Paul Singer’s Still Got It

The hedge fund game's most talented Shade Queen is in fine form.
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In recent months, we’ve seen a kinder, gentler Paul Singer. When Samsung started selling small bombs that explode in people’s pants instead of smartphones, the Elliott Management chief offered some supportive words (in addition to less-supportive words about the “company’s forthcoming new leadership”). A similar missive of relative mildness showed up on the desk of Cognizant Technology’s CEO after Thanksgiving. He even moved to mend some fences with our southern neighbors in the wake of the whole Argentina thing. Perhaps more importantly, after offering significantly less than an endorsement to our (tragically) fearless new leader, Singer quickly found a few good things to say about our brave new world and even helped finance the party inaugurating it.

singer-apocalypse

This is all perhaps news to Arconic CEO Klaus Kleinfeld. The head of Alcoa’s former aerospace and automotive parts maker could likely guess he wouldn’t like what Singer had to say in his presentation on the company, of which Elliott owns in excess of 10%, which Singer titled, “New Leadership Is Needed At Arconic.” Some highlights of Singer’s critique of the three-month-old company:

  • “abysmal operating performance” and “broken company culture” with an “antiquated corporate governance structure” that has led to “wasteful corporate spending on projects that enthuse the CEO but provide little benefit to the business or shareholders,” such as “the delivery to him of more than $111 million in compensation over an 8 year period;”
  • “Dr. Klaus Kleinfeld has underperformed the Company’s proxy peer media by 156%” and “massively underperformed virtually all peer groups over virtually all periods;”
  • Of the 465 constituents of the S&P 500 that have remained in the index since 2008, Arconic predecessor Alcoa ranks—you guessed it!—465th;
  • “‘New’ 2019 Guidance Closely Resembles Original 2016 Guidance;”
  • “Despite years of poor performance, a culture of grandiose rhetoric devoid of any real substance of follow-through has been tolerated.”

And, for good measure, a selection of some of that grandiose rhetoric, thrown back in Kleinfeld’s face.

Luckily, Singer does have some kind words in the presentation. Unfortunately for Kleinfeld, they are for the man he hopes will replace him, named former Lockheed Martin and Spirit Aerosytems executive Larry Lawson, who Singer thinks has the right cut of jib to “turn around Arconic’s woefully and continually underperforming business.”

For his part, a weary Kleinfeld can only offer some rhetoric of his own, grandiose or otherwise.

"The board, as well as management, have had intense dialogue with Elliott and spent countless hours to go through those assertions," Kleinfeld told network CNBC in an interview on Tuesday. "The board stands behind the strategy and they stand behind me."

Which is fine by Singer, because he’d like to replace the board as well.

Elliott Management’s Presentation for Ousting Arconic CEO Klaus Kleinfeld [WSJ]
Arconic digs in heels against Elliott as proxy fight begins [Reuters]

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