Elliott’s Former Hong Kong Head Preps London Hedge Fund Startup

James Smith, the former head of Elliott Management Corp.’s operations in Hong Kong, is preparing to start his own hedge fund as he stages a comeback into the industry.

Smith is setting up his multi-strategy investment firm Palliser Capital in London, according to an investor document seen by Bloomberg. Similar to Elliott, one of the most-feared activist investors in the world, Palliser will seek changes at companies, bet on mergers and acquisitions and also invest in distressed securities and market dislocation.

Palliser is expected to start with about $750 million in initial capital at launch, according to a person with knowledge of the matter. Smith is starting the firm with three other former Elliott colleagues, the person said asking not to be identified because the information is private. They are Paul Reid, who will head trading at the new fund, as well as Armenio Keusseyan and Jason Chang.

A spokesperson for Palliser declined to comment.

Hedge fund startups are showing signs of revival following a year of stellar gains for some of the biggest names in the industry last year. Launches in the fourth quarter of 2020 rose to their highest level in three years and exceeded the estimated quarterly liquidations, according to data compiled by Hedge Fund Research Inc.

Hyundai, BHP

Smith, who led Elliott’s high-profile investments in Hyundai Motor Group and BHP Group Ltd., left the firm last year after nearly two decades. He moved back to London from Hong Kong in 2016 and had been running the Hong Kong operations from Elliott’s headquarters in the U.K.

Former colleague Franck Tuil is also planning to start his own hedge fund. Tuil is setting up actvist investment firm Sparta Capital Management, which will invest in public and private companies around the globe.

Palliser, which is expected to launch in the second quarter, will run a portfolio of up to 35 names but its core holdings will be spread over five to 10 bets, the document shows. The fund will invest globally but with a focus on Asia and Europe.

The pandemic has sparked price dislocation in Europe, creating a fertile hunting ground for activists who agitate for change at companies to lift their share prices. Several high-profile European companies have been targeted by investors in recent years, including French yogurt maker Danone SA, which said earlier this month it would separate its chairman and chief executive officer roles after pressure from investors.

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