Hedge-fund mogul Paul Singer, after an 11-year battle to collect on defaulted Argentine bonds — a fight that included three huge legal victories and a global hunt for assets — stands weeks away from possibly collecting $832 million on an estimated $48 million investment.
That’ s a 1,608 percent return — a huge payday, to be sure, but not even the biggest in Singer’s 37-year career.
It’s the kind of investment acumen that has helped Singer’s $23 million Elliott Management, the ninth-largest US fund, post an annualized return of 14 percent since 1977 — outpacing the 11.3 percent return for the S&P 500 during that time.
As if that weren’t enough for the 69-year-old investor, the Argentine investment could ultimately bring Elliott $3 billion if he is paid every cent he claims he is owed, according to Argentina.
The victory over Argentina that Singer stands to realize further validates a business strategy that has been widely disparaged as “vulture investing” — picking at the carcasses of bankrupt companies or countries in default by buying their bonds for pennies on the dollar and then litigating for profit.
While many hedge-fund titans have followed Singer into the field of distressed investing, few can match his results. Here’s some of Singer’s greatest hits:
Singer’s initial haul on Argentina would be $832 million, according to Argentina, under the court rulings that mandate that it pay him all principal and interest when it makes a payment to investors who agreed to accept a 70 percent to 75 percent haircut on their bonds.
Argentina says Singer paid $48 million for those bonds, or about 22 cents on the dollar. But that’s only one case.
Lehman Brothers is another. Singer was one of many hedge funds to feast on the bones of this casualty of the financial crisis.
It’s unclear how much he has made on it, but in 2011 Elliot told investors its Lehman position accounted for 10 percent of its then-$19 billion portfolio. By last year, he’d made about $1 billion on the Lehman claims, according to sources. Some of the legal wrangling is ongoing.
Delphi was Singer’s biggest winner in terms of the percentage gain. Elliott and fellow hedgies won a bankruptcy court battle to buy the auto supplier, blocking a plan by the government’s auto task force to sell it to a private-equity firm.
The hedge fund turned an estimated $30 million debt investment into an equity stake worth $1.3 billion by October 2012 — more than a 4,000 percent return.
Singer still owned 25 million shares at the end of 2012, when it the stock hit $38.51, almost double its 2011 IPO price. He’s been slowly selling down his stake and was almost entirely out by the end of the first quarter.
Singer’s sovereign debt strategy first gained notoriety when Elliott bought defaulted Peruvian debt in 1996. Soon after, he testified in a New York court that “Peru would either pay us in full or be sued.” It was the first — and last — time the hedge-fund mogul ever would testify in a courtroom.
Singer won a $58 million judgment on debt in 2000 for which he paid about $11.4 million. Peru paid up after Singer used the same tactics that prevailed in the Argentina case.
The Republic of Congo was controversial for being one of the countries Singer targeted that was eligible for debt relief programs from the World Bank and the IMF.
It ended up settling with Singer for $90 million, after his fund threatened to expose government corruption its investigators uncovered. Singer paid less than $20 million for those bonds. Singer, through a spokesman, declined comment.