Singer Says Tougher Disclosure Rules Would Threaten Activism

(Bloomberg) -- Billionaire Paul Singer said efforts to require earlier disclosure for new investments in the U.S. pose a threat to activist investors including his Elliott Management Corp.

“It's already very hard and it's going to get harder,” Singer said Thursday at The Deal's Corporate Governance 2018 conference in New York. “There are legislative efforts to reduce the time. But even the existing filing requirements makes it difficult to build a position.”

Narrowing the window for disclosing a stake in a new target would make it harder to hold boards accountable, particularly with the rise in passive investing. Under federal law, activist investors are required to disclose ownership of any class of registered voting equity securities in excess of 5 percent within 10 days of acquiring them. Legislation backed by Senators Tammy Baldwin, a Wisconsin Democrat, and Georgia Republican David Perdue would shorten that deadline to four days.

Typically, the share price of a target company jumps when an activist investor such as Elliott discloses a stake. That makes buying additional shares more costly.

“The passive investing trend is just pointed one way and the other part of that trend is the reduction of active investing,” Singer said. “The question naturally arises, ‘Who's going to do the work?”'

Singer's Elliott has been one of the busiest activist investors of the past year, targeting companies around the globe. Last month, Elliott scored a major victory at Hyundai Motor Group, where it managed to halt a restructuring plan at the South Korean carmaker. Also in May, it wrested control of the Telecom Italia SpA board from Vivendi SA through a proxy fight.

Athenahealth Proposal

The New York-based hedge fund has been urging Athenahealth Inc. to consider its proposal to take the medical-technology company private in a transaction that would value it at about $6.46 billion. On Wednesday, Athenahealth said it would explore a sale and that Chief Executive Officer Jonathan Bush would resign after complaints of inappropriate behavior with female employees and allegations he assaulted his now ex-wife more than a decade ago. Elliott said it planned to participate in the bidding.

Elliott, which has about $35 billion in assets under management, invests across strategies including long-short hedge funds, distressed credit, arbitrage, real estate and private equity, as well as shareholder activism.

Singer said activist investors, including himself, are often misunderstood. By far, most of the situations that Elliott involves itself in result in some sort of settlement with the company, he said, disputing media characterizations of him as “one of the most feared investors.”

Elliott's reputation for doing its homework does get people to pick up the phone, Singer said.

“They know that we're dealmakers,” he said. “They know that we're not bomb throwers. But they know we have money and energy and that we're going to pursue it in a rational and practical way.”

To contact the reporter on this story: Scott Deveau in New York at sdeveau2@bloomberg.net

To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, Michael Hytha, Matthew Monks

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