Billionaire Paul Singer of Elliott Management has been described by Bloomberg as "the world's most feared investor". Other outlets have referred to his $35 billion hedge fund in somewhat less glowing terms, with "vulture fund" ranking highly on that list due to the firm's tendency to prey on distressed companies or situations and attempt to profit from them by extending costly loans or through other tactics.
Such a situation occurred earlier this year in one of the firm's most interesting moves to date, as Elliott Management took control of famed Italian football squad AC Milan. Li Yonghong, who had received a €300m ($341.45 million) loan from Elliott last year to help purchase the club, defaulted on a €32m ($36.42 million) payment after the interest rates on the loan jumped to 24% from 11%. Li later admitted he made a mistake (ostensibly by accepting Elliott's loan) and criticized the fund in an open letter, describing their conduct as "careless and predatory".
While the list of Paul Singer's detractors may be growing, so has his bank account. His estimated personal fortune of $3.2 billion ranks him 656th on Forbes' real time ranking of the world's richest people. His hedge fund's 13F portfolio has also exploded in value over the past three years, rising to $22.81 billion by the end of September from just $5.22 billion three years earlier.
In Q3, the fund became bullish on utilities stocks, as they jumped to 17.47% weighting within its 13F portfolio from less than 2%, while its exposure to tech stocks was slashed by nearly 11 percentage points to 24.04%. The fund added 12 new holdings to its portfolio during the quarter, while closing 17 positions, including its small bet against Alibaba Group Holding Ltd (NYSE:BABA), one of the 30 Most Popular Stocks Among Hedge Funds.
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On the next page we'll check out four holdings that Elliott Management was buying during Q3, as well as one it sold off.
Stocks Bought in Q3
FirstEnergy Corp. (NYSE:FE)
- Shares Bought During Q3: 25.04 million - Value of Holding (as of September 30): $931 million
- Q4 Return (through December 14): +5.25%
- Forward P/E Ratio: 15.40
- Forward Dividend Yield: 3.89%
Elliott Management opened a large new position in one of the 50 Best Utility Dividend Stocks To Invest In, FirstEnergy Corp. (NYSE:FE) during Q3. Elliott was just one of several funds to do so, as there was a 36% jump in hedge fund ownership of the stock during the quarter. Steve Cohen’s Point72 Asset Management and George Soros’ Soros Fund Management were among the other funds to add FE to their 13F portfolios in Q3.
Nielsen Holdings plc (NYSE:NLSN)
- Shares Bought During Q3: 5.00 million - Value of Holding (as of September 30): $138 million
- Q4 Return (through December 14): -7.01%
- Forward P/E Ratio: 20.74
- Forward Dividend Yield: 5.44%
Elliott appears to like the discounted price on Nielsen Holdings plc (NYSE:NLSN), which was one of 4 Bargain-Priced Dividend Stocks Near 52-Week Lows earlier this year and has continued to tumble further since then. CNBC reported last week that Nielsen is preparing to talk to private equity firms early next year about the possibility of being taken private.
SPDR S&P Oil & Gas Explor & Prodtn ETF (NYSEARCA:XOP)
- Put Options Bought During Q3: 15.50 million - Value of Holding (as of September 30): $1.67 billion
- Q4 Return (through December 14): -32.80%
- Forward Dividend Yield: 0.90%
Elliott added heavily to its put position against the SPDR S&P Oil & Gas Explor & Prodtn ETF (NYSEARCA:XOP) during Q3, raising the number of shares it's betting against by 67%. The ETF, which contains 67 U.S-based holdings primarily from the oil & gas exploration sector, is topped by Cabot Oil & Gas Corporation (NYSE:COG), which accounts for 2.72% of its weighting. While functioning partly as a hedge against some of the fund's long positions in energy stocks, including the following stock, the size of it also demonstrates clear bearishness against the broader industry. The ETF has lost 33% of its value in Q4.
Devon Energy Corporation (NYSE:DVN)
- Shares Bought During Q3: 8.21 million - Value of Holding (as of September 30): $448 million
- Q4 Return (through December 14): -35.30%
- Forward P/E Ratio: 13.05
- Forward Dividend Yield: 1.24%
While Elliott may be growing more bearish against oil and gas stocks, it remained bullish on natural gas E&P company Devon Energy Corporation (NYSE:DVN), raising the size of its holding by 272%. Elliott also raised its call position in Devon Energy by 47% during Q3, one quarter after opening both positions.
Stocks Sold in Q3
Wipro Limited (NYSE:WIT)
- Shares Sold During Q3: 1.12 million - Value of Holding (as of September 30): $0
- Q4 Return (through December 14): -0.38%
- Trailing P/E Ratio: 21.96
- Forward Dividend Yield: 0.30%
Wipro Limited (NYSE:WIT)'s $1.5 billion deal with Alight Solutions in September may not have been enough for Elliott Management to want to remain shareholders of the stock (although it could've sold out before that deal was announced), as it unloaded its small stake in the company during Q3, which had been valued at $5.34 million on June 30.