Paul Singer’s $41B hedge fund moves its headquarters to Florida

The $41 billion hedge fund, Elliott Management, will move its headquarters from New York to Florida. Yahoo Finance’s Emily McCormick shares the details.

Video Transcript

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ADAM SHAPIRO: Word on the Street, let's start with Emily McCormick. In some parts of the country, it's the brain drain. In New York City, it's the tax train as people are getting on board to get out of town. Tell me more.

EMILY MCCORMICK: Well, Adam, just this week, we had Elliott Management reported to be the latest major hedge fund to plan a move to Florida from Manhattan. Now, this was first reported by Bloomberg earlier in the week, and according to that report, that comes as a number of executives, including co-chief investment officer John Pollock had already set up shop down near West Palm Beach during the pandemic and work from home. Now, while that firm reportedly still plans to keep some of its workforce in New York and also open an office in Connecticut, this does point to this ongoing exodus that we've seen of firms leaving Manhattan and leaving the specter of higher taxes to Florida where there's no state income, estate or capital gains tax. Remember that earlier this year, we also saw billionaire investor Carl Icahn move part of his firm down to Florida from New York as well.

Now, that's a problem for New York state and New York City especially if more and more of these wealthy individuals and their firms actually leave the locality essentially. These firms, especially on the financial services side, have been doing exceptionally well so far this year. We have data from the New York State Comptroller just saying earlier this week that Wall Street firms saw pre-tax profit for the first half of the year surge by 82% to $27.6 billion. That was the highest level actually since 2009. They also saw their underwriting revenue hit a record 10.7 billion in the second quarter alone.

Now, if we take a look outside of financial services, the rest of New York City especially is struggling on the service economy side. We've had restaurant workers, hotel workers, really anyone in an area relating to tourism, struggling to make ends meet given the ongoing pandemic. We had the unemployment rate in New York City at 14.1% in September, which is, of course much higher than the country wide unemployment rate of 7.9%.

Now, statewide, New York government and authorities have projected a $59 billion shortfall in revenue through 2022 due to the ongoing pandemic. Governor Andrew Cuomo has also suggested that services might need to be cut and taxes increased if there isn't another relief bill from Congress that gives direct aid to state and local governments. So again, something that threatens a vicious cycle here where if we do get higher taxes in New York, something that could drive even more of these firms to leave and contribute even more heavily to that shortfall, so another trend to watch here, Adam.