Paul Singer Is Reopening His Flagship Hedge Fund to New Capital

  • Elliott’s multistrategy fund posted a return of 13% last year
  • Investor sentiment toward industry category has been positive

Billionaire Paul Singer is reopening his hedge fund to additional cash to take advantage of upcoming investment opportunities, according to people familiar with the matter.

Investors will be able to start committing their money to the multistrategy hedge fund in the second quarter, said one of the people, who asked not to be identified because the information isn’t public. The capital may be put to work within two to three years.

Singer’s $32.8 billion Elliott Management raises money by securing commitments from investors and calling on that capital at a later date when the opportunity is ripe. This fundraising method, which is atypical for the industry, allows managers to have money at the ready to make investments.

The last time Elliott opened to fresh capital in this manner was in 2015. It raised $3.8 billion that year and $3.3 billion in 2013, through a combination of new money and extensions of previously committed capital, the person said. It gathered $3.5 billion in 2012 and $2.4 billion in 2010.

Elliott gained 13.1 percent last year in its flagship fund, beating the 5.3 percent gain of the average multistrategy fund, according to Hedge Fund Research Inc. The firm, which Singer founded in 1977, has one of the best long-term track records in the industry, producing an average annual gain of about 13.5 percent since inception with only two down years, one of the people said. 

A spokesman for New York-based Elliott declined to comment.

Opening Gates

Elliott is among funds seeking additional capital after the industry last year had its first net outflow since 2009. This year, investor sentiment has been positive toward multistrategy funds, which saw $3.8 billion in inflows in January, the most among the strategies tracked by eVestment. Clients pulled more than $5.2 billion from the industry overall.

Macro funds also attracted cash, starting the year with $1.06 billion in net inflows after investors yanked about $10 billion in 2016. Chris Rokos recently raised about $2 billion for his macro fund, even before it was scheduled to reopen on Feb. 1. The money, which came after the fund gained 20 percent in 2016, boosted the firm’s assets to nearly $7 billion.

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Macro hedge fund EDL Capital (U.K.), run by ex-Moore Capital Management money manager Edouard de Langlade, is seeking to more than double its assets to $1.2 billion and then close to new cash in the third quarter. Assets at EDL’s Global Opportunities Fund increased 500 percent last year as the fund returned 18.4 percent.

Firms may be more inclined to open their doors to outside money after a year or two of strong performance, particularly if they have outperformed their peers, Panayiotis Lambropoulos, hedge funds portfolio manager at the Employees Retirement System of Texas, said by email.

“If managers raise capital simply because they can, they may be introducing business instability down the road,” he said. “The same hot capital that came in yesterday will most likely be the first capital to flee tomorrow should performance turn south.”

— With assistance by Katia Porzecanski

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