In a controversial move Connecticut is offering one of the world’s largest hedge funds, Bridgewater Associates, $22 million in exchange for the firms promise to invest $525 million in the state through job creation and facilities upgrades.
The incentive is part of the Connecticut Department of Economic and Community Development’s First Five program, which is designed to stimulate investment by major employers in the state.
“I still think that if we look at this from a taxpayer perspective and I view myself as a fiduciary of their dollars, that they’re going to get a great return on this investment” said Catherine Harris, the Commissioner of DECD.
The $22 million includes $2 million for job training, $3 million for renewable energy development, and $17 million in a loan, in the form of bonds. In exchange Bridgewater must keep the 1,402 jobs they already support at their Westport headquarters plus create 750 more jobs by 2021.
Also part of the deal is the company will be eligible for $30 million in Urban and Industrial Sites Reinvestment Tax Credits over the next ten years.
Republicans were not pleased with the deal, saying that it is not necessary for the government to give money to a company that manages $150 billion in assets globally.
“People have just had enough with ridiculous decisions that government makes and this is beyond the pale,” said state Senate Minority Leader, Republican Len Fasano.
Attendees of the lavish SkyBridge Alternatives (SALT) Conference are starting to endorse Donald Trump for president, not just with words, but with money, too. This is despite the fact that Trump has accused hedge fund managers of “getting away with murder” when paying (or not) their fair share of taxes. Trump is also unhappy with the manager’s belief in free-trade.
The SALT conference is run by Anthony Scaramucci’s SkyBridge Capital. Scaramucci is one of the first of his kind to get behind Trump, explaining to his fellow managers that he is expecting Trump to radically change his campaign style. Others who are leaning towards supporting Trump said they expect he will most likely gather experienced advisors around him to help him navigate the complex world of the US economy and business.
Part of the leanings towards Trump is the fear that Clinton will need to go to the left to attract supporters of Bernie Sanders. Trump supporters and others did agree that he would have to make drastic changes to his style if he does manage to win the White House.
Scaramucci said that Trump is “playing to an electoral base that he knows he needs to garner to win the nomination.” He added that, even though some of Trump’s comments seem alarming to financiers and businessmen, his comments are “100 percent premeditated” tries to “tweak” the establishment.
“He walked it back, as he does a lot of these crazy statements. He is dismissing the establishment, academia, ivory tower, snobby, salon-oriented bourgeois, and he is tweaking them by saying this nonsense, to the great enjoyment of the middle and lower class.”
Jokes abounded at SALT when Trump was discussed. Energy investor and hedge fund manager T Boone Pickens announced his support for Trump at SALT, saying he is “willing to take a chance.” Pickens added that “People will say, well hell yes, you’re 88, you won’t be here if it’s a mistake.”
Pickens said that Trump’s entry into politics was not so different than starting a business: “People are fed up and he seized on an opportunity. He is a man with a new idea and a big mouth,” he said.
Pioneer Wealth Partners Director Jonathan Blattmachr recently spoke at the third annual estate planning event hosted by the Ave Maria School of Law at Northern Trust in Naples, Florida. Blattmachr, speaking at the opening event, which had 60 financial analysts and tax planners in attendance, said that trusts should be an important part of financial planning.
“Using trusts is one of the most important things an average person can do,” said Blattmachr, an attorney based in New York.
“It protects funds from claims from creditors, divorcing spouses and the government.”
Blattmacher has had some high-profile clients under his wing in the past, including J. Paul Getty, Jackie Onassis and Nelson Rockefeller. He has written or co-authored five books and over 400 articles on estate planning and taxes. Blattmacher was also a chairman of the trusts and estates law division of the New York State Bar Association.
Divorce is a huge issue when it comes to estate planning, says Blattmacher. In a country where almost 50 percent of marriages end in divorce, it would be negligent to not protect assets from an ex-spouse in order to protect family funds.
There are also a large variety of trusts, so an estate planner should be consulted every time a new life event takes place, such as the birth of a baby, a marriage, a disability or divorce.
“You want to make sure that there’s an orderly disposition of your assets,” Blattmachr said.
The Sohn Investment Conference is one of the year’s most respected conference for the
hedge fund investor and wannabes. Fund managers of means come to support a charity and share their predictions for the coming year. However, it seems the crystal balls from last year were not operating at peak performance, with only two of the managers picking winners. And even those investors with winners were underwhelmed by the losers they also picked.
Here is a brief run-down of how our most respected hedge fund gurus made out since last year’s Sohn Conference:
David Einhorn of Greenlight Capital- Going bearish, Einhorn picked Pioneer Natural Resources Co, a fracking company. It did OK, trading at about 2 percent less since Einhorn’s call. Too bad Pioneer was his main bet rather than one of his other calls, such as Whitling Pertoleum which lost 70 percent of its value since last year.
Keith Meitster of Corvex got one right and one not so right. He predicted that Yum! Brands Inc, would eject its China business, and they did. Unfortunately, it did nothing ot improve the share price, which is lower now than when he made the call.
Leon Cooperman made some good picks_ Alphabet Inc is up 29 percent, Dow Chemicals is up 2 percent, and Priceline is up 6 percent. Unfortunately, some of his other picks did not fare as well, with one of them down 90 percent. (Gulf Coast Ultra Deep.) His total winnings were 0.54 percent. Better than losing, we guess.
Another hedge fund is closing shop as Aurora Investment Management announced it will return $5.4 billion in investor funds to its client base during the next several months. The decision comes after an attempt at a takeover of the firm fell apart.
Chicago-bases Aurora was to be sold to 50 South Capital Advisors by Aurora’s parent company Natixis Global Asset Management, but the deal was nixed. Roxanne Martino founded Aurora over 28 years ago, and invests in a variety of hedge funds.
“After considering a variety of strategic alternatives, we have decided that it is in the best interests of our investors to return the capital in our funds in a manner that will treat all investors fairly and equitably,” Aurora told clients in the letter dated April 22.
The hedge fund industry has been taking a beating in recent months as more investors seek to cut expenses and invest directly instead of paying high fees to managers.
“Allocations to the industry have declined and new strategies have evolved in the 28 years since Aurora was founded, which has made it more difficult to maintain the scale needed to best serve investors,” spokesman for Natixis Ted Meyer said.
The country’s largest pension fund for municipal employees, the New York City Employees’ Retirement System, is preparing to vote on Thursday to divest its investments out of hedge funds. It is expected that a majority of the pension fund’s trustees will choose move its money out of risky and high-fee-burdened hedge funds to funds which pay better risk-adjusted returns with more modest management fees.
“Hedge funds are charging exorbitant fees for high-risk and opaque investments,” said Letitia James, the city’s public advocate, and one of the trustees of the pension fund. “As financial stewards of public employees’ money, we must invest in responsible and secure assets,” she said.
Other public employee pension funds have also begun to review their stakes in hedge funds. In California and Illinois large pension funds have already divested out of hedge funds. In New York the funds which represent teachers, firefighters, police and the board of education are considering similar action.
The giant fund represents 300,000 city employees with $55 billion in assets. Close to $1.4 billion of that total is invested in hedge funds. Thursday’s vote comes in the wake of a study done by the American Federation of Teachers which found that of the 11 public pension plans examined, including the one in NYC, each fund paid, on average, $81 million in annual fees. The study also found that the portion of the investments staked in hedge funds performed poorly compared to the investments made to other vehicles other than hedge funds.
Various financial firms have recently received awards for their exemplary performance. The Carpinteria Sanitary District received the Certificate for Achievement in Financial Reporting; Anchin Block received the award for Best Global Accounting Firm (its sixth consecutive year). Grant Thornton LLP is being honored by the Tony Awards, serving as the “Official Professional Services Partner.”
Being recognized as a top firm – in whatever industry – gives a company a sense of pride and accomplishment. Despite the fact that Anchin Block has received this particular award now six times in a row, this level of excellence is something they work toward at all times. Indeed, according to Jeffrey Rosenthal, Partner-in-Chief of the firm’s Financial Services Group, they work very hard for their clients. “To say that we go beyond the expected is not just a catchphrase; it is what we actually do.”
In an article on Findsome & Winmore, Lauren Bowes concluded that: “Winning an award is a sign that your company is doing something right. From a marketing prospective, this can be an invaluable tool.”
Asian hedge funds have had their worst year so far in 2016 as a group. Yet there are a few funds that are showing profits despite the harsh financial climate.
One of those is Triada Capital. This Hong Kong-based firm includes among its founders an all-women team of credit investors from CQS Management. This group has posted a 4.5 percent gain in its credit long-short hedge fund so far this year. The fund, known as Triada Asia Credit Opportunities began trading in June, and uses event-driven strategies. January’s gain was 2.2 percent, and 2.3 percent for February.
Head of research Anna Tham and CIO Monica Hsiao founded Triada Capital in May, 2015 after working for the $14 billion London-based hedge fund CQS. The third founder, Jean-Marie Barreau, is CEO and COO. She ran hedge fund managed-account platforms for Deutsche Bank AG and Societe Generale SA.
Rubinstein, who was involved in the development of the iconic Apple products the iMac and the iPod, will be joining Bridgewater in May, 2016 along with Eileen Murray as co-CEOs. Bridgewater was launched by Ray Dalio, and now manages about $154 billion.
The hire is in keeping with a recent trend to hire technically oriented executives by financial firms in order to take advantage of their computer engineering skills which are becoming ever more crucial on Wall Street.
“We needed to bring in an exceptional co-CEO with a strong tech focus to supplement the existing leadership,” Bridgewater wrote in a note to its clients. “Technology is pervasively important at Bridgewater, especially since one of our major strategic initiatives in the coming years is to continue building out the systemized decision-making that has been so successful in our investment area and to extend it to our management as well.”
The FengHe Asia Fund, led by Matt Hu, thoroughly beat its peers last year by shorting China-related stocks and putting its assets in Vietnam and the Philippines. Deng Jiewen is part of the five-member team that manages FengHe, said that the economies of Southeast Asia are doing a better job of running their economies than their giant rival, China. Deng said that Chinese stocks are going to have a hard time in the coming months and beyond due to falling earnings. His fund climbed by 20 percent this past year while Asian stocks crashed.
The “Risk and Return” fund, the translated name of FengHe which is Mandarin, is one of just a few hedge funds utilizing investments in Asia’s smaller markets. One manager, John Foo of Kingsmead Asset Management, a Singapore-based hedge fund, said that Vietnam was the “brightest star in a dark night” in Southeast Asia.
“We remain quite positive about the Vietnamese economy and corporate earnings growth,” FengHe’s Deng said. “The Philippines has a strong demographic and economic structure. The country is becoming more friendly to foreign capital now.”