Notable activist hedge fund’s recent returns not actually very good

Suppose you manage a pension fund on behalf of a big union and you want to reward members with at least at least market-average returns on their hard-earned savings. What’s one way to not achieve that goal? Apparently, allocate that capital Elliott Management, one of the most prominent, headline-grabbing, and (probably) expensive investment managers in the world (emphasis added):

Paul Singer’s Elliott Management has a fearsome reputation that has turned it into a $48 billion behemoth. But the hype surrounding the firm doesn’t match its results, according to a new report by the Communications Workers of America and the SOC Investment Group. The SOC Investment Group works with pension funds sponsored by unions affiliated with the Strategic Organizing Center, a coalition of four unions representing more than four million members with more than $250 billion in assets under management. 

Not only is Elliott’s hedge fund an underperformer, so are the companies that its activism targets, the report claimed. 

…

Whatever Singer’s standing among hedge fund honchos, the report noted that over the past several years, Elliott has underperformed both the S&P 500 and a 60-40 blend of stock and bond investments. As of March 31, over the prior 12 months Elliott gained 14.78 percent net of fees, while the S&P 500 gained 56.35 percent, and a 60-40 blend rose 31.67 percent, the report said. 

“Elliott has not provided superior risk-adjusted returns and despite much marketing rhetoric, has yielded absolute returns inferior to conventional investments,” according to the report.

Over five years, it said the annualized performance of Elliott was 9.21 percent, compared with a 16.30 annualized gain for the S&P 500 and a 11.15 percent gain for the 60-40 blend.