The hedge fund industry has reputation for secrecy. To some extent, this is an artifact of a since-abolishedban on anything that could possibly be construed as marketing. To another extent, it’s a useful term to be bandied about political extremists and anti-Semites of all stripes to decry the unseen, malevolent Illuminati Masters of the Universe surreptitiously controlling all of the world’s governments and the global economy. To still another extent, it’s an accurate description of any business, especially privately-held ones, few if any of which practice the wide and free dissemination of their finances, models, plans, etc.
Still, there are definitely hedge fund managers who have earned the adjective. Seth Klarman comes to mind, as does David Shaw. Marc Lasry. Steve Cohen, when he’s not doing daytime talk shows. Top eBay buyer Paul Tudor Jones, until recently.
Paul Singer doesn’t really fit that reclusive mold. He’s more than happy to let you know what he thinks, whether it’s an open letter to some recalcitrant company management, or a press release about some recalcitrant company management, or a PowerPoint about some recalcitrant company management, or in a newspaper statement, or at a conference or event with cameras and reporters. He’ll even regale you with tales of his all-white reggae band, something it is hard to imagine Robert Mercer doing. What’s more, he absolutely hates it when you call him or his hedge fund “secretive.”
“This bothersome word is usually appended, like some chrome automobile hood ornament, to the words ‘hedge fund,’” the $35 billion fund firm said in the July 31 letter reviewed by The Wall Street Journal. “It is rarely appended to ‘government,’ ‘tech company,’ ‘central bank,’ ‘president’ or ‘board of directors….’”
“We have no clue what it actually means, as all organizations, private and public agencies and people have secrets,” the letter said. “Hedge funds have no greater or fewer number of secrets, and their secrets are no more or less consequential to their results, than does anyone else.”
This is more than a little disingenuous. For one, Singer makes clear that he understands exactly what the “bothersome” word means right after saying he has “no clue what it actually means.” For another, the letter in which his essay on secrecy appears is stamped, “confidential and proprietary.” Indeed, three years ago, Singer decided to get serious about his prohibition on sharing with the class, threatening investors who leaked his prose with “monetary damages” and promising to “continue to take measures to protect the confidentiality of our information,” all of which sounds, well, a little secretive, to be honest.
Of course, none of those measures have proven effective, as Singer’s delightfully grumpy musings continue to reach the outside world. Knowing this, and perhaps wanting to turn the irony of the situation up a bit, Singer decided to address the general public on the matter of semantics in a “confidential and proprietary” letter of theoretically strictly limited reach.
Near the end of the 22-page letter, on page 15, Elliott turned its attention to the use of language in the financial world. “We think it will be a public service to illuminate (or skewer) several of the most grating, perhaps overused, buzzwords related to investing and trading,” the letter said.
These words or phrases, according to Elliott, include “correction,” “bubble,” “bear market,” “short-termism” and “alpha.” The last is a term commonly used by hedge-fund managers and marketers to describe outperformance above a certain benchmark. “Somehow, Greek letters elevate prosaic, even questionable points and insights into the realm of profundity,” the letter said.
Thank goodness for Paul Singer’s inability to keep these things out of our hands.