Advice from Paul Singer’s Hedge Fund to Fund Managers
As one of the major hedge funds, Elliott Management does not hesitate to share advice to fund managers. The $ 33 billion Hedge Fund gives some advice as the industry is facing major challenges as political and economic issues arise.
Elliott Management, founded by billionaire Paul Singer, put forward some of his key lessons in an internal media in the first quarter to his clients. Next copy of the note is reviewed and launched by Business Insider as you read today.
Elliott Management explains, “Some of these lessons need to be really implemented to be deeply incorporated into the team’s decision-making process, while other lessons can be taken as they please.”
Here are five suggestions, which according to Elliott Management are not compiled based on a specific hierarchy or sequence:
There is no excessively high (or low) security price so there is no reason the price can not rise any higher (or fall lower);
Market reversal is not possible to predict;
Major changes in market prices often occur long before the reason for the change becomes real, and by then it is too late to include a new information or reason into one’s trading position at the old price;
One of the most important reasons for avoiding significant losses is to avoid painful, and sometimes terminal (fatal / deadly / costly) outcomes, from the difficulties encountered in the quality of decision-making processes of fund managers; and
Extensive and profound education about the world, not only about capital structure, corporate business strategy and industry dynamics, is critical to the long-term success of fund managers.
Elliott Management also added that these lessons have “shaped Elliott’s attitude toward trading, investment, market predictability, risk management and building an organization.”
The hedge fund industry faces many prominent challenges, such as complaints from clients regarding high costs and low performance, and the closure of some hedge fund big and iconic like Eton Park and Perry Capital. Elliott Management lays this background to explain what has been learned over the last few decades so as to develop into one of the greatest players.
Elliott Management seems to be growing. The hedge fund was raised to $ 5 billion in less than 24 hours earlier this month.