Paul Singer is regarded as one of the most successful hedge fund managers, having perfected the art of investing in underperforming companies and engineering activist's campaigns to turn around their fortunes and prospects.
Through activist campaigns, he advocates for management changes, board seats, or the sale of the entire business as one of the ways of unlocking hidden value. Crown Castle Inc. (NYSE:CCI) is the latest company that the activist investor has set sights on calling for the replacement of the chief executive officer as part of an aggressive active investor campaign.
The ability to identify undervalued companies and try to engineer strategic initiatives has affirmed the billionaire investor's status as one of the most revered portfolio managers. Through Elliott Management, a hedge fund he helped found in 1977, Singer has accrued significant returns that have seen his wealth grow to over $5.5 billion.
Singer rose to fame for accurately predicting the 2008 financial crisis and profiting from it as the overall market imploded. The hedge fund manager generates significant returns through aggressive investment strategies that involve betting on credit default swaps that bet on leveraged companies.
His record at Elliott Management speaks for itself, having accrued gains of 5.9% in 2022 as the overall stock market remained under pressure, with the S&P 500 going down 19%. The hedge fund has only lost money two times since its inception in 1977, affirming Singer and other portfolio manager's ability to identify high-risk reward opportunities capable of unlocking significant value.
Singer is best known for investing in struggling businesses and pushing for changes that will turn around their fortunes and share prices. The strategy has always worked, going by the average annual return of 14%.
Recently, Singer has raised concerns over the premium valuations that most stocks enjoy. A point of concern for the hedge fund manager is that the stock market has heated up significantly after one of the longest bull runs. The S&P 500 is already up by more than 17%, with the Nasdaq 100 rallying about 40%.
The fact that the rally mainly concentrates on a few counters is a concern. Nvidia, Microsoft Meta Platforms, and Salesforce have been the key drivers pushing the market higher amid the artificial intelligence boom. In addition to the valuation concerns, Singer has also been vocal about the paltry returns in the real estate that is reeling from the high-interest rate environment.
The U.S. Federal Reserve hiking interest rates at the fastest pace in decades in the race to curtail runaway inflation is already sending shockwaves. The real estate sector remains the hardest hit by mortgage rates, increasing significantly to the disadvantage of most home buyers.
“Valuations are still very high. There’s a significant chance of recession. We see the possibility of a lengthy period of low returns in financial assets, low returns in real estate, corporate profits, unemployment rates higher than exist now and lots of inflation in the next round,” Singer said.
Likewise, there have been concerns that the high-interest rate environment will take a significant toll on the economy and could plunge it into recession. While the FED has refrained from hiking interest rates in two meetings, the prospects of interest rates remaining high for long do not align with equity markets' exceptionally high growth tech stocks.
Billionaire Paul Singer's Recent Activist Targets and Top Stock Picks
Paul Singer of Elliott Management
Amid the deteriorating macroeconomics, Elliott Management remains heavily invested in the equity markets with significant exposure in the Basic Materials sector. The hedge fund also has substantial exposure to Technology, utilities and services while investing in the healthcare and financial services sector.
In addition to pure equity investments, Singer’s hedge fund engineers activist campaigns to unlock hidden value. In recent years, the hedge fund has engineered campaigns in the U.S., Japan and Germany. Its investments in Vantage Towers, Dai Nippon Printing and Salesforce, Inc. (NYSE:CRM) are part of a push to engineer changes that it believes will unlock hidden shareholder value. Last year alone, the hedge fund raised 13 activist campaigns targeting the likes of Twitter, Paypal Holdings Inc. (NASDAQ:PYPL), and Samsung.
Our Methodology
Elliott Management, known for investing in companies with robust growth metrics and promising long-term prospects, has been explored and analyzed in its 13D filings. From this examination, we've assembled a list showcasing some of Elliott Management's noteworthy activist campaigns and new investments, highlighting the returns generated by these strategic plays on Wall Street.
Billionaire Paul Singer's Recent Activist Targets and Top Stock Picks
Elliot Management has sought exposure in the burgeoning cloud computing sector by investing in E2open Parent Holdings, Inc. (NYSE:ETWO). The company specializes in providing cloud-based, end-to-end supply chain management and orchestrating SaaS platforms.
The hedge fund owns 27.25 million shares in E2open Parent Holdings, Inc. (NYSE:ETWO), valued at about $98 million, having also entered into derivative agreements.
Elliott Management insists E2open Parent Holdings, Inc. (NYSE:ETWO) is highly undervalued and is considering pushing to acquire the company outright and take it private as part of its activist campaign. The push to take the company private comes as the stock is down by about 28% yearly.
Long-Term Returns since Singer's Investment: -4.1%
S&P 500 Gains since Singer’s Investment: 20.7%
St. Louis, Missouri-based Peabody Energy Corporation (NYSE:BTU) is a company that engages in the coal mining business. It operates through Seaborne Thermal Mining, Seaborne Metallurgical Mining, Powder River Basin Mining, and other U.S. companies, specializing in the mining preparation and sale of thermal coal to electric utilities.
While Peabody Energy Corporation (NYSE:BTU) is down by 12% for the year, it is a solid dividend play in the Elliott Management portfolio with a yield of 1.26%. The hedge fund has been buying and selling takes in Peabody Energy Corporation (NYSE:BTU) since 2017 and held stakes worth $548.64 million as of Q3 2023, accounting for 4.24% of the portfolio.
Long-Term Returns since Singer's Investment: 10.3%
S&P 500 Gains since Singer’s Investment: 0.4%
Suncor Energy Inc. (NYSE:SU) is an energy investment play and one of the most significant holdings in Elliott Management Portfolio. Bitumen, synthetic crude oil, and related products are explored, developed, and produced by Suncor Energy Inc. (NYSE:SU).
Suncor Energy Inc. (NYSE:SU) is up by about 3% for the year, benefiting from strong demand for oil and gas. It is one of Singer’s top stock holdings in the energy sector, going by its 4.79% dividend yield, which makes it a solid play for dividends. Elliott Management has been buying and selling stakes in Suncor Energy Inc. (NYSE:SU) since Q1 2022 and held stakes worth $344.51 million as of Q3 2023.
Long-Term Returns since Singer's Investment: 18.9%
S&P 500 Gains since Singer’s Investment: 2.76%
Hamilton, Bermuda-based Seadrill Limited (NYSE:SDRL) is a company that provides offshore contract drilling services to the oil and gas industries. It owns and operates drill shops and jack-up rigs for shallow and ultra-deep-water operations. Oil majors, state-owned national oil companies, and independent oil and gas companies are served by Seadrill Limited (NYSE: SDRL).
Seadrill Limited (NYSE:SDRL) stands out as one of Singer's top stocks as Elliott Management holds stakes worth $316.1 million, accounting for 2.44% of the portfolio. The hedge fund has seen the value of its stakes increase by 18% since it started investing in the second quarter.
Crown Castle Inc. (NYSE:CCI) is a real estate company that operates and leases more than 40,000 cell towers and 85,000 route miles of fibre-supporting small cells and fibre solutions. Crown Castle Inc. (NYSE:CCI) boasts a nationwide communication infrastructure portfolio for connecting cities and communities.
Elliott Management has set its sights on the wireless tower owner as a part of its latest activist campaign, calling for the CEO's replacement and pursuing a strategic review of the company’s fiber business. Reports indicate that Singer's hedge fund has built a $2 billion position in Crown Castle Inc. (NYSE:CCI), which gives it the power to push for strategic initiatives.
Triple Flag Precious Metals Corp. (NYSE:TFPM) is Singer's top stock pick as an essential materials company that engages in acquiring and managing precious metals and other streams of royalties. Triple Flag Precious Metals Corp. (NYSE:TFPM) offers a portfolio of streams and royalties that provide exposure to gold and silver.
While up by about 1% year to date, Triple Flag Precious Metals Corp. (NYSE:TFPM) remains a solid pick for dividends, going by its 1.57% dividend yield. Elliott Management has held stakes in Triple Flag Precious Metals Corp. (NYSE:TFPM) since Q3 2022, when it acquired stakes worth $1.63 billion. As of the end of Q3 2022, it held stakes worth $1.7 billion, accounting for 13.53% of its portfolio.
