Meet 20 hedge-fund dealmakers who are pumping billions into the world’s hottest startups

Arielle Zuckerberg, Glen Kacher, John Curtius, and Alex Sacerdote on a blue background with money and investing icon imagery.
From left to right: Glen Kacher, Arielle Zuckerberg, John Curtius, and Alex Sacerdote.

  • For decades, hedge funds have dominated public markets.
  • Now funds like Tiger Global, D1, and Coatue are investing billions into top startups.
  • Insider lists those leading the charge into unicorn funding rounds.
  • See more stories on Insider’s business page.

It’s easy for investors to take big bets on companies like Google and Facebook. It’s much more challenging to find the fledgling startup that is set to become the next industry titan.

For decades, hedge funds have dominated public markets, through activists demanding major changes at blue-chip stocks or quants supercharging the speed of trading. Now managers are turning toward private markets, investing billions into top startups.

Managers like Tiger Global are pumping so much into private markets that traditional venture capitalists are grumbling that they can’t find any deals for their own clients, and more firms are expected to get in.

Insider compiled a list of the top 20 dealmakers at the most important shops.

Subscribe to see the full list here: 20 hedge-fund dealmakers who are beating VCs at their own game by pumping billions into the world’s hottest private companies

Read the original article on Business Insider

Billionaire investor John Paulson blasts crypto as a worthless bubble, warns SPACs are overvalued, and predicts stubborn inflation in a new interview. Here are the 14 best quotes.

John Paulson
John Paulson.

  • John Paulson said crypto is a bubble, SPACs are overpriced, and inflation is here to stay.
  • The billionaire investor outlined why interest rates could jump and the gold price might soar.
  • Paulson shot to fame after making a fortune betting on the US housing market to collapse.
  • See more stories on Insider’s business page.

John Paulson dismissed cryptocurrencies as worthless, warned the SPAC market is overvalued, and sounded the inflation alarm in the latest episode of “Bloomberg Wealth with David Rubenstein.”

The billionaire investor is best known for betting against the housing bubble and making upwards of $15 billion for himself and his clients – a wager chronicled in the book “The Greatest Trade Ever.”

Paulson reflected on his big short, explained why he’s excited about gold and credit, and offered advice to novice investors in the Bloomberg interview.

Here are Paulson’s 14 best quotes, lightly edited and condensed for clarity:

1. “Mortgage-backed securities were viewed as the safest securities next to Treasuries, and that was essentially true up until that point. What they missed was the underwriting quality had never been as poor, so the fact that they hadn’t defaulted in the past had nothing to do with whether they would default in the future.” – explaining why other investors didn’t emulate his bet against the housing market.

2. “One of our investors called me. He said, ‘Uh, John, I just got the monthly results. I think there was a mistake, it said 66%, you meant 6.6%,’ and I said, ‘ No, it was 66%.’ He goes, ‘That’s impossible, I’ve invested with Soros, with Tudor Jones, with everyone. No one’s been up 66% in a year. How can you be up 66% in a month?’ I said, ‘Well, that’s what happened.'” – Paulson’s funds ended up returning close to 800% for the year in 2007.

3. “There’s a perception in the market that this inflation is transitory. Investors bought the Fed line that it’s just temporary due to the restart of the economy and it’s eventually gonna subside. Our viewpoint is the markets are currently too complacent regarding inflation. We have inflation coming well in excess of what the current expectations are.”

4. “The area that’s most mispriced today is credit. If inflation doesn’t subside, interest rates will catch up and bonds will fall, and various options strategies could offer very high returns.”

5. “As inflation picks up, people try and get out of fixed income, try and get out cash. The logical place to go is gold, especially if it starts to rise in inflationary times. But because the amount of money trying to move out of cash and fixed income dwarfs the amount of investable gold, the supply-and-demand imbalance causes gold to rise, and the more it rises – it sort of feeds on itself. It has the potential to go parabolic.”

6. “If inflation does prove to be higher than expectations, that will result in both higher gold prices and higher interest rates. If you get those two happening at the same time, we could set up positions that could return 25- or 50-to-1.”

7. “We went through probably the worst financial crisis imaginable with COVID, in which the entire economy shut down. If it wasn’t for the very aggressive policies of the Fed and the Treasury, we could have dove into a deep recession. But by providing all the monetary and fiscal stimulus that they did, they really minimized the downturn, resulting in a very rapid recovery.”

8. “The SPAC market is overvalued. It’s not quite a bubble but it clearly shows elements of a frothy market, there’s just too much liquidity. Investing in SPACS, on average, will be a losing proposition.” – discussing the outlook for special-purpose acquisition companies.

9. “I wouldn’t recommend anyone invest in cryptocurrencies. They’re a bubble, a limited supply of nothing. There’s no intrinsic value to any of the cryptocurrencies except that there’s a limited amount. They will eventually prove to be worthless. Once the exuberance wears off or liquidity dries up, they will go to zero.”

10. “There’s unlimited downside in crypto. It’s just too volatile to short. Even though I could be right over the long term, in the short term, bitcoin went from $5,000 to $45,000 – I would be wiped out on the short side.”

11. “Invest in areas that you know well. Anyone can be lucky in a particular investment, but that’s not a long-term strategy. If you invest in areas that you don’t know, ultimately you’re not going to do well. Concentrate on particular areas that you know better than other people, and that’s what gives you an advantage to succeed in investing.”

12. “They look for get-rich-quick schemes and they buy based on stories. They chase investments that are going up, but ultimately those investments deflate and they lose money.” – highlighting a common mistake among newbie investors.

13. “The best investment for an average individual is to buy their own home.” – Paulson emphasized that homeowners generally see their properties grow in value over time, boosting their return on investment.

14. “Do what you’re passionate about. You can be successful in music, dance, medicine, physics, math – the important thing is you pursue a career in what you’re naturally passionate about. That will improve your odds of achieving success.”

Read the original article on Business Insider

The 20 hedge-fund dealmakers who are pumping billions into the world’s hottest private companies

Arielle Zuckerberg, Glen Kacher, John Curtius, and Alex Sacerdote on a blue background with money and investing icon imagery.
From left to right: Glen Kacher, Arielle Zuckerberg, John Curtius, and Alex Sacerdote.

  • For decades, hedge funds have dominated public markets.
  • Now funds like Tiger Global, D1, and Coatue are investing billions into top startups.
  • Insider lists those leading the charge into unicorn funding rounds.
  • See more stories on Insider’s business page.

It’s easy for investors to take big bets on companies like Google and Facebook. It’s much more challenging to find the fledgling startup that is set to become the next industry titan.

For decades, hedge funds have dominated public markets, through activists demanding major changes at blue-chip stocks or quants supercharging the speed of trading. Now managers are turning toward private markets, investing billions into top startups.

Managers like Tiger Global are pumping so much into private markets that traditional venture capitalists are grumbling that they can’t find any deals for their own clients, and more firms are expected to get in.

Insider compiled a list of the top 20 dealmakers at the most important shops.

Subscribe to see the full list here: 20 hedge-fund dealmakers who are beating VCs at their own game by pumping billions into the world’s hottest private companies

Read the original article on Business Insider

Talent brokers of quant trading: Top headhunters behind Wall Street’s systematic-trading and data-science hiring frenzy

wall street quant hedge fund recruiting 4x3
The hiring market for quant and data-science specialists on Wall Street is red-hot. These are the top headhunters for quant finance talent.

  • The hiring market for quant and data-science specialists is red-hot on Wall Street.
  • They’re the lifeblood of hedge funds, trading firms, market makers, and bank trading teams.
  • Insider compiled the top headhunters in the war for quant finance talent.

The market for quant and data-science specialists has perhaps never been hotter. And the technologists, researchers, scientists, and traders developing cutting-edge investment strategies and platforms aren’t just coveted by hedge funds.

They’re the lifeblood of high-frequency-trading (HFT) firms and proprietary market makers, as well as investment banks building out their systems for electronic trading and execution. They’re also coveted by Silicon Valley juggernauts, startups, academia, and the government. People working on hard-science Ph.D.s from top universities can expect the most elite institutions to start wooing them years before they defend their dissertations.

A cadre of Wall Street recruiters are at the forefront of this lucrative talent battle, and Insider assembled a list of specialists in the field.

Subscribe now to read our full list of more than 30 top headhunters at the forefront of Wall Street’s systematic-trading and data-science hiring frenzy

Read the original article on Business Insider

US hedge funds were caught off-guard by China’s massive regulation-driven stock sell-off, Goldman Sachs finds

NYSE trader
  • US hedge funds have been burned by China’s regulatory crackdown in recent months, according to Goldman Sachs.
  • The bank found that Chinese stocks were the most popular ever among hedge funds at the start of the third quarter.
  • The average China ADR has declined by more than 50% since February, according to Goldman.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

US hedge funds seem to have been caught off-guard by China’s regulatory crackdown and the ensuing sell-off in Chinese stocks like Alibaba, Tencent, and JD.com.

According to a Thursday note from Goldman Sachs, recent underperformance by US hedge funds has in part been driven by their exposure to Chinese stocks.

“One third of hedge funds in our analysis held a China ADR in their long portfolio at the start of 3Q, contributing to the recent headwinds against hedge fund returns,” Goldman explained. The bank analysed 813 hedge funds with nearly $3 trillion in gross equity positions at the start of July.

Chinese stocks have seen accelerating declines as companies across all sectors face increased regulatory scrutiny from Beijing. From tech giants like Alibaba and Tencent, to small education tutoring companies based in China, the stock losses have been large.

The regulatory crackdown started late last year after Alibaba’s Jack Ma made critical comments against several institutions in China, which ultimately led to the withdrawal of Ant Group’s highly anticipated IPO. But the losses in Chinese stock prices didn’t accelerate until this year. The average China ADR has decline by more than 50% since February, according to Goldman.

Chinese stocks most popular with hedge funds include Alibaba, which ranked seven, as well as JD.com, Baidu, Didi, and Bilibili.

“At the start of the third quarter, 33% of hedge funds in our sample held long exposure to China ADRs, suggesting funds were generally unprepared for the recent regulatory tightening,” Goldman Sachs said.

US hedge funds aren’t the only ones losing money on Chinese stocks. China’s richest tech titans have seen $87 billion of personal wealth destroyed amid the government crackdown on different industries.

Read the original article on Business Insider

Coinbase’s CFO says the company is looking to focus more on institutional clients – and lays out what services those firms generally need

coinbase direct listing

Coinbase, the world’s largest cryptocurrency exchange, is looking to focus more on institutional clients, CFO Alesia Haas said on Wednesday.

“The way that we look at it is where the money is in the world,” Haas told CNBC. “A lot of that money sits in institutional hands, whether that is in pensions or asset managers. So I think we’ll shift into more institutional money as we go forward.”

Haas also laid out what institutional firms generally look for when seeking their services.

The first step is usually for cryptocurrency custody, a service that Coinbase provides institutional firms so they can have a safe and secure way to store their digital assets, said Haas.

“They really appreciate our history of investing in security that we have not had a loss due to cyberattacks on our platforms since our inception,” she told CNBC.

From there, Haas said it moves into trading, data services, and borrow-lend products, in that order.

“We’re really building deep roots with a lot of our institutional clients across their investing needs in the crypto economy,” she added.

Among its roster of clients are Elon Musk’s SpaceX and Tesla, as well as PNC Bank, Third Point, and WisdomTree, CEO Brian Armstrong revealed on Tuesday during the earnings call. Around 10% of the top 100 largest hedge funds by AUM have also onboarded the company’s institutional product, he added.

The company on Tuesday posted second-quarter earnings that crushed analyst expectations, boosted by a volatility-spurred jump in trading volumes. The chart below shows pronounced quarter-over-quarter growth in both retail and institutional activity.

Coinbase key metrics: institutional vs retail traders

Retail investors, which pay more fees compared to institutional traders, comprised almost 95% of Coinbase’s transaction revenue in the quarter.

Coinbase’s stock rose to as much as 9% to $294 on Wednesday.

Read more: A key bitcoin lightning network developer shares how he makes $4,500 a month just in fees from running a node. He and 3 other crypto experts lay out how to run profitable nodes.

Read the original article on Business Insider

Meet 20 hedge-fund dealmakers who are beating VCs at their own game

Arielle Zuckerberg, Glen Kacher, John Curtius, and Alex Sacerdote on a blue background with money and investing icon imagery.
From left to right: Glen Kacher, Arielle Zuckerberg, John Curtius, and Alex Sacerdote.

  • For decades, hedge funds have dominated public markets.
  • Now funds like Tiger Global, D1, and Coatue are investing billions into top startups.
  • Insider lists those leading the charge into unicorn funding rounds.
  • See more stories on Insider’s business page.

It’s easy for investors to take big bets on companies like Google and Facebook. It’s much more challenging to find the fledgling startup that is set to become the next industry titan.

For decades, hedge funds have dominated public markets, through activists demanding major changes at blue-chip stocks or quants supercharging the speed of trading. Now managers are turning toward private markets, investing billions into top startups.

Managers like Tiger Global are pumping so much into private markets that traditional venture capitalists are grumbling that they can’t find any deals for their own clients, and more firms are expected to get in.

Insider compiled a list of the top 20 dealmakers at the most important shops.

Subscribe to see the full list here: 20 hedge-fund dealmakers who are beating VCs at their own game by pumping billions into the world’s hottest private companies

Read the original article on Business Insider

The 20 hedge-fund dealmakers who are beating VCs at their own game

Arielle Zuckerberg, Glen Kacher, John Curtius, and Alex Sacerdote on a blue background with money and investing icon imagery.
From left to right: Glen Kacher, Arielle Zuckerberg, John Curtius, and Alex Sacerdote.

  • For decades, hedge funds have dominated public markets.
  • Now funds like Tiger Global, D1, and Coatue are investing billions into top startups.
  • Insider lists those leading the charge into unicorn funding rounds.
  • See more stories on Insider’s business page.

It’s easy for investors to take big bets on companies like Google and Facebook. It’s much more challenging to find the fledgling startup that is set to become the next industry titan.

For decades, hedge funds have dominated public markets, through activists demanding major changes at blue-chip stocks or quants supercharging the speed of trading. Now managers are turning toward private markets, investing billions into top startups.

Managers like Tiger Global are pumping so much into private markets that traditional venture capitalists are grumbling that they can’t find any deals for their own clients, and more firms are expected to get in.

Insider compiled a list of the top 20 dealmakers at the most important shops.

Subscribe to see the full list here: 20 hedge-fund dealmakers who are beating VCs at their own game by pumping billions into the world’s hottest private companies

Read the original article on Business Insider

The hedge fund badly bruised by betting against GameStop is still struggling after ending the first half with a 46% loss, report says

Gabe Plotkin

Gabe Plotkin’s Melvin Capital Management, targeted by the Reddit army of day traders for its bearish GameStop bets, ended the first half of the year with a 46% loss, Bloomberg reported.

The New York-based hedge fund, which suffered a stunning 53% loss in January from the Reddit-trader short squeeze, gained 1% in June. But it is still struggling to recover, Bloomberg said in the Thursday report, citing sources familiar with the matter.

Melvin Capital, founded by star portfolio manager Plotkin, did manage to stage something of a comeback with a 22% gain in February. But its overall first-quarter loss stood at 49%, Insider understands.

The hedge fund got torched by the Reddit army alongside other high-profile firms that had big bets against GameStop when day traders banded together to send shares of the gaming retailer skyrocketing. When the price of a stock rises, short sellers must typically cover their positions by buying shares at that higher price.

Melvin Capital lost a chunk of its assets in the trading frenzy, ending January with $8 billion in assets, down from $12.5 billion at the start of the year. Its assets had risen to $11 billion as of June 1, the Financial Times and Bloomberg reported.

After the January hit, the fund has somewhat recovered. It is up 18% for the five months between February and June, Insider understands. It gained 5.4% in the second quarter.

The hedge fund is understood to be taking smaller-sized positions to limit its exposure to single companies. It exited its public short positions against GameStop, AMC and other stocks in the first quarter, but may have still held non-public, more traditional short positions.

Founder Gabe Plotkin has also asked a team of data scientists to comb through social media and day-trader forums for stock names of interest to retail traders, Bloomberg reported.

A spokesperson for Melvin Capital declined to comment.

Read More: Prominent market bear Albert Edwards warns that investors who prematurely bet on higher inflation are set up for further losses – and lays out the pathway to record-low bond yields

Read the original article on Business Insider

Hedge fund manager Bill Ackman’s mega-SPAC seals $4 billion deal to buy 10% of Universal Music

bill ackman
Bill Ackman.

  • Bill Ackman has agreed a deal to buy 10% of Universal Music Group for about $4 billion.
  • Ackman’s Pershing Square Tontine Holdings will remain a public company following the transaction.
  • Shareholders are set to have UMG and PSTH shares plus the chance to back a new investment vehicle.
  • See more stories on Insider’s business page.

Bill Ackman’s pitch to buy 10% of Universal Music Group (UMG) for about $4 billion has been accepted, the billionaire investor announced on Sunday. He also confirmed his intention to pursue two more multibillion-dollar deals, paving the way for fresh intrigue after seven months of speculation about his original target.

Ackman’s Pershing Square Tontine Holdings (PSTH), a special-purpose acquisition company (SPAC), will purchase the minority stake in Drake and Billie Eilish’s record label from its parent company, Vivendi. The French media conglomerate intends to list UMG on the Euronext Amsterdam Exchange in September, and PSTH shareholders are set to receive their shares in the music group before the year ends.

“When the transaction is completed, our shareholders will directly own 10% of the common stock of an independent, publicly traded, large capitalization, extraordinary business with a superb management team,” Ackman and his team wrote in a presentation about the deal.

Unusually, PSTH will remain a public company after the transaction, and seek to deploy as much as $2.9 billion on another business combination. Ackman and his team are already searching for a compelling target, they said.

PSTH shareholders are set to receive UMG shares, continue to own PSTH shares, and will also be handed warrants to buy shares of a special-purpose acquisition rights company (SPARC) for $20 a pop. The SPARC, which hasn’t been approved by regulators yet, could be armed with up to $10.6 billion to pursue a separate business combination.

Ackman’s SPARC is similar to a SPAC, but it doesn’t let investors buy its shares until it has struck a deal. As a result, it doesn’t tie up their capital while it searches for a business combination, and also escapes the pressure of having to close a transaction within two years.

Read the original article on Business Insider