Richard Wilson is a bestselling author, global speaker, and capital raiser focused on connecting family office investors to best-of-breed fund managers. Richard's team runs the 65,000 member Hedge Fund Group which offers the #1 hedge fund certification program, and the most frequently updated family office directory. To grab a copy of Richard's book please click here.
As the sub-prime mortgage crisis emerged, several savvy hedge fund investors made a lot of money betting that the housing bubble would burst. Now, some hedge funds are betting that housing is going to rebound soon and are positioning their funds to gain from the realization of that prediction.
Big money is starting to wager on housing.
Hedge funds run by Caxton Associates LP, SAC Capital Advisors LP, Avenue Capital and Blackstone Group LP have been buying housing-related investments, betting on a rebound. And formerly bearish research firm Zelman & Associates now predicts a housing pickup, as does Goldman Sachs Group Inc.
Other investors seem to be making the same bet. Shares of home builders are up 30% since the end of the third quarter, as measured by the Dow Jones index tracking those shares, topping a nearly 10.5% gain for the Standard & Poor's 500. Source
Tags: hedge funds, hedge funds housing, hedge funds housing boom, how to bet on a rally in housing, how to go long housing, hedge funds long housing, hedge funds short housing
Hedge funds reportedly trimmed their bullish commodities bets significantly before the biggest rally in the sector in 10 weeks. The missed rally further hurts returns by hedge funds which have, on average, had a rough time predicting the frequent swings in the market this year.
Hedge funds reduced bets on higher commodity prices to the lowest level since 2009 just as raw materials headed for their biggest weekly rally in two months.
Money managers cut their combined net-long position across 18 U.S. futures and options by 15 percent to 454,512 contracts in the week ended Dec. 20, the lowest since March 2009, data from the Commodity Futures Trading Commission show. The Standard & Poor's GSCI gauge of 24 commodities climbed 4.5 percent last week, erasing this year's declines and pushing the index toward its third consecutive annual advance.
While the S&P GSCI is 15 percent below the 32-month high reached in April, prices gained last week on signs the U.S. economy is proving resilient. Durable-goods orders rose in November by the most in four months, and jobless claims unexpectedly fell to the lowest in more than three years. Concern that shortages will emerge in commodities from copper to crude oil spurred Goldman Sachs Group Inc. to stick with a bullish outlook this month even as funds cut their holdings. Source
David Einhorn has been very vocal with his criticism of Green Mountain Coffee Roasters. Mr. Einhorn's hedge fund, Greenlight Capital, has established itself as a top hedge fund and so when Einhorn declared that his fund was shorting the company its share price took a steep dive and eventually led to an audit committee review. Einhorn has since denounced the findings of the review as a "whitewash," and recently spoke to Reuters.
In an exclusive interview with Reuters, Einhorn said he still doubts sales figures and spending plans at the company, which saw its stock soar to $110 in August on the rapid growth of its individual coffee servings or K-cups. When Einhorn revealed in October that he had been building a short position in shares of the company for weeks, the stock tanked and it effectively turned things around for his $8 billion (5 billion pounds) Greenlight Capital fund this year.
"I think everything we said in the presentation is right now as it was then -- and in many cases even more so," said the 43-year-old manager, who runs one of $2 trillion hedge fund industry's better-known long/short funds and also is an accomplished poker player.
In the interview with Reuters, Einhorn blasted the company's audit committee for conducting a "whitewash" review of the concerns he raised in an October 17 presentation entitled, "GAAP-uccino." That presentation hit Green Mountain like a tidal wave, and has sliced the stock's value in half to around $46 as of Tuesday trading. Source
Commodities Traders Leave Banks to Start Hedge Funds
Many banks are making cuts either to meet new compliance and regulation requirements or simply to eek out a profit at a tough time for the sector. For many commodities traders this has meant redundancies or even eliminating the entire commodities group for the bank. Some traders have responded by forming their own hedge funds. Are they sorry to leave banking behind? According to one new hedge fund manager, "I can't say there's anything I miss about banking. I have more freedom."
Traders in energy, metals and agriculture are opening or joining hedge funds after leaving financial firms that cut more than 233,000 jobs this year, data compiled by Bloomberg show. Departures of commodity traders from banks probably rose 10 percent this year, according to Commodity Search Partners Ltd., a Brighton, England-based recruiter. Pay for that group will drop 24 percent on average, estimates Options Group, a New York- based recruitment firm.
Financial firms are losing people as U.S. and European regulators seek to limit holdings across raw materials and ban so-called proprietary trading that uses shareholders' cash. Slowing economic growth and Europe's deepening debt crisis may crimp earnings and limit compensation for traders.
“Banks are particularly vulnerable at the moment to losing people,” said Peter Henry, New York-based head of front-office search at Commodity Search Partners, which recruits about 40 commodity traders each year. “Increasing regulations are forcing banks to defer more pay in stock as opposed to cash as well as constraining the traders' ability to trade.” source
Hedge Funds Growing Wary of China's Economic Growth
China has been the subject of largely positive economic coverage for the past years, as the country's dazzling growth grabbed hold of many investors hoping to profit off the boom. However, hedge fund investors are taking a second look at the country, wondering if it might be too good to be true as several economic indicators have suggested that China's impressive growth may be coming to a halt--or at least, slowing significantly.
The past few weeks have seen China loom large in the nightmares of many hedge fund managers still smarting from a less-than glory-filled 2011. Concerns are rising for the global outlook over the increasingly negative economic signals emanating from the country.
As the Emerging Sovereign Group, a $1bn hedge fund backed by Julian Robertson and half owned by Carlyle, one of the world’s biggest private equity groups, told its clients in a recent note: “[we have a] gathering sense that the next act of this rolling global debt crisis may well play out in the East.”
Take the most obvious barometer. The Shanghai Composite has been locked into a steady downward trajectory since April that has seen it shed over 27 per cent of its value since then.
ESG sent a team for a two week “deep-dive research trip” to China in October, an investor told the Financial Times. Source
Veteran Manager Julian Roberts Talks Hedge Funds Today
Hedge fund veteran Julian Roberts gave his take on the current state of the hedge fund industry. He highlighted one problem he sees today: too many hedge funds create too much competition among managers. However, he is very optimistic of the hedge fund industry saying "it's still the best way to run money." If you are reading this via RSS or email, please click here to watch the video.
Tags: Julian Roberts Hedge Funds, Julian Roberts Hedge Fund, Julian Roberts Hedge Fund Manager, Who is Julian Roberts, Julian Roberts Quantitative Easing, Julian Roberts Federal Reserve, Julian Roberts Hedge Fund Industry
It's always interesting to hear from hedge fund managers what their top picks are for the coming months. Seeking Alpha has looked through the recent quarterly filings of some hedge funds to see what their top stock picks are based on new positions by funds. Here are the top 5:
Microsoft (MSFT) was popular with several hedge fund managers in the third quarter. Leon Cooperman initiated a new position in the company of 1.36 million shares, while both George Soros and Donald Yacktman increased their positions in the applications software company.
Google (GOOG) was a favorite pick for George Soros in the third quarter. He initiated a small holding of 1126 shares, and he wasn’t the only hedge fund manager buying. Julian Robertson, John Griffin and Jean-Marie Eveillard each increased their holdings in GOOG in the third quarter.
Walt Disney (DIS) was on the list for both Mason Hawkins and Ray Dalio. Hawkins upped his position in the company by 29%, while Dalio nearly tripled his stake in the children’s entertainment company.
Tyco International (TYC) was a new position for George Soros and Lee Ainslie during the third quarter, with Soros opening a small 6,000-share position in the diversified machinery company and Ainslie coming in at 2.8 million shares. Jean-Marie Eveillard was keen on TYC in the third quarter as well. He upped his position by 56.34%.
Northrop Grumman (NOC), the aerospace and defense company, was on the radar for several big hedge fund managers in the third quarter. Joel Greenblatt, Jean-Marie Eveillard and Ray Dalio each increased their positions in the company by 156%, 49% and 116%, respectively. Source
Tags: hedge funds, hedge fund stock picks, hedge fund managers stock tips, hedge funds stocks, hedge fund top stocks, George Soros, Ray Dalio, hedge fund managers favorite stocks
While many hedge fund employees have seen a squeeze on their compensation, hedge fund marketers are expected to see their compensation climb by 20% on average for 2011. The “2011 Marketer Compensation Report" showed that the average hedge fund marketer took home $580,000 in 2010, meaning they are expected to make around $700,000 this year.
The survey, “2011 Marketer Compensation Report,” was conducted by human capital advisory firm Alpha Search Advisory Partners, which polled over 166 executive-level marketers across a variety of hedge funds, according to a statement from the firm.
Findings from the report show that hedge fund marketers earned an average of $580,000 in 2010, which means that the average salary for them in 2011 would increase to nearly $700,000.
According to the report, compensation levels are highly correlated with the firms’ asset flows and amounts under management. For example, marketers at firms with over $650 million in assets earned an average of 36% more than those working at smaller firms.
Findings also show that hedge funds are relying more on their marketers to not just attract capital, but to also help keep it. Source
Tags: Hedge Fund Marketer Compensation, Hedge Fund Marketer salary, Hedge Fund Marketer Compensation 2011, Hedge Fund Marketer Compensation data, Hedge Fund Marketer Compensation research, Hedge Fund Marketer Compensation survey
Hedge fund performance has been up and down throughout the year with many funds getting hit hard by the European debt crisis and the large shifts in the market. Still, hedge funds are set to close the year on a high note with subscriptions increasing in December. The GlobeOp Capital Movement Index advanced 1.55% in December.
“December closes the year on a positive note with net inflows of 1.55 percent, driven primarily by healthy subscriptions,” said Hans Hufschmid, chief executive officer, GlobeOp Financial Services.
The GlobeOp Capital Movement Index represents the monthly net of hedge fund subscriptions and redemptions administered by GlobeOp. This monthly net is divided by the total assets under administration (AuA) for GlobeOp’s fund administration clients.
Cumulatively, the GlobeOp Capital Movement Index for December 2011 stands at 141.01 points, an increase of 1.55 points over November 2011. The Index has advanced 14.40 points over the past 12 months. The next publication date is January 12, 2012. Source
Tags: hedge funds, DEcember hedge funds, hedge funds in december, hedge funds december performance, hedge fund capital movement index, hedge fund performance, hedge funds 2011, hedge funds 2011 performance
Free Video on Family Office & Emerging Fund Managers
In the following video, recorded in Zurich Switzerland, I speak about how family offices are investing in emerging fund managers. For rising hedge fund managers, family offices represent one of the most important capital sources to grow your hedge fund startup. If you are reading this via RSS or email, click here to watch the video.
If you are looking to raise capital from family offices, click here to claim your copy of the Family Office Database.
If you'd like to view more free finance training videos, visit FinanceTraining.com
Tags: Family Offices Industry, Family Offices Emerging Managers, Family Offices Emerging Manager, Family Offices Emerging Fund Managers, seeding family offices AUM, assets under management family offices
Free Video on the Growth of the Family Office Industry
In the following video, recorded in Switzerland, I speak about the growth of the family office industry. This investor is becoming a very important source of capital for hedge funds and so it is important to understand how the industry is developing. If you are reading this via RSS or email, click here to watch the video.
To learn more about this hedge fund training program which includes many videos like the one you just watched, please click here.
If you'd like to view more free finance training videos, visit FinanceTraining.com
Tags: Family Offices Industry Growth, Family Offices Industry, what is a family office, family offices, what are family offices, family office growth, family offices AUM, assets under management family offices
The average hedge fund declined about 1% last month, according to recent data from Bloomberg's hedge fund index. That's still better than most stocks performed last month as Europe's debt crisis sunk global stocks in November, but worse than October's average 2.2% gain by hedge funds.
The Bloomberg aggregate hedge-fund index dropped to 116.03 from 117.22 in October, bringing this year’s loss to 3.8 percent. Long-short equity funds, multistrategy funds and macro funds, which bet on global economic trends, declined.
“Volatility has been fierce,” said Andrew Parrillo, president and founder of Newport Capital Advisers Inc. in North Quincy, Massachusetts, which has about $200 million in assets to invest. “Hedge funds are getting a bit of a whipsaw. They really are concerned about the resolution of this impasse in Europe.”
Europe’s crisis has added to woes for hedge-fund managers struggling with market volatility and increased correlation among asset classes. John Paulson, who oversees $28 billion, lost 46 percent this year through November in one of his largest funds in part because of wrong-way bets on an economic recovery. Paulson is the industry’s sixth-biggest manager, according to data compiled by Bloomberg.
The MSCI All-Country World Index of global stocks declined 3.2 percent in November amid concern that a Greek referendum would threaten Europe’s bailout, along with record costs to insure European government debt. Source
Tags: Hedge Funds November 2011, hedge funds in 2011, hedge fund performance, how hedge funds performed in 2011, hedge fund performance index, hedge fund index, bloomberg index, hedge fund, hedge funds 2011 data
Join Us at the 7th Annual Private Equity Southeast Asia Summit!
Greetings,
My name is Richard Wilson and I want to personally invite you to a private equity conference that I will be speaking at in March. The 7th Annual Private Equity Southeast Asia Summit 2012 is a great opportunity for you to capitalize on the pre-eminent gathering of Southeast Asia-focused private equity professionals and LPs.
Private equity firms ignore Southeast Asia at their own peril; as this Summit shows, leading private equity investors have long-recognized the huge potential for returns in the region. Don't miss this opportunity to broaden your reach in Southeast Asia, meet with investors, and better understand how others are investing in the region. The event takes place in Marina Mandarin, Singapore on March 7-8, click here to learn more about the summit.
I will be delivering a speech on a topic that I have spent the last year researching in-depth: family office investment preferences. I can't think of a topic more important for private equity firms looking to raise capital and yet I rarely see GP's devoting significant time to understanding and focusing marketing efforts specifically on family offices. If you sign up to attend the Private Equity Southeast Asia Summit 2012 you will hear my talk on what family office investors look for in private equity fund managers as well as many other presentations from private equity authorities--from prominent limited partners to top-tier fund managers.
With 40 speakers already committed, and over 40 LP decision makers confirmed to attend, this summit is dedicated to providing the Southeast Asia Private Equity sector with the definitive forum to network and learn. It will enable you to understand how you can capitalize on the buoyant PE market in South East Asia.
Establish local connections within Southeast Asia’s growing markets to facilitate your entry and growth into the regions hottest sectors and industries looking for investors
Meet institutional LPs waiting to capitalize on rapidly emerging private equity investment markets in the region
Develop a deeper understanding of Southeast Asia’s often complex GP-LP and GP-investee company relationships to warrant greater success in deal sourcing, structuring and fundraising.
If you're ready to secure your seat at this valuable program then simply sign up here.
How to Raise Capital From & Work With Family Offices
While my upcoming book on family offices is being written primarily for family office executives and clients of family offices we do realize that some of you may buy the book to help you more effectively raise capital from or provide services to family offices. I have several suggestions and a resource that should help you while further respecting the time and needs of family offices.
Best Practices: My experience includes raising capital from $800M funds, $8M funds, $80B investment firms, and training over 3,000 fund managers face-to-face. This experience has shown that the following are effective practices in reaching out to family offices:
Do your homework first. Learn about the family office industry well enough to know how you fit into their world. Know who you are meeting with, what makes their family office unique, and how you can add value to their business. As part of your homework you can download our free report on family offices.
Listen. Ask questions and get to know them before pitching them about how you can help them. Nobody likes to get pitched.
Respect their time. Like you family offices professionals are very busy, and it is likely they are pitched by more service providers, fund managers, and consultants in a week than you may see in a quarter due to their status as a family office.
If you can become a thought leader in your specific niche whether it be patent litigation, institutional consulting, or something else you will eventually have opportunities and family offices coming to you.
Working With Family Offices: Family offices are relatively secretive and hard to track down at times, searching for them via Google can turn into a full time job. The resource we have created to help you connect with family offices is called the Family Offices Directory of single and multi-family offices. It is based in Excel format and includes the contact details of over 1,000 family offices. This spreadsheet of family office contact details is updated at least twice a year with fresh data and it is guaranteed to be accurate. Many institutional investment consultants, top ten investment banks, conference companies, and investment fund managers use it to help them reach out to family offices more consistently and quickly.
To learn more about this Family Offices Directory solution please visit http://FamilyOffices.com
Tags: Capital Raising Family Offices, Capital Raising from Family Offices, Family office marketing, family office capital raising, family offices capital raising, family offices marketing, hedge funds family offices
In the following video, recorded in Switzerland, I speak about the booming growth of the family office industry and trace the industry's history. The more conferences on family offices that I speak on and the more interviews I conduct with family office managers for my upcoming book, the more that I realize how important this investor is to the hedge fund industry.
I predict a continued surge in the family office industry making family offices even more important to hedge funds looking to raise capital and find new investment partners. With that in mind, you should watch this video to become more familiar with the family office industry and how it has developed. If you are reading this via RSS or email, click here to watch the video.
To learn more about this hedge fund training program which includes many videos like the one you just watched, please click here.
If you'd like to view more free finance training videos, visit FinanceTraining.com
Transcript for History of Family Offices
Hello, this is Richard Wilson coming to you from the Swiss Alps here in Switzerland. I’m actually in town to speak at a family office conference. I’m traveling from Zurich to Liechtenstein and I thought it was only appropriate to record a video here at about 10,000-feet elevation since I’m often trying to provide a 10,000-foot view of the family office industry. And today I wanted to talk to you about the history of family offices; how they got started, what’s the background behind them and how they are the way they are today.
So first of all, if you think back the word “family office” hasn’t always existed. But it really originated from thousands of years ago. If you had the king cavemen or even before that, they just look at animals and how they protect their land and protect their resources, and they’re territorial, we think back the cavemen, the biggest caveman, leader of his tribe. You know he might have had a bigger cave and more extra firewood and furs or whatever. And he probably had some protection while he was gone. He probably didn’t leave there in the open while he went off hunting or something.
From there I really think you can go to kind of the renaissance era or kind of the dark ages’ type era where people had lands and there were nobles and kingdoms. If you think about it, a noble, when he went and traveled to go off and marry some other noble’s daughter, he probably didn’t leave his land with no one there, someone was trusted to protect it.
And I recently learned from Thomas Handler, a trust in the States Executive in the family office space, actually the word “trust” and the whole concept of a trust being set up is backed during those times when somebody would appoint someone in charge of looking over their lands and belongings while there were off traveling, then they would appoint somebody else to make sure that this first person did their job. And if they weren’t doing their job there were supposed to kill them or get rid of them and replace them and have someone else who was trusted to watch over everything.
And that’s really how the word “trust” came about. And if you’re not familiar with that already, private banks were sometimes called Trust. It could be called Trust Services and Private Banking Services, and really that’s where the word trust came from when you’re setting up a trust. And it’s partially where the word trust came from. And so from there, it really evolved in the 1800s and the 1900s with big families like Rockefeller and families that made a lot of money in the oil business and the railroad business and the industrial revolution, and they started having so much money in the current financial system. It was more about paper money than it was about goods or land, and it was really about protecting and reinvesting the paper money.
And that’s when the modern family office started to really develop. It still wasn’t called the family office. Many times this was the beginning of private banks and trust services in a more modern form instead of having just somebody trusted with your assets is more of a modern form of private banking, but nobody really use the term family office. It was really private banking for very wealthy families. Late in 1800s and early 1900s, these became more popular. In the mid-1900s, the first uses of the term single family office or family office started to be used. It picked up steam a bit in the 1950s, 60s and 70s.
And in the 1970s private banking was already relatively popular, that’s when people started realizing that they could manage the wealth of 1 or 2 other families in addition to their own. And so the term family office grew in definition from managing one family’s wealth to managing a few families wealth that maybe are involved in the same operating business or a very strong long term ties. From there, the term further evolved and has resulted in a lot of confusion in the industry. Some people believe that it’s not a family office unless it serves only 1 family or 2 or 3 families at the very most but really just 1 family. Otherwise, it’s not a family office.
But the reality is that modern day, a single family office is that which serves 1 family or maybe 2 at most, and a multi-family office is a family office that serves 2, 3, 4, 5 families or sometimes hundreds of families. I just interviewed a family office that works with over 425 clients. Many various successful family offices only have 50 or 100 or 150 clients and they’re very successful in doing that because every client has $20M, $50M, $100M to manage so their assets are enormous even if they only have 50 clients many times. Many family offices require $20M, $30M, $50M or much more to join their family office. I think that’s important to know about the history of the industry and where it’s at right now in the past. You had to have more wealth. Now from $30M and $50M, it’s down to $15M and $20M, and $20M is really where most family offices require you to have that amount of money.
And really to summarize, it has always been about the protection and preservation of assets and secondarily the growth of assets and the efficient taxation and income that can come from those assets and that really has been true for the last couple of thousands years if you think about it. And it has changed the most over the past 100 years, and I think this industry is really thriving right now because people are actually getting familiar with what it means to be a family office, more people than ever are having enough wealth to use family office services and become ultra affluent. And I think that the family office trend is not slowing down at all. So I have a separate video on the future of family offices. I would encourage you to watch that.
If you haven’t been to familyofficesgroup.com I would encourage you to visit our website, and thank you for joining me today. This is Richard Wilson from the Family Offices Group coming to you from the Swiss Alps.
Tags: History of Family Offices, Family Offices history, industry Family Office, Family Office growth, what is a family office, what are family offices, family office industries, family office managers, definition family offices
Hedge Fund Investors Pull Back $11 Billion in October
In October, hedge funds investors pulled back more money than in the last two years. The diving stock market and investors fears about the current European sovereign debt problem led many hedge fund investors to withdraw from funds, totaling $11 billion in October according to recent data.
The redemptions represent just under 1% of assets in the industry, fund tracker Trim Tabs said in its report. The company released its findings based on 2,900 hedge funds. "Investors seem to be fed up with lackluster hedge fund returns," Trim Tabs said.
Indeed, the S&P 500 Index is up only 1% this year through the end of November, although the market posted big gains yesterday. For example, the Dow Jones Industrial Average is coming off its biggest one-day gain since March 23, 2009, fueled by news that a global effort to make it less costly for European banks to borrow U.S. dollars. The Dow has added 814 points over the past three sessions.
But a few days does not a rally make. Trim Tabs said funds of hedge funds shed $2.7 billion (1% of assets) in October. Hedge funds overall have taken in $103 billion since the start of 2010, while funds of funds have shed $20 billion.
Hedge fund assets, at $1.6 trillion at the end of November, are at their lowest since the beginning of 2010, "in part because of performance," Trim Tabs said. Source
Tags: Hedge Fund Investors October, Hedge Fund Investors Oct, Hedge fund investors, hedge fund investing, hedge funds investing preferences, hedge fund redemptions, hedge funds
