Elliott Sees A Financial World Put To Sleep By Quantitative Fairy Dust; But Has A PlanMark Melin
Most major countries in the developed world “are long-term insolvent and have financial systems chock-a-block with debt and derivatives,” Paul Singer and Elliott Management observe in their first quarter letter to investors, as an odd herding mentality in the market is noted that defies logic. In this environment, the Elliott team finds itself in the peculiar position of not wanting to miss a market rally, but wary of drying up liquidity and following the herd. Despite this, Elliott appears to be positioning itself to reap the benefits of a bull market rally fueled by quantitative easing, but at the same time positioning the portfolio for a value adjustment opportunity when it arrives. In this regard, they are not unlike many other major hedge fund managers, such as Seth Klarman, who has a significant hoard of cash sitting on the sidelines with an itchy trigger finger waiting for the big opportunity.