Singer supports Giuliani

NY Times:

Paul E. Singer is the founding partner of one of the oldest hedge funds around. And while he has become a major donor to Republican and conservative causes in recent years, he has largely managed to stay out of the limelight, even avoiding having his picture appear in newspapers.

But this year Mr. Singer became one of the biggest supporters of Rudolph W. Giuliani’s presidential campaign, making his jet available to Mr. Giuliani, while Mr. Singer and workers at his companies have donated $200,000 to the campaign. And he became the largest individual backer of a California ballot initiative that many Democrats believe could sink their chances of winning the presidency.

Suddenly, the normally low-profile Mr. Singer, a New Yorker, found himself singled out by Democrats intent on beating back the California effort before it gained any steam.

Howard Dean, the chairman of the Democratic Party, questioned “Paul Singer’s involvement in this dirty trick aimed at stealing the White House.” A group of Democrats filed a complaint with the Federal Election Commission charging that Mr. Singer had been acting on behalf of Mr. Giuliani in his efforts to change the California law — which Mr. Singer and the campaign deny. And the Democratic National Committee drew attention to the part of Mr. Singer’s business that involves buying the debt of poor countries at a discount and then seeking repayment in full — prompting an article in The Times of London labeling his firm, Elliott Associates, a “vulture fund.”

The vitriol directed at Mr. Singer reflects the intense passions being stirred by efforts to change the California law, which could alter the nation’s electoral map to favor Republicans and Mr. Giuliani, should he emerge as the party’s candidate. While Mr. Singer is now distancing himself from the effort, another Giuliani fund-raiser has since taken up the cause.

Mr. Singer, 63, who was surprised to be photographed for this article on a Manhattan street, said in an e-mail interview that he had contributed to the California initiative on his own, and that he was not acting on behalf of the Giuliani campaign. He noted that buying what he called “sovereign distressed debt” represented only a tiny fraction of the $9 billion that is under management by his funds, but defended his decision to press for repayment, saying that countries must meet their obligations.

And he lamented what he called “the name-calling against investors who do not just ‘go along’ with cents-on-the-dollar offers for valid sovereign debt,” saying it was primarily generated by ideological groups and debtors who do not want to pay.

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The irony of the California initiative, is that when Democrats thought the race was going to be as close as the last two, they were talking about the States agreeing to apportion electors based on the popular vote in their state as a way of getting around the Constitutional Electoral College requirement. Now that it looks like a Republican could get some advantage from such a scheme they are all against it. Go figure.

Singer appears to be an interesting character. The story does not indicate how he moved from a legal career to the hedge fund business. Democrats have tried to demonize the business in recent years, but it is a relatively benign way of managing risk in the investment world. It allows investors to take a large position and off set the risk of that investment with counter cyclical investments. Because of this the margins can be slim percentage wise, but significant because of the volume.