On May 18, 2017, Jonathan Bush was standing at the stern of his luxury catamaran, the Zenyatta, named for a champion Thoroughbred racehorse, when he received a text message from a colleague warning him not to answer calls from phone numbers he didn’t recognize. Bush, the co-founder and C.E.O. of the health-care technology company Athenahealth, had just finished a three-day race with his company’s sailing team, going from the Bahamas to Bermuda. Bush is the nephew of one former President, George H. W., and the cousin of another, George W., and his professional and personal lives were intertwined. He socialized with members of Athena’s staff as if they were college friends. (“We have a drinking team that has a sailing problem,” he said, half-jokingly, of the Bermuda group.) On social media, he documented nights spent partying with employees alongside his family visits to Kennebunkport and his kids’ soccer games. That day, as the Zenyatta sat in the Bermuda harbor, Bush’s phone rang. He answered it.
On the line was a man named Jesse Cohn, who worked for the hedge fund Elliott Management. Cohn said that he was calling as a courtesy, to give Bush a “heads-up” that Elliott had amassed a 9.2-per-cent holding in Athenahealth and was now one of its largest shareholders. It wasn’t unusual for a major shareholder to talk with the C.E.O., but this interaction, Bush thought, had a menacing tone. Although he wasn’t familiar with Elliott Management, an unsettled feeling came over him.
Bush had co-founded Athenahealth, a platform that digitizes patient medical records and billing claims for hospitals and health-care providers, in 1999, and he had built it into an enterprise with more than a billion dollars in revenue. One of the firm’s marketing taglines was that it freed doctors and nurses to spend more time doing what they loved—practicing medicine—and less time on paperwork. Athena served more than a hundred thousand health-care providers.
Cohn told Bush that Athenahealth was a great business, and that he should be proud of it. Still, Cohn went on, there were problems. Athena’s stock price had recently declined, which he said was hurting morale and affecting the company’s ability to recruit employees. Cohn said that he had spoken with Athena’s other investors, who were also unhappy. Bush had the impression that Cohn was making his way through a script, repeating familiar talking points.
Bush was planning to take one of his daughters to Europe, and he asked Cohn whether he should cancel the trip and hurry back to the U.S. Cohn replied, “No, I’d never ask you to do that.” Bush told me that Cohn also said something he found curious: “Don’t worry, I’ve told my P.R. people to stand down for now.” (Cohn, who does follow a script, which he has taped next to his desk, told me that this would not have been part of the exchange.)
Cohn, Bush soon discovered, was the thirty-seven-year-old protégé of Paul Singer, the founder of Elliott Management and one of the most powerful, and most unyielding, investors in the world. Singer, who is seventy-three, with a trim white beard and oval spectacles, is deeply involved in everything Elliott does. The firm has many kinds of investments, but Singer is best known as an “activist” investor, using his fund’s resources—about thirty-five billion dollars—to buy stock in companies in which it detects weaknesses. Elliott then pressures the company to make changes to its business, with the goal of improving the stock price. Elliott’s executives say that most of their investment campaigns proceed without significant conflict, but a noticeable number seem to end up mired in drama. A signature Elliott tactic is the release of a letter harshly criticizing the target company’s C.E.O., which is often followed by the executive’s resignation or the sale of the company. One of Singer’s few unsuccessful campaigns, to block a merger within Samsung, eventually led to the impeachment and imprisonment of the South Korean President after Singer’s opponents became so desperate to fend off his attack that they allegedly began bribing government officials. From the outside, it can seem as if Elliott is causing the drama, but the firm argues that it simply identifies preëxisting problems and acts as a check on the system.
Activist investing is controversial: critics believe that it can force companies to lay off workers and curtail investment in new products in favor of schemes that boost short-term profits, while proponents view it as a useful source of pressure on C.E.O.s to reduce waste and manage their companies more effectively. In the press, Singer and similar investors have been compared to vultures, wolves, and hyenas. Bloomberg has called Singer “aggressive, tenacious and litigious to a fault,” anointing him “The World’s Most Feared Investor.” Singer’s ventures have been consistently successful, with average annual returns of almost fourteen per cent, making him and his employees enormously wealthy. The mere news that Elliott has invested in a company often causes its stock price to go up—creating even more wealth for Elliott. Singer has been deploying his riches in Republican politics, where he is one of the G.O.P.’s top donors and a powerful influence on the Party and its President. According to those who know Singer, in politics, as in business, he is intent on doing whatever it takes to win.
Bush told me that, when he began to research Elliott online, the experience was like “Googling this thing on your arm and it says, ‘You’re going to die.’ ” Shortly after Bush’s call with Cohn ended, Elliott’s stake in Athena became public, and Bush’s phone was deluged with messages from friends and colleagues expressing panicky concern. Some sent pledges of support; others offered advice. Many asked him not to tell anyone that they had been in touch. Bush recalled that one of Athena’s longtime investors simply wrote, “They’re going to ask for your head.”
Gradually, Bush diverted his attention from running Athena to focus on repelling, or appeasing, the hedge fund. He was surprised to learn that an entire industry of crisis-communication firms, investment banks, corporate-law firms, and management consultants had sprung up to defend companies against investors like Singer. For fees reaching into millions of dollars, these advisers would counsel Bush about ways to keep the stock price up and what to say, and not say, to Elliott. If Athena was ultimately broken into pieces or sold, they would advise on that, too. Some of these companies also worked with activist investors; the whole ecosystem, Bush thought, added little value to the economy.
On the line was a man named Jesse Cohn, who worked for the hedge fund Elliott Management. Cohn said that he was calling as a courtesy, to give Bush a “heads-up” that Elliott had amassed a 9.2-per-cent holding in Athenahealth and was now one of its largest shareholders. It wasn’t unusual for a major shareholder to talk with the C.E.O., but this interaction, Bush thought, had a menacing tone. Although he wasn’t familiar with Elliott Management, an unsettled feeling came over him.
Bush had co-founded Athenahealth, a platform that digitizes patient medical records and billing claims for hospitals and health-care providers, in 1999, and he had built it into an enterprise with more than a billion dollars in revenue. One of the firm’s marketing taglines was that it freed doctors and nurses to spend more time doing what they loved—practicing medicine—and less time on paperwork. Athena served more than a hundred thousand health-care providers.
Cohn told Bush that Athenahealth was a great business, and that he should be proud of it. Still, Cohn went on, there were problems. Athena’s stock price had recently declined, which he said was hurting morale and affecting the company’s ability to recruit employees. Cohn said that he had spoken with Athena’s other investors, who were also unhappy. Bush had the impression that Cohn was making his way through a script, repeating familiar talking points.
Bush was planning to take one of his daughters to Europe, and he asked Cohn whether he should cancel the trip and hurry back to the U.S. Cohn replied, “No, I’d never ask you to do that.” Bush told me that Cohn also said something he found curious: “Don’t worry, I’ve told my P.R. people to stand down for now.” (Cohn, who does follow a script, which he has taped next to his desk, told me that this would not have been part of the exchange.)
Cohn, Bush soon discovered, was the thirty-seven-year-old protégé of Paul Singer, the founder of Elliott Management and one of the most powerful, and most unyielding, investors in the world. Singer, who is seventy-three, with a trim white beard and oval spectacles, is deeply involved in everything Elliott does. The firm has many kinds of investments, but Singer is best known as an “activist” investor, using his fund’s resources—about thirty-five billion dollars—to buy stock in companies in which it detects weaknesses. Elliott then pressures the company to make changes to its business, with the goal of improving the stock price. Elliott’s executives say that most of their investment campaigns proceed without significant conflict, but a noticeable number seem to end up mired in drama. A signature Elliott tactic is the release of a letter harshly criticizing the target company’s C.E.O., which is often followed by the executive’s resignation or the sale of the company. One of Singer’s few unsuccessful campaigns, to block a merger within Samsung, eventually led to the impeachment and imprisonment of the South Korean President after Singer’s opponents became so desperate to fend off his attack that they allegedly began bribing government officials. From the outside, it can seem as if Elliott is causing the drama, but the firm argues that it simply identifies preëxisting problems and acts as a check on the system.
Activist investing is controversial: critics believe that it can force companies to lay off workers and curtail investment in new products in favor of schemes that boost short-term profits, while proponents view it as a useful source of pressure on C.E.O.s to reduce waste and manage their companies more effectively. In the press, Singer and similar investors have been compared to vultures, wolves, and hyenas. Bloomberg has called Singer “aggressive, tenacious and litigious to a fault,” anointing him “The World’s Most Feared Investor.” Singer’s ventures have been consistently successful, with average annual returns of almost fourteen per cent, making him and his employees enormously wealthy. The mere news that Elliott has invested in a company often causes its stock price to go up—creating even more wealth for Elliott. Singer has been deploying his riches in Republican politics, where he is one of the G.O.P.’s top donors and a powerful influence on the Party and its President. According to those who know Singer, in politics, as in business, he is intent on doing whatever it takes to win.
Bush told me that, when he began to research Elliott online, the experience was like “Googling this thing on your arm and it says, ‘You’re going to die.’ ” Shortly after Bush’s call with Cohn ended, Elliott’s stake in Athena became public, and Bush’s phone was deluged with messages from friends and colleagues expressing panicky concern. Some sent pledges of support; others offered advice. Many asked him not to tell anyone that they had been in touch. Bush recalled that one of Athena’s longtime investors simply wrote, “They’re going to ask for your head.”
Gradually, Bush diverted his attention from running Athena to focus on repelling, or appeasing, the hedge fund. He was surprised to learn that an entire industry of crisis-communication firms, investment banks, corporate-law firms, and management consultants had sprung up to defend companies against investors like Singer. For fees reaching into millions of dollars, these advisers would counsel Bush about ways to keep the stock price up and what to say, and not say, to Elliott. If Athena was ultimately broken into pieces or sold, they would advise on that, too. Some of these companies also worked with activist investors; the whole ecosystem, Bush thought, added little value to the economy.
