Hedge fund Elliott eyes fresh market turbulence
By Svea Herbst-Bayliss and Lawrence Delevingne
BOSTON/NEW YORK (Reuters) - Paul Singer's $27 billion hedge fund Elliott Associates is worried about Europe's prospects and is bracing for fresh market turbulence.
In a letter to investors dated July 23 and seen by Reuters on Thursday, the New York-based firm told clients that it has returned 2.8 percent in its Elliott Associates, L.P. and 2.2 percent in its Elliott International Limited.
While both funds beat the Standard & Poor's 500 Stock Index's 1.2 percent gain, the fund spent pages explaining its more cautious approach and warning that even after a six-year bull market in stocks, there is "no such thing as a permanent trend in the markets."
It worries about central bankers' easy money policy noting that governments that have "abused the power to create 'money' have always, eventually, paid a huge price for their profligacy."
"We are not bragging about our record, nor do we feel defensive about not keeping up with the S&P 500 in the last few years," adding that it invests carefully especially at a time it sees more chance for severe market turmoil.
It also expressed concern about Europe even after the region found a solution to Greece's debt problem and worries that long-term problems have not been adequately addressed, possibly causing "the breakup of the euro."
"The bottom line in our view is that Europe is in a very difficult situation," the fund wrote.
Still Elliott sees what it calls "attractive opportunities in the activist equity area and a few interesting situations in event arbitrage." The firm recently lost a campaign to block the merger of two Samsung affiliates in Korea. Continued...