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Hedge Funds 2020: What to Expect

Where are hedge funds headed next year? What is the outlook for the industry vis-à-vis new hires, M&As?  Here we present the thoughts of some experts in the field, most notably Alexis DuFresne, Whitney Partners Director, Paul Tudor Jones of Investment Corporation and Leon Cooperman of Omega Advisors.

In a recent YouTube video, on a presentation entitled “Bloomberg Markets: The Close” Alexis DuFresne spoke with Scarlet Fu, Romaine Bostick and Katia Porzecanski. She said she is:

“More optimistic than last year as this is a record year for acquisitions. Right now we are left with a lot of opportunity for talent, not necessarily new hires but replacement hires so we will see volume, not necessarily new positions, mostly upgrades….Secondary space which is growing year over year. This year we’ve seen about 50 billion in asset inflows versus hedge funds.  Over the past six quarters hedge funds have been losing assets and I think this quarter is about 36 billion in outflows in hedge funds so we really see that reflected in the private equity side and I’ve seen numbers all over the place in terms of asset raising anywhere from 200-500 billion going into private strategies so that also indicates that there’s hiring, new hiring.”

The video also showed Hedge Fund Performance to be:

  1. Equity – 8.63%;
  2. Credit – 5.72%;
  3. Macro – 5.19%;
  4. RV – 5.41%;
  5. Event – 4.79%.

Looking at the industry within the political realm, Tudor Investment Corporation’s CEO and founder Paul Tudor Jones asked what would happen if Elizabeth Warren was elected president?  He believes this would result in a 25 percent dip in the market. 

Leon Cooperman of Omega Advisors chairman and CEO had a similar thought telling   CNBC that: They won’t open the stock market if Elizabeth Warren is the next president.”

Why are these individuals predicting such potential doom and gloom?  They believe that incorporated into Warren’s plans are the dismantling of large tech firms, a re-invention of the healthcare system, a banning on fracking and more. 

What to Expect When You Meet With Your Financial Adviser

Not all investment firms work in the same way, but it’s helpful to have some ideas about what you’ll experience when you meet with your financial adviser. The first step, of course, is to find an adviser with whom you’d like to work. Amongst other resources, sites like CrunchBase compile publicly available information about investing firms, such as this example for Fisher Investments. Once you’ve done the research and are ready to start with an adviser, it’s important to know what to expect.

During your first meeting with the new financial adviser, you’ll discuss your current financial situation and your life goals. You’ll talk about your current salary, and any retirement accounts you have. If you’re married, you’ll discuss how the two of you have set up your finances (together, separate, etc) and if you have children, you’ll discuss any savings accounts that you already have for them or that you hope to create.

Before this first meeting, you should do your homework. Your meeting will be far more productive if you come to it prepared. But what does that mean? What should you bring with you? Before your first meeting, you should consider your life goals. When do you hope to retire? How do you plan to pay for your children’s college education? What do you hope to do in retirement? Obviously, you don’t have to have everything figured out; but the clearer you can be about these goals, the easier it will be to plan with your advisor.

Materials that you should bring to your first meeting include: your mortgage statement, all debt statements, pay stubs for you and your spouse, your most recent tax return, your monthly budget, and any 401(k) or other investment statements. You can ask your adviser before your first meeting if there are other things that he or she would like for you to bring. Keep in mind, of course, that you will be starting a relationship. If there are things that you don’t bring to the first meeting, you’ll always have the opportunity to do so at future meetings, or to send materials through email and other avenues.

Based on the goals and materials that you share with the financial adviser, they will then help you to develop strategies which will include a monthly savings plan and how to spread out your investments. Expect some give and take from these meetings as you discuss and refine your goals, needs and targets. Once you’re gotten started, it’s always a good idea to return to your financial adviser once a year for a check-in and to discuss anything that might have changed.

The Innovation Potential in New York City’s Oldest Buildings

For all our modern-day advances, in every field and realm, industry and business still thrive on, and in, brick-and-mortar buildings. That is why commercial leaders are taking an aggressive approach to drive real estate out of the Stone Age, literally.

Innovating New York City’s Office Buildings

Commercial Observer held its first-ever Innovators Forum in early December 2019 at the Sheraton New York Times Square Hotel in Midtown. Executives discussed how office landlords are devising and implementing creative ways to keep tenants.

Google‘s Paul Darrah said his company focuses on “food service, amenities, fitness, and well-being,” as integral parts of the equation for employee satisfaction. Amol Sarva, co-founder of Knotel, said that flexible-workspace companies like his “unlock value” without putting the burden directly on the business-owner. HqO fills a similar need by offering outsourced office-space innovations to make the workday go smoothly for employees. The company’s software helps tenants’ employees control building systems like heat/air conditioning, order meals, and even get a ride home.

Larry Silverstein, the founder of Silverstein Properties and one of New York City’s oldest real estate business owners, recognized the challenges involved in upgrading buildings. He also said it was a necessary step, “there’s a future in the older buildings.”

The one-day forum ended with awards distributed to GenslerVTSLogical Buildings, Near Map, and HqO  for “pushing the boundaries of technology and sustainability.” 

New York’s Independent Store Owners Celebrate Shopping Small

New York’s independently owned shops took part in “Small Business Saturday” on November 30, 2019. This annual event, on the Saturday after Thanksgiving, was created to give level the competitive holiday retail field for small businesses. This year marks the 10th anniversary of “Shop Small” and thousands of Manhattan businesses offered sales and discounts throughout the day.

New York City Small Business Winter Fair

In the spirit of the holiday season, and to keep the momentum going, some shops across New York are hosting their own events, including tree lighting ceremonies, pop-ups, theme parties, and more. Local holiday markets are also a great way to support small businesses and save on time, money, and big-shop aggravation. Markets are open at Union Square, Bryant Park’s Winter Village, Grand Central Terminal Holiday Fair, and Columbus Circle.

Tiffany & Co Gets a New Luxury Backing

The French luxury group LVMH has bought the Tiffany & Co jewelry company for $16.2 billion.

LVMH is the world’s biggest luxury group and has 75 different brands, including Louis Vuitton, Christian Dior and Bulgari. For LVMH, Tiffany — which faced financial and public image struggles recently — is a sensible transformational project. Tiffany will enhance the jewelry and watch line of LVMH, giving it a competitive edge against players like Richemont, the owner of Cartier. Tiffany is also a strong player in the American luxury retail market, which makes up close to a quarter of LVMH’s revenue.

Tiffany’s global brand is also fairly robust; Audrey Hepburn and those little blue boxes are internationally known.

SA Hedge Funds: New Laws

Capital Management

South Africa’s hedge funds will soon be subject to new rules in an effort to help assets under management that have been encountering a dive for too long.  In January 2020, there will be new categories for funds as well as definition of where the funds are.  These two initiatives will help local investors make better comparisons before deciding on their hedge fund of choice.  For hedge funds it will be helpful as they will only be in competition against fixed-income and long-only equity funds.

According to local hedge funds standing committee Association for Savings and Investments Chairman, Hayden Reinders:

“This is the next evolution of where we are going. We want to create awareness that a hedge fund is a different type of fund that can fit into different types of portfolios. Globally if you look at the allocation of alternatives compared to more traditional funds, alternatives can account for as much as 8% of the total. Conservatively in South Africa, the hedge fund industry could look to double.”

CEO of Protea Capital Management Jean Pierre Verster said:

“Hedge funds over the last three to five years have had a torrid time. “Now that hedge funds must formally report net performance, it isn’t this ‘fuzzy area’ anymore. Hedge funds must now get used to marketing themselves.”

Steve Binnie, CEO of Sappi said:

“An initially strong start to the year was unfortunately offset by weak graphic-paper markets and lower dissolving wood pulp prices driven by the ongoing trade wars and slower economic growth in various geographies.”

Ultimately, come January 2020, it will be much easier for the average South African in the street to compare and contrast the different hedge funds available and thereafter make the right choices for their investments.  This is because there will be a new classification standard put into place.

New York Tech Celebrated at Blockchain Weekend

On the weekend of November 7-10, New York City was busy with the inaugural BlockchainWeekend NYC 2019.

In partnership with the New York City Economic Development Corporation (NYCEDC), BlockchainWeekend highlighted projects from a variety of NY based companies, startups, and entrepreneurs. More than 50 events took place across all five boroughs, creating a networked platform for decentralized events. With workshops, panels, hackathons, and meetup sessions, there were plenty of opportunities to hear about what is new in NYC’s world of technology and innovation.

The weekend was launched with a reception hosted by Gemini, the biggest New York based crypto exchange, that opened its headquarters as part of the event.

Gemini’s Jeanine Hightower-Sellitto said,

“Blockchain Weekend celebrates so much of what we love about New York: the coming together of technology and the people and companies who build it. The implications of and potential for blockchain—and cryptocurrency—continue to grow and its foothold in the financial world demands that New York be a leader in its development and growth. Blockchain Weekend is an encouraging step in that direction, and we applaud the leadership of forward-looking companies like Gemini and other New York blockchain companies for being a part of it.”

New York Colleges Offering More Tech-Ed

Five campuses of the City University of New York (CUNY) network are now offering more technology courses, bolstered faculty, and internship opportunities at local tech companies. This initiative is part of the city’s effort to double the number of CUNY alumni employed in the tech industry by 2022.

New York’s Department of Small Business Services is giving $4 million to the CUNY 2X Tech program, making the program’s budget to $24 million across eight CUNY campuses.

“This additional investment in N.Y.C. public colleges expands the pipelines of opportunities for New Yorkers to enter quality, well-paying careers in the tech sector. Local employers can now reach into a larger pool of home-grown talent to help their business and New York City’s economy grow.”

Gregg Bishop, Commissioner of the Small Business Services Department

More than 1,000 students have already been trained by tech workers at Apple, Amazon, and Google, with some continuing on as fulltime employees.

Hunter, Lehman and City colleges already offer the enhanced tech programs. Brooklyn, Queens, Medgar Evers, John Jay Colleges, and the College of Staten Island will each be allocated $2 million over the next few years to expand their tech offerings.

Something New Brewing at Starbucks New York

The Starbucks coffee chain has announced plans to open the first Starbucks Pickup point in Penn Station.

This coffee shop is being designed as a streamlined store experience for customers who order and pay with the Starbucks app. The process of ordering involves downloading the app, selecting Pickup-Penn Station as the location, and placing an order. At the store, the order status board will guide consumers to their caffeine. Baristas will be available to help if needed, but their primary role will be to make drinks as orders come in on the app.

The Penn Station concept is similar to Starbucks Now, the recently launched coffee system in Beijing that relies on mobile orders and serves as a pickup spot for Starbucks delivery personnel. The Starbucks brand is building a portfolio of store concepts, ranging from full-sized stores for work, meetings, and hanging out, to drive-thru only stores meant for areas with high volumes of commuter business. The new Starbucks Pickup adds another facet to the collection. Given its reliance on foot traffic, the pilot location in Penn Station will be a good indicator of its value to coffee-seeking commuters.