Hedge funds and the credibility investors give them have fluctuated a lot historically. In the last ten years, since the 2008 financial crisis occurred. But until then it was hedge funds that dominated the fiscal market, featuring top money managers, investment levels and high fees. Such characteristics were what kept the hedge funds elite.
Much changed with what happened in 2008. According to Value Walk, before the 2008 crisis, approximately 43% of hedge fund assets came from institutional investors. Six years later almost 2/3 of all hedge fund assets were from international capital. It was 201 that saw the biggest plummet for the hedge fund industry since the crisis began with net outflows of around $95 billion across the quarter.
So then a situation arrived whereby hedge funds started trying to get back investors by lowering fees with a structural change moving away from the two and twenty (2% of total assets and 20% of management gains/operation fees) model.
So things stabilized for a while. But according to billionaire hedge fund manager Ray Dalio, that might not be the case in the long term. He said:
“We have to sell a lot of Treasury bonds, and we as Americans will not be able to buy all those treasury bonds. The Federal Reserve will have to print more money to make up for the deficit, will have to monetize more, and that’ll cause a depreciation in the value of the dollar. “Two years out is when I’m worried about. It’ll be more of a dollar crisis than a debt crisis, and I think it’ll be more of a political and social crisis.” How a government responds to a debt crisis is more important than the nature of the crisis itself, Dalio writes.“I think there should be an emergency economic powers act” allowing the President, the Fed chairman, the speaker of the House and the Senate majority leader “to do the things that are necessary,” he concluded: The time to buy is when there’s blood in the street. I think we’re getting there.”
And more caution is needed for deregulation and its consequences which could result in an even deeper recession than 2008. According to a CNBC report:
“It was precisely the pre-2008 deregulatory agenda, including the elimination of barriers between investment and commercial banking, that led to the development of complex financial instruments, such as credit default swaps and derivative markets. This encouraged excessive risk-taking by banks and mortgage lenders. By rolling back these regulations and dismantling portions of the Dodd-Frank Act, the Trump administration is removing the safety net and creating a perfect storm that could lead to a crisis even worse than 2008.”
Certainly, it’s worth following people who have been named as some of the most creative people in their field. Fast Company puts out a list each of the most creative people in marketing – and here are a few glimpses of those who have made the list in past years.
Camille Gibson helped to propel Cheerios into the spotlight by breaking stigmas about mixed race families. While the ad called “Just Checking” had a backlash, she stood by the work and helped to show that their company thought about race differently.
Emil Michael was featured with a long list of impressive business feats. He was a White House Fellow during the Obama administration, worked as a tech consultant and was the COO at Klout. He’s one to watch.
They also put out a list about the most creative people in business. Just to name a few, they featured Franz von Holzhausen of Tesla, Caryn Seidman Becker who bought Clear out of bandruptcy and Pam El, the EVP and Chief Marketing Officer at the NBA.
Keep your eyes on these names – you’ll be seeing more of them in the future.
It was written a year ago but it’s still completely relevant for today. An article in Forbes by Abram Brown: 75 Quotes on Business From America’s Top Entrepreneurs
Entrepreneurs quoted include: Martha Stewart, Marc Benioff, Dan Gilbert, Eric Schmidt, Sara Blakely and many more.
A snippet of the quotes:
- “No business school graduate would recommend gambling as a financial strategy, but sometimes it pays to be a little crazy early in your career.” — Fred Smith, founder, FedEx
- “The four most important words in business are ‘What do you think?'” — Bill Marriott, Jr., chairman, Marriott International
- “I’d said to my partner Stedman, ‘What am I going to talk about for ten days and ten nights at Nelson Mandela’s house?’ And Stedman said, ‘Why don’t you try listening?'” — Oprah Winfrey, founder, Oprah Winfrey Network
- “Don’t take ‘no’ when your gut tells you ‘yes.'” — James Patterson, record-setting author
- “Here’s how I stay relevant: I read. I listen. I try to surround myself with smart people of all ages and backgrounds.” — John Doerr, venture capital Midas
- “Age is just a number for me—I haven’t thought about it in years. I go by the motto that I learn something new every single day.” — Bernard Marcus, cofounder, Home Depot
- “If you do the right thing, the right thing will come to you.” — Berry Gordy, founder, Motown Records
There are some truly great lessons here.
Each year Forbes creates a Best Under a Billion list for the top 200 Asian companies. The list “highlights 200 Asia-Pacific public companies with less than $1 billion in revenue and consistent top- and bottom-line growth.”
There was an average growth of 62 percent this year in annual sales. That generated a combined $45 billion ($9b net in profit). Together the market value increased by 22% to a staggering $254 billion for 2018. And the average stock price escalated by 27% of the candidates.
Of particular note was a company that has not been featured for 10 years – Merry Electronics of Taiwan. And talking of Taiwan, 50% of list entries “reflect the region’s growing specialization in the semiconductor industry.” In China, there was a marked notability in the escalating prosperity of the middle class.
More than half of the 466 cryptocurrency investments funds have been established as hedge funds. According to Crypto Fund Research, 255 of the 466 funds are set up this way and 195 of these are created as VC funds. 16 represent private equity funds. In 2017 around 100 crypto funds were launched; this year the anticipated number is 150.
It seems that cryptocurrency investments are the way to go for the hedge fund industry. When Pantera Capital was first launched in 2013 it was quite unique in its singular cryptocurrency/blockchain focus. But it seems like that was a good decision since according to Dan Morehead, the firm’s co-CIO and CEO and Joey Krug, co-CIO: “the Fund’s lifetime return is 10,136.15% net of fees and expenses.”
Today, it’s not just Pantera that is moving into this niche. Some examples of such funds which have $100+ million in assets include: MetaStable Capital, Galaxy Digital Assets, Arrington XRP, Polychain Capital, and The Logos Fund.
Furthermore, BKCM LLC’s founder and cryptocurrency trader, Brian Kelly pointed out:
I can tell you from the calls that I’m getting, people that looked down on it [Bitcoin] in December didn’t like the price and are coming back now saying – Alright, this thing is not going away, we need to understand what it is, where does this asset class fit into our portfolio.”
It seems that hedge funds are finally looking like a good bet again these days. They are regaining popularity with investors with demand significantly increasing. According to a recent Credit Suisse Group AG survey, net demand for hedge fund allocation is the highest it has been in three years. Last year it was 12 percent and the number for 2018 stands at 28 percent.
According to Credit Suisse Capital Services Strategic Advisory and Content Head, Joseph Gasparro:
“As investors start to look at hedge funds in terms of their broader portfolio, they’re using or employing more-customized solutions via managed accounts and nontraditional structures where they’re assessing hedge funds in numerous ways to fulfill their needs and objectives… Volatility has returned after years of benign, very calm markets. At the same time, investors in hedge funds are finding a middle ground in terms of fees and terms. It feels a lot more constructive.”
In addition, hedge fund fees are diminishing which also adds to their increased popularity.
In this video put out by the Milken Institute earlier this month, Bloomberg TV’s Editor-at-Large Erik Schatzker opens a discussion on hedge fund strategies and other issues looking to the future of the industry. On these topics he sits with the following individuals:
• Dmitry Balyasny – Managing Partner and Chief Investment Officer of Balyasny Asset Management;
• Andrew Feldstein – CEO and CIO at Blue Mountain Capital Management
• Dawn Fitzpatrick – CIO at Soros Fund Management
• Ricky Sandler – Founder, CEO and CIO at Eminence Capital
There has been quite a lot of volatility with crypto hedge funds over the last few months. But does this mean that they should be completely discounted? Should we take a break for a while, or make that long term? Adding to this issue is Americans lack of understanding of its regulatory status.
Still, having said all that, a recent CryptoGlobe report suggests quite the opposite, and that investing in hedge funds has actually increased in 2018. Crypto Fund Research data found statistics from last month as being: 216 investments in these funds (216 investments for the entire 2017 year). So it’s not so surprising that there is an escalation in popularity of the cryptocurrency hedge fund space.
Looking at crypto-related Venture Capital we also see an upswing this year, with Digital Currency Group leading the blockchain VC funds having made 58 investments (worth $78 million). According to Josh Gnaizda, CEO of Crypto Fund Research:
“the four criteria we used [reflect] not only total investment but also how long they’ve been investing in blockchain and how active they are today, not just a year or three ago … the industry is changing rapidly. So what’s most accurate today won’t be as correct next month.”
In conclusion, even though right now crypto markets are somewhat ‘volatile,’ according to Henri Aslanian of PwC, “the long-term positive impact of the number of institutional players entering cryptocurrency investment is more important than short-term price fluctuations.”
This video presents a BoFA analysis of long and short hedge fund portfolios to present a “snapshot… of the most popular and most hated positions, as well as a broad distribution of holdings by sectors.”
Jana Partners LLC, the activist investment firm now taking steps into socially responsible investing, has hired a portfolio manager and analyst to help oversee its effort of pushing companies to become better corporate citizens.
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