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Reporting on wealth: ‘The virus isn’t a leveller. It has made the rich richer’

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Four years in to the newly created role of wealth correspondent, Rupert Neate explains how the lives of millionaires affect us allIn my reporting, I’ve been interested in how the hobbies and lifestyles of the super-rich affect everyone who isn’t well-off. I wrote an investigative piece on superyachts, and how their billionaire owners often spend £200m or more on what is essentially a floating palace on the ocean, but staffed by people who are entirely unsupported, working up to 24 hours a day. Related: How the Covid-19 pandemic has increased Amazon’s dominance – podcast Related: ‘Put that down, cancel that’: the Guardian tracks Philip Green to Monaco Trump looked at the stock market every day and judged his success from how it was doing Continue … [Read More...]

Tesla investor defends electric carmaker’s soaring share price

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Investment manager Baillie Gifford says rise is no fluke as manufacturer stands to benefit from move away from fossil fuelsOne of the biggest investors in Tesla has defended the explosive growth in the US electric carmaker’s share price, arguing that it is “far from an aberration”.Baillie Gifford, the Edinburgh-based investment manager that runs the Scottish Mortgage Investment Trust (SMIT), has been the second-biggest winner from Tesla’s rocketing share price, beaten only by Tesla’s outspoken chief executive, Elon Musk. Continue reading… [Read More...]

Bonanzas in private equity world spark call for tax relief limit

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‘Fat cat’ wealth transfer thriving in huge investor deals buoyed by cheap debt and lockdowns, say analystsWelcome to the world of private equity, also known as the “billionaire factory”, where already super-rich firms have used low interest rates and their considerable financial firepower to embark on a multi-billion dollar buying spree this year. Mere mortals were this week given a rare glimpse inside the money-spinning and highly secretive private equity industry – which buys up companies, often using more debt than stock market investors would tolerate, then floats or sells them on again – as the London firm Bridgepoint floated on the stock market. Related: Best-paid gig in town rains down £12m a head – but are the non-exes still independent? … [Read More...]

How did the Covid crisis affect your finances in 2020?

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Pandemic leaves some people jobless and deferring mortgages, while others have saved moreIt has been possibly the strangest year ever for household finances. A stock market collapse, soaring unemployment, millions deferring their mortgage payments – and a booming housing market, plus bulging savings accounts. Which side of the coronavirus financial equation were you on?Baillie Gifford American owns more than £500m worth of Tesla shares, which have soared by an extraordinary 650% Continue reading… [Read More...]

Arbitrage hedge fund

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More dumb money is invested in the markets than ever before. So there are MORE opportunities for hard working, smart people to capture alpha from all that dumb money. Experts claim there is no such thing as arbitrage as it supposedly would be copied and eliminated! They are so wrong. If you have the expertise and resources there are many profitable arbitrages on Wall Street. Markets are becoming even LESS efficient.A common metaphor is that if a $100 bill is dropped in the street it would immediately be picked up therefore no arbitrage can persist. But what if YOU are the person that finds it? Someone will. What if you specialize in walking the streets 24/7/365 looking for drops? What if you spent some of your “high” … [Read More...]

What Hedge Funds Bought & Sold in the Volatility: New Q1 Issue Just Released

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The new Q1 issue of our hedge fund newsletter is now available. This portfolio snapshot coincides directly with the pandemic market sell-off, which means this is a chance to see what stocks top investors have long had on their watchlists that they finally got a chance to buy due to the volatility.Subscribers please login at www.hedgefundwisdom.com to download it.New Q1 Issue Includes:- Reveals the latest portfolios of 25 top hedge fund managers: David Tepper, Seth Klarman, Stan Druckenmiller, Bill Ackman, Dan Loeb, Chase Coleman & more (full list here)- Commentary on each fund’s moves: Excerpts from hedge fund letters, Q1 performance numbers, occasional short positions, and more – New consensus buy / sell lists: What they dumped & what they bought during the pandemic panic- … [Read More...]

Best-paid gig in town rains down £12m a head – but are the non-exes still independent?

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Yet more millionaires in the City thanks to an IPO may be normal, but Bridgepoint’s signing-on bonuses jar with scrutiny dutySome 166 millionaires were created in the City on Wednesday. Well, strictly speaking, the fortunes of the investment professionals at the private equity firm Bridgepoint were not “created” in a single stroke. Rather, the act of listing the firm on the stock exchange crystallised the value of shares they already owned and allowed them to flog a few.But, however you view the numbers in this £2.88bn flotation, or IPO, they illustrate how private equity is challenging investment banking for the status of best-paid gig in the financial game. Continue reading… [Read More...]

Hedge fund crisis

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Hope for the best but hedge for the worst. First rule of risk management – if it can happen, it will happen. Market crashes are no problem for investors that diversify PROPERLY. I’ve been saying, writing and doing for so many years now but to repeat: only invest in alpha and hedge beta factor sensitivities away. NO ASSET ALLOCATION. Zero naive equity or credit exposure. Only short/long SKILL. Skill strategies are the ONLY suitable, prudent investment.We have seen excellent returns from great hedge funds, hard times for lower quality managers but much worse from “cheap” risk craving index funds. Skilled investors don’t always make money but they do have fewer, milder and shorter drawdowns than passive funds that don’t try to manage risk, reduce exposures or … [Read More...]

Funds of funds

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You can’t be too careful with hedge funds. We have large amounts to invest so all our managers are required to make daily visits to our conveniently located head office for performance updates. We do rigorous background checks unlike mere F3s and F2s. Initial due diligence includes managers providing a pint of blood and pound of flesh for DNA analysis. We also require their great-aunt’s, next door neighbor’s second-cousin’s original birth certificate.The required 1,000 question RFP questionnaire sorts the wheat from chaff in the swashbuckling cowboy world, that media thinks exists in hedge fund land. All trades by F3, F2 and F1 managers must be pre-authorized by our byzantine bureaucracy with approval forms to be submitted in original notarized triplicate to the … [Read More...]

Big or best fund

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Hedge fund due diligence? Many people confuse BIG with BEST. Investors are urged to put more in big companies than small companies! Why? They are even expected to lend the most money to biggest sovereign debt addicts? With hedge funds, there is almost no overlap on a list of the best firms versus the biggest. Media and consultants focus on big firms. Instead I focus on managers that will make me the most money in the future. Isn’t that the point?The AUM sweet spot for risk adjusted returns for most hedge fund managers is in the tens to hundreds of millions NOT billions. Over 90% of the world’s BEST hedge funds manage TOTAL firm assets of less than USD 1 billion. In fact I typically advise institutional … [Read More...]

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