Billionaire Hedge Fund Manager Paul Singer expects”all hell to break loose” due to a Groupthink of policymakers.
And this is why the hedge fund billionaire and investing legend Paul Singer of Elliott Management has been building up its cash reserve to deploy during future market turmoil. He has raised $5 billion in less than 24 hours earlier this year.
The hedge fund has been sounding the alarm for some time. But its most recent letter sets out why the fund decided to raise additional funds.
“We think that it is a good time to build a significant amount of dry powder,” Elliott wrote to investors in a first-quarter update.
“Given groupthink and the determination of policymakers to do ‘whatever it takes’ to prevent the next market ‘crash,’ we think that the low-volatility levitation magic act of stocks and bonds will exist until the disenchanting moment when it does not. And then all hell will break loose (don’t ask us what hell looks like…), a lamentable scenario that will nevertheless present opportunities that are likely to be both extraordinary and ephemeral. The only way to take advantage of those opportunities is to have ready access to capital.”
In 2008, the hedge fund founder said, it invested all of the remaining capital investors had committed to it shortly after Lehman Brothers failed, and also raised an additional $800 million. The hedge fund said it “could have deployed ten times as much in what turned out to be amazing (and fleeting) opportunities.”