the broader market. The energy sector was an exception, losing only 1.1% thanks to crude oil's positive performance ($49.04/bbl, +0.8%).
The energy component jumped from its flat line to a solid gain following the weekly crude inventory report from the Energy Information Administration (EIA), which showed that U.S. crude stocks declined by 1.8 million barrels for the week ended May 12. While that's less of a decline than the consensus expected (-2.3 million barrels), it was seen as a positive in light of Tuesday's disappointing API reading, which showed a build of 0.9 million barrels.
In addition to energy, three sectors --real estate (+0.6%), utilities (+0.3%), and consumer staples (-0.2%)-- settled notably ahead of the broader market, benefiting from the drop in interest rates and a defensive rotation.
The CBOE Volatility Index (VIX 14.41, +3.76) spiked a whopping 35.3% amid a heightened expectation for near-term volatility in the wake of the NY Times article. The U.S. Dollar Index (97.39, -0.71, -0.7%), meanwhile, slipped to its lowest level since before the U.S. presidential election. The greenback lost 0.7% and 1.9%, respectively, against the euro (1.1157) and the Japanese yen (110.93).
On the data front, the weekly MBA Mortgage Applications Index decreased 4.1% to follow last week's 2.4% increase.
On Thursday, investors will receive several economic reports, including Initial Claims (consensus 240,000) at 8:30 ET, the Philadelphia Fed Index for May (consensus 18.5) at 8:30 ET, and April Leading Indicators (consensus 0.4%) at 10:00 ET. In addition, Walmart (WMT 75.12, +0.01, +0.01%) will report its quarterly earnings results before the open.
- Nasdaq Composite +11.7% YTD
- S&P 500 +5.3% YTD
- Dow Jones Industrial Average +4.3% YTD
- Russell 2000 -0.1% YTD
After Hours Summary: LB +6.4%, SNPS +2% following earnings/guidance, P +8% and SIRI +1% on M&A speculation... ASNA -31%, SMRT -24%, CSCO -7.5% following earnings/guidanceAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: LB +6.4%, SNPS +1.8%
Companies trading higher in after hours in reaction to news: GLYC +35.9% (FDA has granted Breakthrough Therapy designation for treatment of adult relapsed/refractory acute myeloid leukemia to the com's drug candidate GMI-1271), CYTR +18.9% (to present Phase 3 aldoxorubicin clinical data in patients with soft tissue sarcomas at ASCO; results continue to demonstrate significantly prolonged PFS in N Am and L-sarcoma patients compared to standard treatments, with minimal or no cardiotoxicity up to 40 cycles), CYTR +18.9% (to present Phase 3 aldoxorubicin clinical data in patients with soft tissue sarcomas at ASCO; results continue to demonstrate significantly prolonged PFS in N Am and L-sarcoma patients compared to standard treatments, with minimal or no cardiotoxicity up to 40 cycles), INCY +9.5% (announces the publication of new data from the ongoing ECHO-202 trial, evaluating epacadostat in combination with Keytruda; 'well-tolerated and demonstrates durable clinical responses across multiple solid tumors), P +8.2% and SIRI +0.8% (Pandora Media said to be back in active talks with Sirius XM Radio regarding a possible acquisition, according to the NYPost), NSPR +5.1% (announces the publication of the Investigator Initiated IRON-GUARD Italian clinical registry in the peer reviewed journal EuroIntervention, which appeared in the May 9th issue), IMGN +2.5% (will present new clinical data with mirvetuximab soravtansine in ovarian cancer at ASCO; Pooled analyses of Phase 1 expansion cohorts demonstrate clinically meaningful activity in patient population being studied in FORWARD I registration trial), VRTX +1% (confirms FDA expanded approval of KALYDECO, increases product revenue guidance)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: ASNA -30.9% (lowers Q3 outlook, 'cites highly elevated promotional environment have persisted at levels significantly above our expectations'), SMRT -24.1% (also suspends quarterly dividend and reduces CapEx), ZTO -9.3% (also appoints new COO), CSCO -7.5% (also discloses additional restructuring, including 1,100 more layoffs), FLO -0.8%
Companies trading lower in after hours in reaction to news: ELGX -21% (updates regulatory status on Nellix Endovascular Aneurysm Sealing System; to host call on May 18 at 7:30am ET), RPRX -12.6% (proposes public offering of common stock and warrants to purchase common stock), GMED -10.4% (receives letter from the FDA - co has not sufficiently addressed the FDA's questions regarding 510(k) submission for the ExcelsiusGPS robotic guidance and navigation system; FY17 guidance reaffirmed), MYGN -7% (several ASCO abstracts released; one study had close to a third of all PVs identified in men with BC were in a gene other than BRCA1/2), FCAU -3.9% (reports suggest the DOJ is preparing to possibly sue Fiat over diesel emissions), SHOP -2% (filed for $2.5 bln mixed securities shelf offering), GRAM -2% (light volume; delays annual report; not in compliance with SEC reporting requirements and the continued listing requirements of the New York Stock Exchange), JNPR -1.5% (CSCO sympathy), EPZM -0.9% (ASCO publishes abstracts from Phase 2 study of tazemetostat)
Macau focused casino/gaming names are under pressure following comments from the Macau Gaming Inspection and Co-ordination Bureau on regulation/taxes: WYNN -4.2%, LVS -3.7%, MGM -1.8
Elliott brings a ‘prosecutorial’ approach to activist investing
Hedge fund’s sometimes belligerent statements mask a careful and dogged strategy
If Hitachi, the Japanese conglomerate, thought it would be a routine matter to buy out the remaining investors in an Italian rail signalling equipment company where it had just become the largest shareholder, then it did not reckon on Paul Singer’s Elliott Management.
For the past two years, Hitachi’s planned takeover of Ansaldo STS has been under a multi-pronged legal attack, orchestrated by Elliott, that has included multiple complaints to the Italian markets regulator, a complaint to the country’s auditing board and a lawsuit.
For Elliott, this is business as usual. The $32.8bn fund and its billionaire Republican donor founder are an anomaly among activist hedge funds because of their readiness for a very protracted fight and the very broad legal tools they employ to win.
Elliott is battling on multiple fronts. It is demanding, among other things, that BHP Billiton spin off its US petroleum business, Akzo Nobel accept a takeover offer and Samsung break itself up. Last week it disclosed an activist stake in Gigamon, a network-monitoring company.
The string of victories includes claiming back more for holders of Argentine sovereign debt or pushing Klaus Kleinfeld out as chief executive of metals group Arconic. But Elliott’s belligerent legal strategies and bellicose public language mask a patient strategising that reflects Mr Singer’s early career as a lawyer. One rival activist calls it a “prosecutorial” approach; Mr Singer himself has called it “using every tool in the tool chest”.
Another anomaly: as other big-name activists falter and the sector faces criticism for crowding into the same trades, Mr Singer’s fund still has investors clamouring to pay the full rate. The industry standard is a 2 per cent management fee and a 20 per cent performance fee. When Elliott briefly opened its main fund to accept new investments earlier this month, it raised $5bn in 24 hours.
“Raising that much money that quick is really hard, especially in a time when people are taking money away from the activists,” said Don Steinbrugge, managing partner at Agecroft Partners, a hedge fund consultancy. “You have all this competition and the low-hanging fruit is gone, especially if you’re a big activist.”
The consistency of the returns explains why. Elliott’s main fund was up 3.1 per cent in the first quarter, and returned 13.1 per cent last year. In its 40-year history, Elliott has had only had 12 losing quarters, and only two down years. In two years — 2007 and 2009 — the fund returned more than 30 per cent.
As a multi-strategy fund, Elliott remains more versatile than its competitors, investing in a range of credit, commodities, property and various arbitrage strategies when equity opportunities are thin. Its long background in distressed debt investing means that Elliott instinctively takes a “what’s the worst that can happen” approach that has limited its downside.
The 72-year-old Mr Singer, who founded Elliott 40 years ago, has shown signs that he is preparing for an eventual succession by bolstering the management ranks, but every investment decision still goes through him and his co-chief executive, Jon Pollock.
In a rare interview, Mr Pollock said that, whatever the asset class in which the fund is investing, “there is an activist thread that runs through the entire business”, and he added: “Patience and persistence are certainly hallmarks at Elliott.”
Most famously, Elliott spent 15 years battling Argentina in court over its defaulted debt, leading a band of creditors that were the last holdouts to settle. The final pay-off to the New York-based hedge fund was $2.4bn. With US car parts company Delphi, the fund pocketed nearly $1bn after years as a creditor by buying it out of bankruptcy.
The soft-spoken, bearded Mr Pollock favours button-down shirts with the sleeves rolled up, a tattoo on his wrist visible under his watch. Mr Singer’s long-time deputy, he was promoted to co-CEO in late 2015. Earlier this month, the fund named Jesse Cohn and Steve Cohen equity partners, bringing the partnership to seven people.
Mr Cohn, who oversees Elliott’s activist positions in US companies and runs Evergreen Coast Capital, their recently launched private equity arm, became the firm’s youngest-ever partner at 36. Mr Cohen is Elliott’s head trader and a macro specialist who has spent 14 years at the fund.
Mr Pollock chafes at the accusation of short-termism that is sometimes levelled at activists. Elliott will often be invested in a trade for five years, and it never seeks unnecessary public fights, he says.
“We have no interest in having our interactions with a company become public just for the sake of it. It usually becomes public after a series of conversations.”
Yet the fund’s style of activism has been criticised by its targets as “vulture” capital and has come under fire even from other activists.
Jeff Ubben, chief executive of ValueAct, an activist fund that keeps its pressure behind the scenes, said the recent ouster of Mr Kleinfeld was an example of companies being “bullied” by Elliott. Mr Kleinfeld was forced out not because of Elliott’s criticisms of his record at Arconic but because of what his board called “poor judgment” in sending a letter to an official at Elliott that the hedge fund said “read as a threat to intimidate or extort”.
“It’s prosecutorial in nature,” said Mr Ubben, speaking on a panel at the Milken Conference in Los Angeles earlier this month. “You hear the Elliott side, but you don’t ever hear the management or board side because they’re the defence, and the defence doesn’t talk . . . And then when you do strike back, you’re fired.”
The Ansaldo situation has not gone Elliott’s way so far. It lost a ruling in a court in Genoa in November last year where it sought to suspend the appointment of the chairman of the board, and Hitachi has shown little inclination to boost its offer price. But there — as at Elliott’s burgeoning number of activist positions — the infusion of new cash means it has additional firepower to prosecute its case.
Push for change: selected Elliott missives
Presentation entitiled ‘New Leadership Is Needed At Arconic’, Jan 2017
Letter to Marathon Petroleum board, Nov 2016
Letter to Cognizant Technology board, Nov 2016