New Fund Launching with Backing from Soros’ Sons

November 26, 2017 James Heinsman Hedge Fund News

A former money manager from the George Soros family office, Santiago Jariton, is making plans to start a hedge fund primarily focused on stocks in Latin America. The main backing for the launch will be coming from two of Soros’ five children, Jonathan and Robert.

Jariton, who is 37, started with Soros in 2005, and in 2014 became the head of Latin America equity investments at Soros Fund Management, until this past May. The plan is for the new fund to open in February 2018 with a maximum of $250 million AUM with a large junk from the Soros brothers. The new fund will be called Emerging Variant.

The fund will open offices in New York, Buenos Aires and Sao Paulo, trading securities from Argentina, Brazil and Mexico.

Emerging market investments have been trending recently, with investments topping out at a record $223 billion during the third quarter of 2017. That represents a growth of 11 percent from last year. Of the 1,145 hedge funds that invest in emerging markets, only 10 percent are invested in Latin American stocks. Latin America is leading in growth among the emerging market strategies, with 10 percent growth in Q3.

Last June Gerorge Soros’ eldest son Robert left his position as chairman and president of Soros Fund Management, so he could spend more time managing his own money at the Soros family office. Five years ago, Jonathan established his own, connected family office, JS Capital.


Emerging Markets hedge funds, George Soros, Latin America, Santiago Jariton, Soros Fund Management,

Hedge Funds Can’t Complain This Year

November 18, 2017 James Heinsman Hedge Fund News

As the stock-market continues its upward march, hedge funds are reaping the benefits. Hedge Fund Research Inc. reports that hedge funds, on average, are having their best year since 2013.

Hedge funds have been in the dog house in recent years, taking a lot of slack for charging high fees despite lackluster returns. This year less people are complaining and are happy to pocket their higher earnings, despite the continued high fees.

On closer look, however, compared to equity benchmarks like the S&P 500 Index, hedge funds are still lagging behind. The S&P is up so far this year by 15.7 percent, while hedge funds’ average return barely got to 6%.

The best strategies for funds in 2017 were health care and technology. Through September the S&P Tech Index rose by 26%, and the Bloomberg Barclays US Aggregate Total Return Value Unhedged investment grade bond fund returned 3.1%.

Funds in it for the short term fared the worst, with short-bias funds losing 8% and energy and basic materials funds fell by 5%.


Hedge Fund Research Inc, S&P 500, S&P Tech Index,

Aksia’s New Partnership: Supporting Schools

November 11, 2017 James Heinsman Hedge Fund News

In conjunction with a Brooklyn Middle School, the research and portfolio advisory firm Aksia has begun an initiative which seeks to impact students in a number of ways, including through the creation of development of interactive after-school programs. For the 2017-18 academic year, the school – MS 582 – will reap the benefit of Aksia’s involvement through an expansion of their chess program, resulting in greater student participation, and even professional coaching from ChessNYC.

The benefits of chess playing in schools are numerous and over the years Chess NYC has become known as a leader in chess education.  Chess NYC focuses on the sport and fun aspect of the game and provides opportunities for children from beginners to championships in its programs.

Other educational initiatives taken by Aksia include the company’s Lunch & Learn Series, whereby every week staff members as well as industry experts from the community are invited to take part in the current discussion.




Aksia, Chess NYC,

Bitcoin Boom Boosts Bill Miller’s Fund into the Stratosphere

November 6, 2017 James Heinsman In the News

Superstar fund manager Bill Miller loaded his MVP 1 fund with bitcoin this year, and has seen mind-bending growth of 72.5% so far this year.

Miller is known for beating the S&P 500 for 15 years straight when he worked for Legg Mason, until the 2005 recession cramped his style. In August 2016, after 35 years with Legg Mason, he jumped ship and founded his own firm, Miller Value Partners, or MVP. Last year his fund was only 5% composed of bitcoin. This year, however, after buying up the cyber-currency at an average price of $350 each, his portfolio is now made up of about 30% bitcoin. Considering that Bitcoin is now selling for $6100 each, a 1600% mark-up, the fund is doing quite well, thank you very much.

Although Miller told the Wall Street Journal that at those prices he isn’t buying anymore bitcoin, he would be willing to “put 1% of my liquid net worth in it here” if he didn’t already own a considerable pile of the digital currency.

According to Forbes Miller invested 1% of his net worth in bitcoin three years ago.

Miller’s flagship fund, MVP 1 has $154 million AUM, and has flown through the roof with a 72.5% growth spurt this year. The S&P 500 grew by 15%, and the HFRI Fund Weighted Composite Index, a measure of hedge fund performance, was up 5.9% up until the end of 3Q this year.

Not everyone is equally excited by the expansion of bitcoin. Although the number of funds with a focus on digital currencies is now at 124, nay-sayers like Howard Marks of Oaktree Capital told investors last September that bitcoin is a “speculative bubble.”


Bill Miller, bitcoin, Legg Mason, MVP,

Bannon Vows to Bust Billionaire Republican Supporter Singer

October 30, 2017 James Heinsman In the News

According to a report from Axios, Steve Bannon, the ex-White House Chief Strategist and owner of ultra-right-wing Breitbart News, told President Donald Trump he was going to go “off the chain” to destroy Paul Singer. Singer is the head of hedge fund Elliot Management, and a major donor to Republican causes and candidates.

This news follows another report that a conservative website which is backed by Singer-The Washington Free Beacon- hired a company called Fusion GPS to look for negative information on a number of Republican candidates for president, including Trump.

Fusion GPS is the group that created the Russia dossier, the infamous document that says that Trump conspired with Russian officials to influence the results of the presidential election in 2016. According to the New York Times Hillary Clinton’s campaign also paid for part of the research that is included in the dossier.

Singer was also a major contributor to the “Never Trump” movement which gasped for air and then went out during the presidential campaign. Since the story in the NYTimes appeared, Breitbart News has been producing a steady stream of attacks on Singer, calling him a “globalist,” and also attacking politicians who have taken money from Singer.


Axios, Donald Trump, Elliot Management, Fusion GPS, Paul Singer,

Dalio Says US Economy Not So Rosy Just Under the Surface

October 24, 2017 James Heinsman Economic Barometer

Ray Dalio, founder and head of the world’s largest hedge fund, took a deep dive into the inner workings of the US economy, and did not like what he saw there.

Dalio, CEO of Bridgewater Associates, which manages $160 billion, posted on LinkedIn, the social media business networking site, his findings on the current state of the US economy, and it looks scary.

He begins by dividing the US economy into two broad categories: the 40% at the top, and the 60% at the bottom. The reason he divided up the economy this way is to more easily see that the headlines we are reading everyday are describing a robust, growing economy, the truth is something quite different. To get a more accurate view, one must see what is happening with the 60% at the bottom. The following bad news is taken straight from Dalio’s message on LinkedIn:

  • Real incomes have been flat to down slightly for the average household in the bottom 60% since 1980 (while they have been up for the top 40%).
  • Those in the top 40% now have on average 10 times as much wealth as those in the bottom 60%. That is up from six times as much in 1980.
  • Only about a third of the bottom 60% saves any of its income (in cash or financial assets).
  • Only about a third of families in the bottom 60% have retirement savings accounts—e.g., pensions, 401(k)s—which average less than $20,000.
  • For those in the bottom 60%, premature deaths are up by about 20% since 2000. The biggest contributors to that change are an increase in deaths by drugs/poisoning (up two times since 2000) and an increase in suicides (up over 50% since 2000).
  • The top 40% spend four times more on education than the bottom 60%.
  • The average household income for main income earners without a college degree is half that of the average college graduate.
  • Since 1980, divorce rates have more than doubled among middle-aged whites without college degrees, from 11% to 23%.
  • The number of prime-age white men without college degrees not in the labor force has increased from 7% to 15% since 1980.

Dalio includes a warning that the “stress between the two economies” will “intensify over the next 5 to 10 years” due to inevitable demographic and technological upheavals.

Not knowing the differences between the two economies has caused the Feds to raise interest rates, a move Dalio believes is a mistake. Taking the average of the unification of the two very different economies could “lead the Federal Reserve to judge the economy for the average man to be healthier than it really is.” He added that this could lead the Fed to implement “an inappropriate monetary policy.”

“Because the economic, social, and political consequences of an economic downturn would likely be severe, if I were running Fed policy, I would want to take this into consideration and keep an eye on the economy of the bottom 60%,” Dalio noted.


Bridgewater, Bridgewater Associates, Ray Dalio,

Bridgewater Losing Another Top Exec

October 15, 2017 James Heinsman In the News

Bridgewater Associates, the world’s largest hedge fund, is saying good-bye to marketing head Parag Shah, who “recently agreed to step aside,” according to a Wall Street Journal report.

Shah has been with Bridgewater, which controls $160 billion, since 2002. He will stay on the payroll during a “period of transition.”

It is not a shock that Shah is leaving. Top leadership at Bridgewater has been in flux over the past few years, with five chief executives at the firm since early in 2016.

Bridgewater became famous on the success of its “Pure Alpha” fund, which was the most successful such fund in the history of the industry. The fund used a strategy which combined multiple uncorrelated return strategies which are leveraged to maximize returns, while simultaneously lowering risk.

Ray Dalio is the founder of Bridgewater. He published a book in September, 2017 entitled “Principles: Life and Work.”


Bridgewater Associates, Parag Shah, Ray Dalio,

Tilson Closing Kase Capital Management

October 2, 2017 James Heinsman Company Spotlight

Kase Capital Management, run by well-known fund manager Whitney Tilson, is closing its doors as returns don’t meet expectations.

At its best the fund managed $180 million, a comparatively smaller fund considering the $3 trillion invested in this space. Yet the fund has been watched over the years as Tilson appeared on several TV shows and even made some highly noticed market predictions.

“It was a hard decision, but the right one,” Tilson said in an email Thursday explaining his decision to close shop.

“I expect that most of my work will continue to be in the investment field, as I still love it and am confident that I can put my energy and 18 years of experience to good use,” he said.

Tilson added that he will most likely stick to managing his own assets.
He also said that he takes no comfort from the fact that many other managers have decided to shut down their funds in recent days, finding it increasing difficult to beat the market.

This year, broadly speaking, hedge funds went up by 5.5% through August. Total funds invested in this market equal about $3.1 trillion. But investors shrank the money in hedge funds by about $70 billion last year, while money going in came to only about $1.2 billion.
In addition, the total number of funds available has been growing smaller, with exactly 9,691 now, compared to 10,142 in 2013. That is a loss of 4.4% of funds over three years.
In his letter to his clients announcing his decision, Tilson said he regretted his funds did not perform better.

“If I were managing only my own money, the fund’s recent results wouldn’t bother me quite so much. But investing and running a money management business are two very different things, and reporting sustained underperformance to you was making me miserable,” he said


Kase Capital, Whitney Tilson,

Women-Run Funds Outperforming Those Managed by Men

September 25, 2017 James Heinsman In the News

According to the HFRX Women Index, a list that examines the success (or lack thereof) of hedge funds run by women, revealed that women-run funds outperformed male-run funds by 2.5 times. This finding is one more bit of evidence that the hedge fund sector, which has been labeled as “male, pale and stale,” could use more women portfolio managers.

Women-run funds returned on average 9.95% during the first seven months of 2017, while a broader grouping of funds returned 4.81% for the HFRI Fund Weighted Composite index.

Head of personal investing at Legal & General Investment Management, Helena Morrissey, is wary of the figures, since HFRX data looks like it was collected in a shorter period. But she added that other research has confirmed that women are “at least as good as men” when it comes to investing.

“We definitely need more women in fund management, because we bring slightly different approaches to analysis and risk. Our diversity is complementary,” she said.

In one study done at the University of California, Berkeley, which examined 35,000 households from 1991 to 1997 with large investments, men earned annual risk-adjusted net returns that were 1.4% less than those earned by women. The difference was due to men’s penchant for trading more often.


Helena Morrissey, HFRX Women Index, Legal & General Investment Management, UC Berkeley,

Hedge Funds Looking to Metal to Pad Their Portfolios

September 19, 2017 James Heinsman Hedge Fund News

Metals are doing well these days, reaching some of their highest prices in six years.
After years of little growth, investors are expecting to see further rises in prices as part of a general trend of prices for industrial metals in reaction to production cuts to shrink a supply glut.

Production cuts came a bit too late for some specialist metals hedge funds, which were forced to close due to the oversupply. Among those that closed were Apollo Global Management and Hall Commodities.

The market is also responding to China’s new environmental measures. China is the second-largest economy in the world, and the single largest consumer and producer of industrial metals. As a polluting industry, the manufacture of metals has been curtailed in China, thus contributing to the resolution of the glut crisis.

“We’re seeing renewed interest in metals for a number of reasons … including portfolio diversification and six years of a bear market,” said Gerardo Tarricone, founder at Arion Investment Management.

Hedge funds with significant bets on metals have reaped at least 4% in the 12 months until August 2017. Although some managers are excited by the results, others are proceeding with more caution.

“I have always looked for somebody that could add alpha in the metal space but find it difficult, ” said one hedge fund manager.


Apollo Global Management, China, glut, Hall Commodities, Industrial metals,

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