• GCM Grosvenor to Go Public Link https://t.co/fusFdcpiOz
    Institutional Investor Mon 03 Aug 2020 20:15

    In a sign of the times, GCM Grosvenor will become a public company through a SPAC.

    The Chicago-based alternative investments firm is planning to go public by merging with a special purpose acquisition company in a deal valued at $2 billion. The 50-year-old firm has $57 billion in assets in private equity, infrastructure, real estate, credit, and absolute return investments.

    “We have long valued having external shareholders and we wanted to preserve the accountability and focus that comes with that,” Michael Sacks, GCM Grosvenor’s chairman and CEO, said in a statement. 

    GCM Grosvenor will combine with CF Finance Special Acquisition Corp, a SPAC backed by Cantor Fitzgerald, according to an announcement from both companies on Monday. After the company goes public, Sacks will continue to lead GCM Grosvenor, which is owned by management and Hellman & Friedman, a private equity firm. Hellman & Friedman, which has owned a...

  • Christian Super Replaces Longtime CIO Link https://t.co/PhiEX4YgbV
    Institutional Investor Mon 03 Aug 2020 19:40

    Australia’s Christian Super has hired Mark Rider from Australia and New Zealand Banking Group to replace the fund’s longtime chief investment officer.

    Rider, who previously spent seven years at ANZ Wealth and Private Banking, will succeed Tim Macready, according to a statement from Christian Super Monday. Macready, the fund’s CIO since 2005, will transition into a full-time role at Brightlight Group.

    Christian Super, which manages AUD$1.6 billion (about $1.1 billion) in assets, invests based on its religious beliefs. According to its website, this means that the fund avoids companies that profit from gambling, abortion pills and contraceptives, stem cell research, and tobacco manufacturers. It also limits the amount it invests in companies that produce and distribute alcohol and cannabis.  

    “Mark is a highly qualified and experienced investment leader, and his appointment will underpin Christian Super’s strong...

  • Why Did a Hedge Fund Manager Worth $700 Million Take a $630,000-a-Year Job Managing an Oil Fund? Link https://t.co/adxQ0F2i2v
    Institutional Investor Mon 03 Aug 2020 17:00

    At 3:00 in the afternoon on Thursday, November 14, a small group of the world’s most powerful people prepared to board two chartered airplanes in two separate European capitals.

    They were headed for Philadelphia for a weekend-long event that had been several years in the making for its creator, Nicolai Tangen, the Norwegian founder of one of Europe’s most successful hedge funds, London-based AKO Capital.

    “You are all exceptional,” Tangen wrote in the program for the event. “You all want to extend your range and open your minds. But, like me, you may not always have sufficient time in your daily lives to do this, which is why I have had to whisk you away to learn not only from some of the world’s most inspiring speakers and professors, but also from each other.”

    He called it the “dream seminar.” The 150 attendees included psychotherapist Esther Perel, former U.K. Conservative Party leader William Hague, celebrity chef Jamie Oliver,...

  • Nicolai Tangen’s sovereign wealth soap opera. Link https://t.co/4CCxkaBklJ
    Institutional Investor Mon 03 Aug 2020 14:35

    At 3:00 in the afternoon on Thursday, November 14, a small group of the world’s most powerful people prepared to board two chartered airplanes in two separate European capitals.

    They were headed for Philadelphia for a weekend-long event that had been several years in the making for its creator, Nicolai Tangen, the Norwegian founder of one of Europe’s most successful hedge funds, London-based AKO Capital.

    “You are all exceptional,” Tangen wrote in the program for the event. “You all want to extend your range and open your minds. But, like me, you may not always have sufficient time in your daily lives to do this, which is why I have had to whisk you away to learn not only from some of the world’s most inspiring speakers and professors, but also from each other.”

    He called it the “dream seminar.” The 150 attendees included psychotherapist Esther Perel, former U.K. Conservative Party leader William Hague, celebrity chef Jamie Oliver, and...

  • The Hedge Fund Sweet Spots Link https://t.co/xO1kqTKkr5
    Institutional Investor Fri 31 Jul 2020 20:17

    Macro and relative value strategies offer the best opportunities in hedge funds as the economy remains shaken by the pandemic, in the view of JPMorgan Chase & Co.’s alternatives investment group. 

    Funds in these categories could produce gains of at least 10 percent, according to Jamie Kramer, the head of the alternative solutions group at J.P. Morgan Asset Management. They are now offering the best mix of risk and reward as they tend to protect portfolios when markets head south, and do well in rebounds, Kramer explained during a July 30 media briefing.

    “All they need is this sweet spot of volatility of between 20 and 25,” as measured by the VIX index, she said. The VIX, which closed at 24.76 on July 30, had spiked above 80 in mid-March as stock markets crashed amid intensified fears tied to the Covid-19 pandemic.

    [II Deep Dive: As Robinhood Investors Pounced, Hedge Funds Bailed] 

    Hedge funds lost 3.4...

  • Notre Dame’s Endowment Parts With Two Senior Investors Link https://t.co/C7JyMP43ZL
    Institutional Investor Fri 31 Jul 2020 20:12

    For the first time in many years, the senior ranks at Notre Dame University’s investment office are in flux.  

    Rick Buhrman and Paul Buser left this month as investment directors after spending 14 and 11 years, respectively, on the endowment’s public equity team. Buhrman had once been seen as the presumptive heir to take over from Malpass, according to a source close the organization.

    Recently retired CIO Scott Malpass confirmed the moves Friday in emails to Institutional Investor.

    Jason King is now head of the public equity portfolio, according to Malpass. “He is outstanding!” Malpass wrote.

    Malpass, a titan of the industry, surprised many earlier this year by revealing plans to retire and hand over control to veteran team member Mike Donovan. Malpass and Donovan are the same age; they were roommates at Notre Dame in the early 1980s, per the Wall Street Journal. 

    Under Malpass’s 32-year tenure,...

  • Updated with more details: Hedge Fund Manager Crispin Odey Charged With Indecent Assault Link https://t.co/2brlpp6Bar
    Institutional Investor Fri 31 Jul 2020 18:17

    Crispin Odey, one of the U.K.’s most prominent hedge fund managers, has been charged with indecent assault over an alleged incident that took place in 1998, according to the U.K.'s Crown Prosecution Service. 

    Odey, who founded Odey Asset Management in 1991, faces a single charge under the Sexual Offences Act of “indecently assaulting a woman over the age of 16” in the summer of 1998. The news first appeared in the Evening Standard newspaper. The alleged incident happened in London’s posh Chelsea neighborhood, where Odey owns a home, according to the report. 

    Odey is due to appear in Westminster Magistrates Court court on September 20, according to a CPS spokesman. 

    “The allegation is denied and I will strongly contest this matter,” Odey said through a spokesman in an email to Institutional Investor.

    Odey has amassed a fortune — and notoriety — over the years for his massive macro bets, which have led...

  • ‘Clients Are Kind of Cringing’: Why Insiders Say OCIO Marketing Needs to Change Link https://t.co/JKYqqFLM5Y
    Institutional Investor Fri 31 Jul 2020 18:17

    Outsourced chief investment officer firms once sold themselves on strong performance and access to alternative investments.  

    But client needs are changing. Private equity’s long lockup periods are no longer attractive, and OCIOs haven’t outperformed, according to industry insiders. Even as client needs morph, some OCIO firms are stuck in their old marketing ways.  

    Search consultants say that needs to change. Here’s why: A wave of new clients is coming, as an increasing number of institutions are considering hiring OCIO firms, recent research from Cerulli Associates showed.  

    One search consultant, Brad Alford of Alpha Capital Management, said some of the OCIO firms he works with are still trying to sell themselves on access to hedge funds and private equity firms.  

    “Clients are kind of cringing,” Alford said, adding that they are worried about being locked into private equity funds for...

  • Hedge Fund Manager Crispin Odey Charged With Indecent Assault Link https://t.co/QfBfLN9ocO
    Institutional Investor Fri 31 Jul 2020 15:17

    Crispin Odey, one of the U.K.’s most prominent hedge fund managers, has been charged with indecent assault over an alleged incident that took place in 1998, according to the U.K.'s Crown Prosecution Service. 

    Odey, who founded Odey Asset Management in 1991, faces a single charge under the Sexual Offences Act of “indecently assaulting a woman over the age of 16” in the summer of 1998. The news first appeared in the Evening Standard newspaper. The alleged incident happened in London’s posh Chelsea neighborhood, where Odey owns a home, according to the report. 

    Odey is due to appear in Westminster Magistrates Court court on September 20, according to a CPS spokesman. 

    Odey declined to comment when contacted by Institutional Investor.

  • Private Equity’s Answer to a Frozen Deal Market Link https://t.co/F0BQAZL6fI
    Institutional Investor Fri 31 Jul 2020 14:27

    Covid-19 isn’t stopping private equity firms from buying new businesses. 

    True, traditional deals are down dramatically. In the first half of the year, activity was down 63 percent in the Americas region, and 36 percent globally. The slowdown in deals was driven by buyers and sellers not being able to agree on a new price tag, the inability to easily travel and meet management, and scarce financing, according to EY’s newest quarterly report on private equity, infrastructure and private credit. 

    But private equity firms have just shifted their gears, taking more minority stakes in companies and buying non-core businesses carved out from large conglomerates, strategies they might have shunned a year ago. Minority stakes represented 23 percent of total deals in the first half of 2020, up from 11 percent last year, EY said in the study published Friday. 

    “Although investors are encountering challenges like deal pricing,...

  • 2020 Could Be the Biggest Year Ever for Secondaries Fundraising Link https://t.co/aVZMOi0Fz0
    Institutional Investor Thu 30 Jul 2020 21:16

    The secondaries market has been flooded with record levels of cash, as investors sought to capitalize on what they see as a buyer’s market for private equity stakes.

    According to Preqin, a provider of private markets data, the 11 secondaries funds that closed in the first half of 2020 raised $44 billion — far surpassing 2019’s full-year total of $26 billion raised across 26 funds.

    “This exceptional capital total is partially motivated by the expected impact of Covid-19, as 89 percent of those funds closing in H1 2020 secured capital above their initial targets — a sign of solid investor demand,” Preqin said.

    The other main driver behind the mid-year fundraising total was the closure of several mega funds, including the largest secondaries fund ever raised, Ardian’s ASF VIII. The fund closed in June with $19 billion in commitments — “smashing its $12 billion target,” Preqin said.

    “With other mega secondaries funds currently in...

  • Second-Quarter Earnings Show How Major Managers Are Coping With Choppy Markets Link https://t.co/mrr0EML40D
    Institutional Investor Thu 30 Jul 2020 20:41

    Three asset management giants reported their second-quarter earnings Thursday, revealing how the market drop — and rebound — has impacted their businesses.  

    The second quarter was kind to Apollo Global Management: the firm’s assets under management surpassed $400 billion for the first time. But for the Carlyle Group and Man Group, assets were tougher to hold onto.  

    Meanwhile, levels of dry powder remain high, but fee-related earnings by and large declined.  

    Apollo’s total assets under management grew by nearly $100 billion during the second quarter, according to its presentation. Sixty percent of Apollo’s total assets under management are invested in permanent capital vehicles. 

    But this was not the case for others. Carlyle’s assets under management have dropped one percent so far this year, to $221 billion. However, its credit business’ assets under management grew 1 percent year to date,...

  • The 50 Percent Female Portfolio Management Team That’s Trouncing Its Benchmark Link https://t.co/bDk0DU3cvZ
    Institutional Investor Thu 30 Jul 2020 17:16

    Kathryn Koch, co-head of the fundamental equity business at Goldman Sachs Group’s asset management unit, spends a lot of time digging around the social aspects of companies.

    Her team, which oversees about $60 billion in assets globally, seeks to invest in businesses with strong cultures that include gender diversity. These characteristics provide companies a competitive edge — and for GSAM, alpha.

    “It will unlock shareholder value,” Koch said in a phone interview. “We’re really attuned to this because our investing team is highly diverse.” 

    About half of the portfolio managers in Goldman Sachs Asset Management’s fundamental equity group are women, well above the industry average, according to Koch. Her team has attracted about $4.5 billion in net inflows this year, with 89 percent of GSAM Fundamental Equity strategies outperforming benchmarks on a gross-of-fees basis through June 26.

    Companies that don’t meet Koch’s...

  • One of the Best Market Neutral Funds Is Run by a Robot Link https://t.co/yE5dl8X7Z9
    Institutional Investor Thu 30 Jul 2020 16:41

    A market-neutral strategy powered by new artificial intelligence techniques has beaten its human peers by multiple return and risk measures in this year’s market downturn, one of the most volatile environments ever for stocks.

    Castle Ridge Asset Management’s market-neutral strategy is up 12.1 percent, before fees, year-to-date through the end of June, according to a letter obtained by Institutional Investor. That compares with the Standard & Poor’s 500 stock index, which lost 4 percent over the same period, after recovering from a historic drop of 30 percent.

    Since inception in October 2019, the Castle Ridge strategy returned 16.3 percent before fees, beating SPX, an ETF tracking the S&P 500, which delivered 4.2 percent. It also outperformed the HFRI Equity Market Neutral Index, which lost 5.7 percent from October through June. 

    Castle Ridge’s market- and peer-beating performance also comes as quantitative funds in general...

  • One of the best market neutral funds is run by . . . a robot. Link https://t.co/aKp7ZihOu4
    Institutional Investor Wed 29 Jul 2020 22:40

    A market-neutral strategy powered by new artificial intelligence techniques has beaten its human peers by multiple return and risk measures in this year’s market downturn, one of the most volatile environments ever for stocks.

    Castle Ridge Asset Management’s market-neutral strategy is up 12.1 percent, before fees, year-to-date through the end of June, according to a letter obtained by Institutional Investor. That compares with the Standard & Poor’s 500 stock index, which lost 4 percent over the same period, after recovering from a historic drop of 30 percent.

    Since inception in October 2019, the Castle Ridge strategy returned 16.3 percent before fees, beating SPX, an ETF tracking the S&P 500, which delivered 4.2 percent. It also outperformed the HFRI Equity Market Neutral Index, which lost 5.7 percent from October through June. 

    Castle Ridge’s market- and peer-beating performance also comes as quantitative funds in general...

  • More Institutions Will Turn to OCIOs After ‘Challenging’ 2020, Survey Finds Link https://t.co/42WYXGw2RV
    Institutional Investor Wed 29 Jul 2020 20:50

    The volatility and disruption brought by the Covid-19 pandemic may cause more asset owners to consider offloading at least parts of their portfolios, according to new research from Cerulli Associates.

    The research firm surveyed asset management professionals specializing in requests for proposals about what strategies investors were likely to target in the wake of the pandemic. Outsourced-CIO services were seen as one of the most likely beneficiaries, with 67 percent of surveyed professionals anticipating an increase in RFP volume for OCIO mandates.

    Similarly, 72 percent predicted increased demand for multi-asset class products, while 56 percent expected to see more RFPs for liability-driven investment strategies, which have been popular with corporate plan sponsors as a way to manage pension risk. All three types of strategies give asset managers more discretion over asset allocation decisions.

    [II Deep Dive: OCIO Firms Faltered...

  • These bets are paying off for short sellers Link https://t.co/JtggwbALpx
    Institutional Investor Wed 29 Jul 2020 20:50

    Short-sellers that invested in illiquid companies headquartered in countries with low credit ratings outperformed during March’s market crash, according to new research.

    Those companies saw a 10 percent drop in addition to the market’s average decline during the four weeks following February 24, when stocks began falling, found researchers from the University of Mannheim, Deutsche Bundesbank, and Erasmus University Rotterdam.  

    “We think the story is that these companies made a bet on the ability of the government to offer help to illiquid companies to survive,” said Stefan Greppmair, a researcher at the University of Mannheim. 

    Greppmair conducted the study with Stephan Jank, a researcher at Germany’s Deutsche Bundesbank, and Esad Smajlbegovic from Erasmus University Rotterdam.

    The research adds to a growing body of academic work looking at the “crucial role of cash and short-term liquidity” during the early...

  • How a disgraced former @iimag All-American star analyst build @businessinsider, arguably the world’s most powerful financial website (Sorry, @business…) Link https://t.co/TFpVYLvwva
    Institutional Investor Wed 29 Jul 2020 18:15

    Shortly after Amazon CEO Jeff Bezos headlined a $5 million equity round in the scrappy young media brand Business Insider in 2013, its editor and co-founder, Henry Blodget, jumped on a commercial flight to Seattle, squeezed his lanky frame into a coach seat, and set off to pay homage to his new angel investor. 

    It was an intoxicating moment for Blodget, a onetime star Wall Street analyst whose career in the financial industry ended in disgrace when, in 2003, he settled fraud charges related to several companies he had analyzed during the late-1990s tech bubble.

    By 2013, a decade had passed, and Blodget’s days as an analyst were arguably best remembered for his bullish views on Amazon, whose stock price he predicted in 1998 would rise from $240 to $400 a share — which it quickly did. 

    Amazon now trades north of $3,000, and Blodget’s Amazon call is seen on Wall Street as one of the most prescient in the history of technology....

  • ICYMI: Volatility trades — which have caused major losses at hedge and pension funds alike — are the toxic subprime mortgages of the Covid Crash. Link https://t.co/Y5GM9WhPjK
    Institutional Investor Wed 29 Jul 2020 18:10

    Malachite Capital Management embarrassed its hedge-fund rivals for years before facing its own fatal humiliation. 

    In the gossipy and arcane world of volatility trading, just about everyone knows, and has an opinion on, everyone else. And in 2014, Malachite founders Jacob Weinig and Joe Aiken started making the others look bad.

    Weinig and Aiken — a confident pair of former Goldman Sachs guys, which may be redundant — said yes to exotic trades with Wall Street banks, while their competitors studied the what-ifs and frequently balked at what they found. Malachite led the pack in insuring banks against infinite losses during an extreme stock-market crash, all in exchange for tidy premiums. The firm also borrowed money from banks — sometimes the same ones — to make far more of these trades. As a result, those tidy premiums became competition-topping returns and marketing gold.

    The hedge fund raked in hundreds of millions of dollars...

  • Small Endowments and Foundations Fall Behind in the Pandemic Link https://t.co/mLb31PWAsF
    Institutional Investor Wed 29 Jul 2020 17:45

    Large endowments and foundations in the U.S. beat smaller ones in the first quarter, reversing last year’s performance trend as a result of having different investment strategies heading into the pandemic, according to a study by Bank of New York Mellon Corp. 

    Endowments and foundations managing more than $1 billion are significantly more exposed to alternatives assets, while smaller ones have higher allocations to equity and fixed income, BNY Mellon said in a report on its findings. As the industry lost an average 10.46 percent in the first three months of this year, large endowments and foundations outperformed their smaller peers by 1.93 percentage points.

    Larger allocations to alternative assets such as private equity appear to have provided a cushion during the stock market crash in the first quarter, according to the report. But further declines may be coming as private equity-owned companies aren’t shielded from a downturn —...

  • “@businessinsider wants to be better than all of them and more beloved than all of them and have more subscribers than all of them and have more impact on the world than all of them.” Link https://t.co/PfRj0uwzQY
    Institutional Investor Wed 29 Jul 2020 15:30

    Shortly after Amazon CEO Jeff Bezos headlined a $5 million equity round in the scrappy young media brand Business Insider in 2013, its editor and co-founder, Henry Blodget, jumped on a commercial flight to Seattle, squeezed his lanky frame into a coach seat, and set off to pay homage to his new angel investor. 

    It was an intoxicating moment for Blodget, a onetime star Wall Street analyst whose career in the financial industry ended in disgrace when, in 2003, he settled fraud charges related to several companies he had analyzed during the late-1990s tech bubble.

    By 2013, a decade had passed, and Blodget’s days as an analyst were arguably best remembered for his bullish views on Amazon, whose stock price he predicted in 1998 would rise from $240 to $400 a share — which it quickly did. 

    Amazon now trades north of $3,000, and Blodget’s Amazon call is seen on Wall Street as one of the most prescient in the history of technology....

  • Hedge Funds Still Struggling to Win Back Investors Link https://t.co/jHJQyNCF8C
    Institutional Investor Wed 29 Jul 2020 13:45

    Hedge funds just delivered their best quarterly return in over a decade — but so far investors aren’t rushing to commit fresh capital.

    More than two thirds of hedge fund mandates issued by allocators in the second quarter were for investments of $50 million or less, according to Preqin, which tracks alternative investments. “Hedge fund investors were cautious,” the firm said in its second-quarter report on the industry. 

    The same thing happened in the first three months of 2020, with 67 percent of planned allocations amounting to $50 million or less. But larger mandates became less common in the second quarter, Preqin said.

    While about 22 percent of mandates announced in the second quarter were for commitments of at least $100 million, all of them fell below $300 million. In the first quarter, by comparison, about 9 percent of mandates issued by investors were for allocations of $300 million or more.

    “Overall sentiment...

  • .@hblodget was banned by the finance industry. So, instead, he build a financial media empire at @businessinsider Link https://t.co/TzsqxIAqmj
    Institutional Investor Wed 29 Jul 2020 12:00

    Shortly after Amazon CEO Jeff Bezos headlined a $5 million equity round in the scrappy young media brand Business Insider in 2013, its editor and co-founder, Henry Blodget, jumped on a commercial flight to Seattle, squeezed his lanky frame into a coach seat, and set off to pay homage to his new angel investor. 

    It was an intoxicating moment for Blodget, a onetime star Wall Street analyst whose career in the financial industry ended in disgrace when, in 2003, he settled fraud charges related to several companies he had analyzed during the late-1990s tech bubble.

    By 2013, a decade had passed, and Blodget’s days as an analyst were arguably best remembered for his bullish views on Amazon, whose stock price he predicted in 1998 would rise from $240 to $400 a share — which it quickly did. 

    Amazon now trades north of $3,000, and Blodget’s Amazon call is seen on Wall Street as one of the most prescient in the history of technology....

  • Venture Capital Makes Talent Unaffordable for Start Ups’ Competitors Link https://t.co/TxkQk0rQux
    Institutional Investor Wed 29 Jul 2020 11:45

    Assistant finance professor Linghang Zeng noticed a few years ago just how much computer programmers seemed to be getting paid. 

    “The salaries in IT went up quite dramatically in the last decade or two,” Zeng observed. “When programmers go out to find jobs, they are typically going to have multiple offers. Naturally, they ask those organizations to compete on pay.” 

    The modern economy needs more tech workers, yes, but it’s not frenetic Cisco-versus-IBM bidding wars for fresh CalTech grads that’s driving up labor prices, Zeng said.

    Venture capital plays a major role.

    Zeng, a Babson College assistant finance professor in Boston, recently published a study analyzing VC funding’s effect on labor competition.

    Plenty of attention — popular, professional, and academic — goes to parsing product competition: How much better is an Uber ride than a yellow cab? What’s the value of a prechopped Blue Apron delivery over...

  • If Culture Matters, Should Your Asset Managers’ Political Donations Matter? Link https://t.co/9DOTWRmIgg
    Institutional Investor Wed 29 Jul 2020 00:04

    “Culture matters.” 

    How many times have you uttered this phrase when talking about your own company or your manager due diligence process? 

    Asset managers certainly recognize this and loudly tout their own cultures as being essential to their success. Asset allocators — and especially investment consultants — cling to this phrase as if it had totemic power, ascribing to a manager a mystical ability to generate alpha. 

    Willis Towers Watson, for example, writes, “In the competitive world of generating alpha, we believe culture is a unique ingredient and the bedrock on which a competitive advantage is sustained over the long term.” But in spite of its importance, the firm admits, “evaluating [a manager’s] culture is not easy. It can require countless hours speaking to a firm’s leadership and staff, in addition to data gathering and analysis to create a robust view of the firm.” 

    Which takes us, inevitably, to...

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