billionaire paul singer made his name pressuring public companies – but recent windfalls in private equity have prompted him to shift tactics n the spring of 2017 elliott management believed it had crafted the perfect plan to save athenahealth a provider of patient records software that had lost nearly half its value over the previous few years after building up a roughly 9 stake the activist hedge fund pitched its proposal to athenas executives there was only one problem the executives disagreed led by cofounder and longtime ceo jonathan bush a cousin of george w bush athena tried to win over elliott with its own methods laying off workers and slashing costs but elliott had other changes in mind—like replacing bush himself the firm saw a good company that had been led astray by ineffective leadership that leadership of course had a different view the situation simmered for more than a year eventually elliott’s thinking shifted if athena didn’t want to implement the firm’s plans then elliott would try to implement those plans itself elliott submitted a formal takeover offer in may 2018 a month later bush stepped down from athena after bloomberg published a story detailing past domestic violence allegations and newer accusations of workplace misconduct athena’s stock continued to flounder and its shareholders opted to side with elliott a deal was reached by november when elliott teamed up with private equity firm veritas capital to buy athena for 57 billion elliott has snapped up plenty of other notable companies in addition to athenahealth and citrix systems once it would have been a rare instance of elliott taking a majority stake in a company rather than maintaining a smaller activist position but the firm is pushing aggressively into the world of buyouts and athena is its biggest success yet last week after just three years of ownership elliott and veritas closed the sale of athena for 17 billion elliotts profit is estimated to be about 5 billion—a lucrative exit that serves as a testament to the benefits of private equity and elliotts turnaround chops elliott’s activist investing has always relied on mountains of research and detailed plans for corporate transformations as a minority shareholder though the financial upside is limited if those detailed plans work out so elliott has spent the past several years building out its buyout team to grab a bigger piece of the pie “i think we’re finally showing results that speak for themselves” said david kerko the firm’s head of north american private equity lliott was founded by paul singer in 1977 making it one of the world’s oldest hedge funds at first singer focused on convertible bond arbitrage then distressed investing in the 2000s he turned his efforts to activism by then elliott had become a wall street giant and it had earned a reputation as a firm not to be trifled with one that is unafraid to chastise corporate executives and issue public calls for a sale process a new ceo or other major strategic shifts the firm’s most famous fight was with the government of argentina a 15year legal campaign waged over lapsed debt payments that included the seizure of an argentinian ship and eventually a 24 billion payout for elliott while other bondholders settled for pennies on the dollar last year bloomberg described elliott as “wall street’s most feared fund” elliott’s activist activities continue its targets in recent years have included twitter att and samsung but its next major evolution began in 2015 when the firm formed evergreen coast capital as a pefocused affiliate since then elliott has made around 40 acquisitions a major uptick in activity striking deals for the likes of logmein gigamon cubic and barnes  noble “in certain situations pursuing a private transaction at the end of an activist process is the best valuecreation possibility” singer wrote in a 2016 letter to investors detailing the strategic shift that was obtained by forbes in previous years elliott’s structure had made it challenging to do such deals “thanks to the additions we have made to our team” singer continued “this is no longer the case” lliott’s exit from athena isn’t its only recent headlinegrabber the firm announced its biggest purchase yet on the last day of january teaming with vista equity partners to acquire citrix systems in a takeprivate buyout worth 165 billion citrix will merge with tibco software an existing vista portfolio company to create a new cloud software giant with some 400000 customers elliott’s specific combination of public and private investing through a single fund is unique but it’s also part of a larger trend among many of the world’s biggest investment firms longtime private equity giants like blackstone kkr and apollo global management have generated explosive growth in recent years by diversifying away from buyouts at the same time hedge funds have plowed billions into the business of buying and selling stakes in private companies firms like tiger global and coatue have turned into forces in the world of startup investing point72 asset management and de shaw both recently raised debut private equity funds the lines are blurring as the private markets have grown more popular among lps they have also grown more crowded and competitive everyone is searching for a new edge a new angle—a new way to use their expertise to generate huge returns he athena and citrix deals demonstrate some of the key ingredients in elliott’s private equity cocktail both trace their roots to the public market elliott first invested in citrix in 2015 and held a stake for five years before it ever attempted a buyout and the firm owned a slice of athena for nearly two years before closing its takeover in 2019 that yearslong relationship allows elliott to learn more about potential targets than would be possible in normal diligence it also allows the firm to identify offtheradar targets neither citrix nor athena had engaged any formal sale process when elliott first made its approach in both cases elliott partnered with another private equity firm clubbing up makes it easier to gather the substantial capital required for these sorts of megadeals and it allows for collaboration between investors with complementary strengths perhaps the defining element of elliott’s approach is that capital for all its investments—private markets public markets and whatever else—comes from a single fund and all deals are assessed by the same group of investors that stands in contrast to the biggest private equity factories where dozens of discrete funds are managed by different teams pursuing specialized strategies the structure gives elliott’s team more flexibility and freedom when deciding how to invest “there’s elements of publicmarket investing and there’s elements of privateequity investing” said jesse cohn a managing partner at elliott who’s one of the architects of its push into pe “we are taking companies private we are buying public stakes we are doing activism and in many cases we’re doing all of those at the same time or at the same target” some of the investors behind the initiative are elliott lifers cohn has worked at the firm since 2004 others are newer additions including kerko who joined elliott in 2020 after spending nearly two decades at kkr that mix has created a fusion of elliott’s insider knowledge and outside industry expertise kerko acknowledges that it’s more difficult than ever to stand out from the pack in today’s crowded private equity landscape but difficult isn’t impossible “what we’re doing from a public and private strategy standpoint i’m not aware of anybody else that’s doing it” kerko said “and i think if you say well why is that it’s really really hard to do”