Paul Singer, founder of hedge fund Elliott Management Corp., has purchased at least a $1bn stake in Twitter, and is nominating four board members. He intends to oust ‘part time’ CEO Jack Dorsey, and the Twitterverse, at least the left side of it, is melting down.
The Guardian’s Josh Shepperd broke the news, and you can tell from his tone that he’s terrified that Twitter might be more friendly to conservatives:
Flying under the radar today: Trump’s people just bought Twitter. https://t.co/L1sFuXJp9B
— Josh Shepperd (@joshshepperd) February 29, 2020
A “sizable stake” means enough to nominate four board members, and to press for the replacement of Jack Dorsey (the infamous @Jack) as CEO, on the grounds that Dorsey has interests in multiple firms, and Twitter needs a shakeup because it is not realizing its potential!
Paul Singer himself is a very interesting character, best described as a staunch capitalist (and conservative) who drives a very hard bargain and does not back down, kind of like Trump. In 2016, Singer was a declared Never-Trumper, but after a January 2017 meeting came around and is now a supporter.
To illustrate how persistent Singer can be, you should check out the story by Monica Showalter at American Thinker – she covered the financial markets in the early 2000’s, when Argentina defaulted on its bonds, leaving a lot of investors only pennies on the dollar. Paul Singer was not one of those willing to take a “haircut.” Instead he pursued Argentina in the courts, through the banks, and on the high seas! He sought to lock up their deposits in US banks, seize two satellite launch contracts between Argentina and SpaceX, and in the boldest move of all, played repo-man against the Argentine navy. When the training ship “Libertad” docked in Ghana in 2012, Singer persuaded the Ghanaian courts to impound the vessel as security against their defaulted loans. The vessel was returned after two months of wrangling, but the wheels were in motion, and Singer got his money, with interest, a couple of years later.
Having described the ‘vulture,’ here’s the basics from WSJ:
Elliott Management Corp. has nominated four directors to the board at Twitter Inc., according to a person familiar with the matter, setting the stage for a potential showdown between one of the most prolific and pugnacious activist hedge funds and the influential social-media company.
Elliott has taken a roughly $1 billion stake and been in talks with Twitter management about its desire for the company to find a full-time chief executive officer, the person said. That most likely would involve replacing co-founder Jack Dorsey, who began a second stint as the company’s CEO in 2015. In addition to his role at Twitter, Mr. Dorsey leads Square Inc., a financial-technology firm he also co-founded.
In November, Mr. Dorsey said via a tweet that he planned to live in Africa for three-to-six months this year. The announcement surprised executives at Twitter and angered investors frustrated with the company’s performance under the part-time CEO.
Twitter’s shares and financial performance have long lagged behind its popularity and influence in culture and politics. Its market capitalization, at around $26 billion, is a fraction of that of rival social-media platform Facebook Inc.
Elliott is known for battles with companies such as Arconic Inc. and AT&T Inc. and campaigns against Peru and Argentina, pressuring the countries to make payments on defaulted bonds. It recently revealed an interest in Japanese telecommunications-and-technology giant SoftBank Group.
Or put another way, Twitter has ben used by a political plaything by its management team, and is exactly the kind of distressed asset a hedge fund would want to buy and shake up. Add in its blatant political bias, and you can see why a conservative hedge fund might see this as sport as well as a profit opportunity. Could Twitter become “fair and balanced?” Gadzooks!!
More from Monica Showalter:
Singer’s now got @Jack, Jack Dorsey, the man who founded and semi-still leads Twitter in his sights and plans to take over.
For us, that’s like a barbarian breaching the walls. Undoubtedly, Singer, who was once a nevertrump but came around, considered Twitter the weak link in the fat underbelly of social media giants. Now he’s moving for the kill. Which might be very good news for forcing Twitter to live up to its promises, too, just as Singer forced Argentina into being honest earlier.
A hedgie, Singer probably would first and foremost be making his decision to hostilely take over Twitter, based on the fact that it must have unrealized profits, something he could force Twitter into making if he gets his men or women on that board with enough power to clean house.
Add in the facts that Twitter is declining to take political ads, which could be a great source of profit (especially if done in an even-handed way), and is well known for chasing conservatives, such as the very witty actor, James Woods, off the platform. Both of these behaviors are chasing away users, clicks, and profits – bringing a little balance and increasing profits – what a concept!
Something I have frequently discussed with my friend “Weegee” is that these social media platforms are claiming on the one hand to be a public carrier, not responsible for other people’s content that they carry, and on the other hand to be a corporation with the right to edit or censor the material on their platforms – both cannot be true at the same time! Monica Showalter agrees: “The site claims to be a public platform and therefore exempt from libel laws, but its policy of censorship of conservatives makes it a highly edited platform. They’re likely to be eventually sued for the double standard and it’s all their own doing.”
Could this be the beginning of a conservative march through social media? What if fair and balanced platforms make bigger profits and cash flow with which to buy up biased liberal laggards? Grab the popcorn, and for a sampling of the meltdown, visit Twitchy.com