Investing intelligence, ideas and strategies to build wealth, with insights from the most successful investors of today and tomorrow
If there’s anything the pandemic taught us, it’s to take some time to think. But in the lightning-speed world of finance and investing, “thinking” can often seem like a luxury.
So when I was tasked with spearheading a Delivering Alpha newsletter based on CNBC’s 11-year-old eponymous conference, I reflected on what the event does best: Serve as a vehicle to disseminate some of the industry’s boldest ideas, contrarian thinking and unique commentary, pulled out through journalistic probing.
In other words, help smart people learn from other smart people.
While I can’t take credit for the creation of the conference, I would like to borrow that mission for the purposes of this newsletter. As a reporter for CNBC, I cover professional investing — hedge funds, private equity and asset management. With all the complexity, all the competition, all the creativity, the industry is one that — above all else — requires maximum knowledge absorption. To be candid, that’s my favorite part of the job. My second-favorite is sharing that intel with our audience.
Through this newsletter, we want to help take some of the ephemerality out of the high-stakes ideas out there. Every other Monday, we’ll dig into a topical subject, molded by someone with a strong-minded take. Our inaugural newsletter below focuses on fees, with a keynote “Sharpe Angle” interview with Christopher Ailman, the CIO of CalSTRs, the second-largest public pension fund in the U.S.
We may also send additional alerts to inform on an interim basis.
A special welcome to those previously subscribed to the Big Data Investor newsletter. As a reminder, you can manage your CNBC newsletter subscriptions by clicking on “Manage Newsletters” at the bottom of this email.
Our goal is to help you learn from some of the key voices in the industry. At the very least, we hope to make you think.
“Knowledge is like money: To be of value, it must circulate, and in circulating, it can increase in quantity and hopefully, in value.” – Louis L’Amour.
The Sharpe Angle: Head of the second-largest U.S. public pension fund says managers rarely added value
“We seldom saw managers consistently add value net of fees.”
The hedge fund model has been under attack for decades, at least since the financial crisis, but assets under management continue to surpass records. Christopher Ailman oversees the nation’s second largest public pension fund, CalSTRS, with $300 billion dollars under management. Here he is on the high price of delivering alpha. – Ritika Shah
Two and twenty is long dead
According to HFR, in the fourth quarter of 2020, hedge funds charged an average of 1.4% management fee and 16.4% performance fee. That’s down from the 1.6% management fee and 19% performance fee that was commonplace a decade prior.
Delivering Alpha Headlines
Big thoughts from the big money
While bitcoin’s wild volatility continues to test investors, Paul Tudor Jones believes that in the long run the cryptocurrency will protect his wealth and it has a place in his portfolio just like gold and cash. “I like bitcoin as a portfolio diversifier. Everybody asks me what should I do with my bitcoin? The only thing I know for certain, I want 5% in gold, 5% in bitcoin, 5% in cash, 5% in commodities… Over time it’s a great diversifier. I look at crypto as a story of wealth,” Jones recently told CNBC. -Yun Li
The JPMorgan chief revealed recently that the bank has been “effectively stockpiling” cash rather than using it to buy Treasuries or other investments because of likely persistent inflation. “We have a lot of cash and capability and we’re going to be very patient, because I think you have a very good chance inflation will be more than transitory,” Dimon said recently during a conference. The biggest U.S. bank by assets has positioned itself to benefit from rising interest rates, which will let it buy higher-yielding assets, he said.
Reddit traders have been piling into one stock after another this year as speculative trading shows no signs of slowing down. But even if the trend is here to stay, the length of each meme stock’s run can be fleeting, a CNBC analysis of market data shows. On average, Reddit stocks’ runs lasted nine trading days from the start to their first big drop during the initial frenzy in January, and this short-lived pattern is seen again in the recent mania in AMC, Clover Health and others.