Paul Singer: Obamacare rollout a 'fiasco'
Hedge fund manager and billionaire conservative Paul Singer thinks the Affordable Care Act is a disaster.
"It is no surprise, given the highly ideological component of its founding impulse as well as the lack of executive experience in its inventors, that the rollout of the national electronic network just weeks ago would turn into a (possibly temporary, but more likely ongoing) fiasco," Singer wrote in a letter to Elliott Management investors obtained by CNBC.com
"(It) may just be the introduction to the surprises and frustrations that are likely to befall tens of millions of Americans in the next few years."
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Singer was a prominent supporter of Mitt Romney during the 2012 presidential election and has long donated to conservative and libertarian politicians and causes.
He's also a wildly successful investor: his flagship Elliott Associates hedge fund is up 9.3 percent this year and has produced a net annualized return of 14.0 percent since inception in 1977, among the best long-term track records in the hedge fund industry. The firm manages $23 billion today.
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"To those who get something free that they never got before, or for which they paid more before, ACA may be a wonderful thing," Singer added. "To those who either lose their existing health plans, are forced to pay for something they don't want to pay for, or experience an alarming degradation in the quality of their health services or waits for appointments that they never experienced previously, ACA will be a bitter pill indeed. This was not what the country needed in its struggle to recover from the financial crisis."
Singer also used the quarterly letter to slam central bank loose monetary policy again.
"It is not easy to see where current Fed policy leads the country. We believe that continued QE will not accelerate the economic recovery," Singer wrote of Janet Yellen's likely continuation of quantitative easing as the next Federal Reserve chair.
"We also believe that the recovery and the economy are distorted and unfair to ordinary citizens who do not own stocks or high-end real estate, which are priced at their highs. ZIRP (zero interest-rate policy) and QE, therefore, are placing the economy at severe risk of another financial crisis and possibly a spike in inflation for no societal benefit."
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"It is also not clear whether stock prices, which are still on a tear and at all-time nominal highs, are at these levels because of optimistic economic prospects, QE, or the beginnings of a loss of confidence in paper money causing a shifting of capital out of fixed income and into purportedly 'real' assets," Singer added.
"However, the fragility of capital markets, so reliant on zero percent interest rates and QE Infinity for their equilibrium, is clearer. The markets' ability to withstand any adversity is highly questionable, and it appears to us that the Fed is basically paralyzed (though they would probably call it 'focused and determined') and afraid (perhaps they would say 'prudently risk-averse') to reduce, much less eliminate, its bond-buying.
"In this environment, plain-vanilla ownership of stocks or bonds represents a highly conjectural bet on government-manipulated markets."
Singer noted several investment positions he likes in the letter. Among them was the Hess Corporation, which he Singer wrote "continues to trade substantially below what we believe is its intrinsic value."
"We believe the market placed little to no value on this business prior to the sale, which underscores the significant potential additional value that can be unlocked as the new board begins to refocus the company," Singer added. "We modestly increased our position during the quarter, and we look forward to the next phase of the corporate restructuring."
Another was gold. "We continue to add to our long gold option positions, which are aimed at having limited downside risk with large upside potential in the event gold has a big upward move," Singer wrote. "Since we think that the fundamentals are uniquely positive for gold (even though most investors would disagree), we think of the current situation as fundamentally very attractive, with the real value as yet to be recognized in the markets."
Singer said that Elliott was generally adding U.S. and European activist equity and event-driven positions.
"These positions come in different flavors, but chief among the qualities that make them attractive to us are (1) that they offer the ability to exercise substantial control over one's destiny by one's own efforts, and (2) that their results are less subject to the influence of governmental manipulations than if they were passive outright long positions in equities or debt," the letter said.
A spokesman for Elliott did not immediately respond to a request for further comment.
—By CNBC's Lawrence Delevingne. Follow him on Twitter @ldelevingne.