Paul Singer: The World's Most Feared Investor

Welcome to today's episode called Paul Singer: The World's Most Feared Investor — and I borrowed the title from a Bloomberg article on Singer where they also described him as aggressive, tenacious, and litigious to a fault. I’ve wanted to cover Singer and his firm Elliott Management ever since I read The Caesars Palace Coup, and the book mainly deals with how Apollo, the hedge fund led by Leon Black — who I also did an episode on a few months ago — operates. The book shows how Apollo is the big beast on Wall Street and uses its reputation to intimidate other firms and creditors, except for one firm — Elliott Management, founded by Paul Singer. In this episode, we find out how Paul Singer built Elliott to become the most powerful and feared activist hedge fund in the world — and feared not just by CEOs and company boards, but also by countries. This really is a fascinating story — enjoy.

Paul Singer was born in August 1944 and grew up in Teaneck, New Jersey. Teaneck in the 1940s and 1950s is a model post-war suburb. Orderly. Middle-class. His father is a pharmacist in Manhattan and his mother is a housewife. So a very normal childhood, and we have very little information on Singer’s early years or indeed anything to do with his personal life — he’s very private.

In 1962, he enrolled at the University of Rochester, where he studied psychology. As far as we know, there’s no clear plan for a career in finance at this stage, and there’s no record of him explaining why he chose psychology, but it does help in his Wall Street career because he learns how people make decisions under pressure, how people panic, follow crowds, and make predictable mistakes.

In 1966, Singer went to Harvard Law School and graduated at the end of the decade, and went into legal practice, but alongside that work he began investing small amounts of money on the stock market.

The timing is brutal. Watergate is unfolding. Trust in institutions is collapsing. In 1973, the oil crisis hits. Inflation surges. Interest rates rise. Real estate falls.

Stocks fall sharply. Every investor gets hit.

And the experience has a big impact on Singer. From this point on, avoiding loss matters more to him than chasing big returns.

In 1974, he takes a job at Donaldson, Lufkin & Jenrette, a well-known and respected Wall Street firm, and Singer’s job was to clean up real estate deals that had tanked because of the economy. He’s examining the contracts, tracing who is owed what, which creditors have priority, and under which conditions. He sees how debt is layered. He sees how a single clause can decide ownership. And he learns something important. In a crisis, the lawyer often has more power than the banker.

Now at this time, Singer is still focused on investing, and the market crash shows him that buying good companies and waiting isn’t enough. Markets can stay unstable for years.

So Singer starts researching, examining other investing theories, and puts a lot of thought into how he should invest, and it leads him to a strategy called convertible arbitrage. Without getting into too much detail, it’s a hedged approach. If the stock falls, he’s covered because he’s shorted it. If the stock rises, he’s still protected because the bond can be converted into shares.

He begins running this strategy while still working at DLJ. The returns are not spectacular, but they’re steady. By 1977, Singer is 33 years old. He faces a choice. Stay in a secure legal career. Or take a risk on his investment strategy.

He chooses the risk and starts Elliott Associates — Elliott is his middle name. He raises about $1.3 million, mostly from friends and family. Now I’ll be using Elliott and Singer interchangeably throughout, but they’re one and the same.

Year after year throughout the late ’70s and much of the ’80s, even though in the ’80s there’s a bull market raging, he sticks to his conservative strategy, and while he’s far from being a major figure on Wall Street, a small group of experienced investors notice, and they start to move some money into Elliott.

But then comes Black Monday, October 19th, 1987. The market doesn’t just fall. It freezes. People want to sell, but there’s no one on the other side willing to buy. On paper, Elliott’s positions should be working. As stock prices collapse, the short side of the trade is making money. But the other side — the bonds meant to balance that risk — can’t be sold at all.

What saves Elliott is the structure he’s put in place. He has set everything up so conservatively — very little borrowed money, no one demanding cash, no margin calls, the positions are hedged. Where other firms are forced to sell into a frozen market, he doesn’t have to. He can wait and get through it and actually ends the year profitable. But the experience rattles him because he realises that in a real crisis, markets can stop working.

So again, Singer thinks long and hard about this. He realises that he needs to change his strategy. He’s thinking — what can you rely on, or where or how can you get protection for your investments? Singer’s conclusion — legal obligations — in other words, situations where someone has to pay, whether they want to or not.

And this insight leads Singer to pivot to investing in distressed debt. Instead of investing in healthy companies and hoping the market cooperates, he starts buying the debt of companies that are already in trouble — sometimes bankrupt — because there are laws that protect debt holders.

So by owning debt in carefully chosen companies, when those companies get into trouble, debt holders have protection. Courts can force a payment. Or hand over ownership. Even when markets fail, contracts don’t. And the thing to understand here is that in bankruptcies, a lot of debt holders accept restructuring plans, take a hit, and move on — they see it as the cost of doing business — but Elliott realises that you don’t have to settle, and if you’re willing to fight and use the courts, you can win. And this insight, this pivot — this is what transforms Elliott from a niche trading firm into a global powerhouse.

And I know, on the surface, this can all sound a bit dull. But I find it fascinating because of how Singer reacts when something breaks. He steps back, works out exactly why it failed, and then asks what that means for how he should invest going forward.

And once he reaches an answer, he commits. Completely. He changes course, sticks to it, and executes it with a level of focus and discipline that most people just can’t match. It’s not flashy — but that is his superpower, for want of a better word — that is how he manages to achieve what he does over the next 40 years.

So the timing of this pivot into distressed debt is pretty good because in the late ’80s, moving into the ’90s, the junk bond market collapsed, and with that the leveraged buyout boom of the 1980s unwinds, leaving companies loaded with debt they can no longer service. So for Singer and his new strategy, this is an opportunity.

And I’ll just look at two high-profile cases that show how he worked his strategy.

The first is Macy’s, which filed for bankruptcy in 1992. Elliott buys the unsecured debt and accumulates enough to get a seat on the creditors’ committee, and that committee has the power to block plans, to force revisions.

Elliott, with the law on its side, insists on operational changes — store closures, lease renegotiations. The process is tense. But it works.

In 1994, Macy’s merged with Federated Department Stores. Elliott exits with a substantial gain — while we don’t have exact figures, it’s estimated that they got about a three- to four-times ROI.

The second case is even more public.

In 1995, the airline TWA files for bankruptcy. Now Carl Icahn — one of the most feared investors in America at that time — had taken control of TWA through a leveraged buyout, and he had a deal that allowed him to buy tickets at a deep discount and resell them, steadily pulling cash out of the company.

Singer sees this as wrong — that other creditors are being jumped in the line — so he builds a position that gets him a seat on the creditors’ committee. What follows is a collision of styles. Icahn goes public, working the media and applying pressure. Singer focuses on contracts, filings, the law.

And the courts side with Singer. Icahn’s ticket deal is dismantled. And not only did Singer come out on top against Icahn, but when the airline was eventually acquired by American Airlines in 2001, the value of the debt Elliott held had soared.

Now as a result of these distressed deals, the financial press comes up with a new name to describe firms like Elliott: “vulture funds.”

And while Singer rejects the term and says the real harm comes from reckless leverage, weak governance, or deals designed to benefit insiders, and that he simply enforces contracts that already exist, I still think the term is apt in that Elliott preys on companies that are either dead or dying and ensures that it picks off the juiciest bits for itself by enforcing those contracts.

But regardless of the label, by this point Elliott has grown, is now managing a few billion dollars, and its name now starts to carry weight in restructuring and bankruptcy courts.

In 1995, Elliott opens its first international office in London, and one of its first major tests is Eurotunnel — the company behind the project is buried under close to nine billion pounds of debt. Junior creditors are assumed to be expendable by the banks, but Elliott buys junior debt, accumulates enough to block the restructuring, and forces a cross-border negotiation involving both the British and French governments, and Elliott makes a big profit — I couldn’t find out exactly how much; it ran into the hundreds of millions. But what’s crucial about this deal is it proves to Singer that Elliott’s confrontational approach can work even against state-backed interests.

Now just as an aside, you’d assume that Singer must be this tough, pugnacious fighter who just loves confrontation. That he relishes the fights, the lawsuits, the pressure. But that’s not him — physically he’s slight and bald, with a trim white beard and round glasses. He isn’t animated. He’s disciplined. Controlled. Almost emotionally removed from the conflict itself.

When a journalist once asked whether legal battles were fun, Singer looked genuinely confused. “Fun?” he said. “Skiing is fun. This is work.”

And as mentioned, he’s very private, so we don’t have a lot to go on. But when Singer talks about what matters most in investing, he doesn’t mention aggression or confidence. He talks about what he calls existential humility — the idea that the moment you start believing your own reputation, or assuming you’re right because you’ve been right before, you’re finished.

In his words, complacency isn’t a mistake. It’s “absolute death.”

So where was I — alright, London office, Eurotunnel, 1995 — and it’s also around this time that Singer makes what becomes the most important hire of his career when he brings in Jay Newman.

Like Singer, Newman is a lawyer by training; he’s not a trader. And like Singer, he sees opportunity not in market momentum, but in contracts. Newman specialises in sovereign debt.

For context, sovereign debt had always been treated as almost risk-free. Lending to countries is seen as safe. Governments don’t disappear. And when things go wrong, there’s a standard script. A country defaults. The IMF steps in. Budgets are cut. Old bonds are swapped for new ones at reduced terms. Creditors accept losses. Everyone moves on.

Newman doesn’t accept that logic.

In Newman’s eyes, when a government borrows money in the commercial market, it’s acting like a company. And when companies break contracts, they get sued.

At the time, this was close to heresy. Banks avoid lawsuits against countries. They worry about the politics of it. About being locked out of future deals. Newman rejects all of that.

So you can see why Newman and Singer would get along so well. Together, they develop a plan built around buying distressed sovereign debt at deep discounts. And if negotiation fails, enforce the contract in court.

Their first test is Panama. Elliott buys defaulted Panamanian debt while the country is negotiating a restructuring plan. Most creditors accept reduced terms. Elliott doesn’t, and it sues.

This lawsuit creates legal uncertainty for Panama that in turn threatens their entire refinancing. Faced with that risk, Panama settles. Elliott more than triples its money — I couldn’t find out how much they invested, but not huge amounts; they’re only testing the waters.

Next comes Peru.

Elliott buys the country’s defaulted debt and refuses the restructuring deal offered. They sue Peru and invoke an obscure clause in the contracts called pari passu. It’s a standard line buried in sovereign bond contracts, stating that one creditor cannot be treated worse than another.

The courts side with Elliott, and eventually Peru settles. Elliott turns a roughly twenty-million-dollar investment into fifty-eight million.

What Peru and Panama prove is that the strategy works. And that lays the groundwork for what comes next — the case that will cement Elliott’s reputation as the most aggressive and feared creditor in global finance.

In late 2001, Argentina defaults on nearly one hundred billion dollars of debt — the largest default in history.

The country is in dire straits. Bank accounts are frozen. Savings vanish overnight. Unemployment surges. Protesters flood the streets. For most investors, this is a pretty obvious warning. Get out. Salvage what you can. Move on.

But for Singer and Newman, this is exactly what they’ve been working towards.

Elliott begins buying Argentine bonds quietly, at distressed prices — often twenty cents on the dollar or less. In total, they spend somewhere between $120 million and $170 million.

Singer knows this won’t be quick. It may take years — it actually ends up taking longer than I reckon even he anticipated.

In 2005, Argentina launches its first restructuring. Bondholders are offered new securities worth roughly thirty cents on the dollar. Most investors accept.

Elliott is part of a small group of holdouts who refuse the deal and remain outside the restructuring.

In 2010, nine years after Elliott first invested, Argentina tries again, offering another deal aimed at pulling in the remaining creditors. Participation rises above ninety percent. The government declares victory — and then goes further, passing what becomes known as the Lock Law, legislation that explicitly forbids better terms in the future to creditors who are still holding out — and of course Elliott is still holding out.

Politically, this Lock Law projects strength. Legally, it does the opposite. Elliott now has written proof that Argentina has no intention of honouring the original contracts.

And so this brings us back to that little-used clause buried in these contracts — pari passu, the clause stating that one creditor cannot be treated worse than another.

And when Elliott invokes that clause, the courts agree — and in 2012, a court issues an injunction against Argentina that doesn’t just say Argentina has to pay Elliott — it says Argentina cannot pay any of its bondholders unless it also pays Elliott.

Until now, Argentina has been servicing the bonds of investors who accepted the restructuring while refusing to pay the holdouts. So this injunction blocks that arrangement entirely, and as a result, from this point on, Argentina is effectively locked out of global capital markets.

The pressure escalates quickly.

Later that year, an Argentine naval training ship docks in Ghana as part of a routine tour. Elliott petitions a local court, arguing that the vessel is a sovereign asset linked to unpaid debts.

The court orders the ship detained.

And this becomes huge news — a military vessel, representing the Argentine state, is stuck in a foreign port over unpaid obligations. And while Argentina appeals and the ship is eventually released, it’s seen as a humiliation.

Argentina’s president publicly denounces Singer by name, calling him an enemy of the country, a “bloodsucker,” and a “financial terrorist.”

But the rhetoric changes nothing. The court orders still apply. Payment systems remain blocked. Argentina slips into another technical default and remains locked out of global capital markets.

What finally breaks the deadlock is a change in government.

In late 2015, Argentina elects a new president on a promise to reopen the country to global markets.

So in early 2016, fifteen years after Elliott first gets involved, a deal is finally struck. Elliott receives about $2.4 billion — about a fifteen-times ROI.

But more than the money, what the Argentina case shows is that Elliott is willing to take on anyone — even a G20 country. It’s willing to fight in courts all over the world, and to keep fighting for as long as it takes. This sends a message to governments, to Wall Street, and to any company Elliott invests in. It will outlast you. And it will outfight you. That’s a powerful calling card.

Now in terms of the rights or wrongs here, critics argue that creditors like Elliott interfere with a country’s ability to return to the financial markets, and in doing so they exacerbate the poverty and suffering of its citizens. Elliott will of course counter this by saying that they are simply enforcing contractual agreements and it’s the governments who are responsible for their citizens’ wellbeing.

I’m by no means an expert on this at all, but based on the bit of research I did, I’d come down on the side of many sovereign-debt experts who agree that yes, Elliott is simply playing within the rules — so the rules need to be changed. In other words, the international financial system needs a version of bankruptcy court, where countries could work out debts they were no longer able to pay.

As you can imagine, since Argentina, Elliott has grown in stature and size. It’s become one of the most feared activist investors in the world — particularly among boards and CEOs. And while I’m willing to give them a pass in relation to the pressure they apply when bringing governments to task over unpaid debts, the tactics they’ve used against some CEOs I think are very questionable and go beyond the pale.

An article in The New Yorker from 2018 describes this in detail. Several executives say that when Elliott targeted their companies, the scrutiny didn’t stop at balance sheets. In some cases, investigators working for the firm combed through public records and personal histories in extraordinary depth.

The article describes, for example, a journalist at a major newspaper receiving copies of a CEO’s divorce settlement from nearly a decade earlier — at the exact moment Elliott was pressing for that executive’s removal. In another case, board members were shown slides that included personal photographs taken from social-media accounts, presented alongside criticisms of the CEO’s performance. Now Elliott defended itself, saying that it relied on public information and third-party research.

I just think it’s dirty, below the belt, and for people who might say, “well, that’s just business,” I understand that business can be tough, and I think you can play tough but still stay within the maxim: do unto others as you would have them do unto you.

Regardless, what matters is the effect. Even the suspicion that this kind of scrutiny might be applied changes behaviour. Executives become defensive. Boards move faster. Resistance weakens.

Today, Elliott manages $76 billion and employs just over 600 people, and it has leveraged its reputation to change boards, leadership, and strategies in some of the world’s best-known companies. It invested $1 billion in Twitter in 2020 explicitly seeking the removal of CEO Jack Dorsey — he resigned a year later. In 2024, it invested $1.9 billion in Southwest Airlines and demanded a change in leadership — the chairman resigned and Elliott got to name six new directors. Also in 2024, it forced Starbucks to fire their CEO. A stern letter from Elliott got AT&T to reverse their strategy and implement a $30 billion share buyback. It even ended up owning A.C. Milan, one of Europe’s most famous football clubs, after its owner defaulted on $300 million that he owed to Elliott. And in fairness, Elliott got the club back into great shape and then sold it a few years later for $1.3 billion. Some of the campaigns it gets involved with are relatively cooperative. But from what I can see, a lot of them aren’t.

There is also a much larger question here as to whether activist investors like Elliott are good for the long-term health of companies. Remember — activists aren’t interested in the long-term viability of the company. And while, as we have seen, Elliott is willing to fight long-term, most of the time they simply want to get a relatively quick return on their investment, and so they’ll advocate for measures that drive up the stock price but can have negative long-term impacts, such as the elimination of research and development, and the borrowing of money to buy back a company’s own stock.

As for Singer himself, he’s now 81 years old. He’s still the co-CEO and chairman of Elliott, with a net worth of $6.7 billion. You’ll notice that I really haven’t had much to say in this episode about him — about his character and that — because we don’t know much about him. He’s extremely private. He rarely gives interviews. We do know that he loves soccer, is an Arsenal fan, and often goes to their games. He plays in a band with his son and son-in-law. He’s one of the largest and most active donors in the Republican Party, yet at the same time he remains one of the most influential financial backers of LGBTQ+ rights — a position shaped by his son Andrew’s coming out in the late 1990s.

He’s too private and too reserved for me to get a good take on him, other than to say that his ability to stand back when things go wrong, think deeply about his options, reassess his position, and then go for it with a level of focus and discipline that just can’t be matched makes for a great business story.

And this brings us to listeners’ emails, and this one comes from James, who at ten years old must be my youngest listener, and he’d love me to do an episode on Steve Jobs. And James, I will be doing loads of episodes on Jobs — because his story can’t be confined to just one episode. Thanks so much for the suggestion, James, and for listening.

And remember, if you have any comments, any corrections, or any story that you’d like me to cover, email us at info@gbspod.com.

All the best, folks.