The restructuring of Elliott Management has led to a significant exodus of its senior employees, with at least nine former staffers launching their funds since 2021.
Why It Matters: The changes at Elliott Management have led to the firm’s ex-employees opting to start their funds. This development is indicative of the broader trend of institutionalization within the hedge-fund industry, as the largest firms are emulating their private equity counterparts, reported Business Insider on Friday, citing sources.
This shift has been attributed to the firm’s increasing bureaucracy, which has altered the once flexible and merit-driven environment. The changes have prompted some long-time investors to seek more freedom by starting their firms.
This shift has prompted some veteran investors to venture out on their own. “The changes haven’t been in place for that long, but the firm is different now,” said a former investor, according to the report. “It’s rigid.”
These changes at Elliott have been attributed to the establishment of an investment committee in 2020. This committee, comprising young partners Jesse Cohn, Gordon Singer, and Jonathan Pollock, has transformed the firm into a more structured but also bureaucratic and political environment, according to the report.
As a result of these changes, several former and current employees have noted a shift in the firm’s culture, leading to a more rigid and less merit-driven environment.
These changes have been particularly impactful given Elliott’s reputation as a unique and flexible workplace. The departure of key talent and the subsequent launch of their funds is a significant development in the hedge-fund industry.
For instance, Mark Wills, the founder of Cisu Capital Partners, is the latest Elliott alum to start his firm. Wills, who spent over a decade at Elliott, is part of a growing cohort of ex-Elliott employees who have launched their funds with different strategies, backers, and philosophies.
These changes have also led to the departure of senior talent to various leadership positions across industries. For example, Sebastien de La Riviere, a former portfolio manager at Elliott, is now the co-founder and chief investment officer of A5 Capital, the family office of Alex Algard, the founder of Whitepages.
Despite the exodus of long-tenured portfolio managers, Elliott’s investment headcount has grown alongside its assets. The firm reported a 27% increase in its investment headcount from the end of 2020 to May 2024, coinciding with a rise in assets from just over $45 billion to $69.7 billion.
However, several former employees argue that the additional people brought in are not in line with the firm’s previous mold. “For every cowboy investor they lost, they gained three bureaucrats,” said a former investor, according to the report.
Elliott did not immediately respond to Benzinga's request for comment.
Why It Matters: The evolution of Elliott has broader implications for the hedge fund industry. The firm’s recent activities highlight its ongoing influence. For instance, Elliott increased its position in ARM Holdings, signaling strong institutional confidence and driving ARM’s shares higher.
Additionally, Elliott has raised stakes in various sectors, including online dating, e-commerce, and airlines. The firm has targeted companies like Match Group Inc. and American Airlines Group Inc., indicating a strategic diversification of its portfolio.
Elliott has also leveraged its $2 billion stake in Southwest Airlines to nominate ten independent candidates for Southwest’s Board, aiming to drive significant changes within the airline.
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Image created using artificial intelligence via MidJourney.
This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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