Hedge funds see turmoil as opportunity
Managers eye investments on Trump moves
The legions of money managers who met in Las Vegas at the year’s flashiest hedge fund event seemed a world apart this week from the meltdown at t he White House that’s engulfed the nation. But for many at the Bellagio hotel, the nonchalance masked an understanding that turmoil begets opportunity. It’s time to make some money.
“What is interesting is that it’s caused market volatility and that’s not altogether bad,” CQS U. K.’s Michael Hintze said. “Am I outraged and worried? No.”
The SkyBridge Alternatives Conference, known as SALT, was a more sober affair than in past years. The speaker lineup was dominated by credit managers — the only strategists that have been consistently making money lately, said Ray Nolte of host SkyBridge Capital, founded by Anthony Scaramucci.
Some attendees confided that they had showed up to gauge the “Scaramucci factor,” how the event had changed after its frontman sold SkyBridge to take a job in President Donald Trump’s White House. The position never materialized.
If there was a sense of discomfort in the crowd, it came from the fact that the industry, which is trying to prove its worth to investors after years of underperformance, is changing. During a presentation, Alphabet Inc.’s Eric Schmidt was asked repeatedly about the impact of technology on finance and jobs. The audience breathed a sigh of relief when he declared: “Will there be more of you or less of you in 50 years? More.”
And will Scaramucci, now unemployed, be part of the industry again? When talking to billionaire Bill Ackman about his l ong- ago wager on McDonald’s Corp., Scaramucci quipped, “That’s going to be my next job actually. I’m going to be flipping burgers.”
Here’s what some of the highlights from the big name participants:
SAM ZELL, EQUITY GROUP INVESTMENTS
The billionaire said the “cacophony” of i nformation about Trump should be treated with some skepticism. Revelations don’t suggest he is unfit to hold office. Liquidity in commercial real estate market has declined, making it hard to find buyers. Amazon, a hedge fund favourite, is a “cult” that isn’t rationally priced.
JIM CHANOS, KYNIKOS ASSOCIATES
He’s shorting Irish drugmaker Mallinckrodt PLC and pharmacy- benefit manager Express Scripts Holding Co. A “murky alliance” between the companies has led to “performance- enhancing drug prices” that may not be sustainable, Chanos said. The Democratic supporter added: markets are hoping that Vice President Pence replaces Trump as president.
DAN LOEB, THIRD POINT
Loeb said his f i rm is using artificial intelligence to analyze big data and now employs about a half- dozen quants.
BRUCE RICHARDS, MARATHON ASSET MANAGEMENT
Former Wall Street executives Steven Mnuchin and Gary Cohn are needed more than ever in the administration to provide a steady hand, Richards said. He’s prepared to take advantage of distress in the U. S. retail sector once high-yield bonds fall further.
MARK MOBIUS, TEMPLETON EMERGING MARKETS
He said the Trump drama won’t impact the developing world because “it’s very much localized and the impact on places like China, India, Brazil, etc., is not going to be very, very big.”