Alternative Thinking: 9.9.15

Alternative Thinking: 9.9.15

Garrett Baldwin

We're ramping up the Alpha Pages in September to build a site dedicated to Real Talk on Alternative Investment, Business, and Finance. Part of that is discovering a number of different stories that you might have missed. But you're busy... and we're busy. So here's today's top Alternative Investment news in just five quotes a day. 

1. “They all want to make money, and lots of it.”

As our Vice Index editor Andrew Zatlin explains, marijuana investment continues to heat up, although it has no chance of going up in smoke any time soon.

With the pot puns aside, Colorado and Washington’s cannabis industries are thriving, while tax revenues are filling state coffers with solely needed revenue.

With this success as a blue print, cannabis investors have set eyes on a new state – and the profits could be even bigger.

On November 3, voters in Ohio will decide whether they want to legalize marijuana. Already, a small number of investors are betting big on legalization and seeking to carve out market share right now. As The Columbus Dispatch explained last week, a diverse roster of wealthy investors is looking to “make money, and lots of it.”

Going down the list, it’s the most random Who’s Who compilations you might read in your lifetime. Writes the Dispatch’s Alan Johnson: “There is a doctor, a developer, an NBA legend, a fashion designer, a knight, an ex-boy-band member, a professional football player, and two relatives of a U.S. president.”

American marijuana enthusiasts sure have evolved over the last several decades. It’s easy to recall the days when this list only comprised a preppy man with an ascot, a wealthy redhead, a geek with glasses, a stoner who couldn’t stop eating sandwiches he found in haunted houses, and a talking dog – all of whom were living in a van and solving mysteries.

Still, not everyone remains supportive of the pending Ohio measure to legalize it. Some have argued that the few investors who are bankrolling this legalization bid to the tune of $20 million could be creating a production monopoly, leaving smaller players and less wealthy investors on the sidelines for this potential boon.

Here’s the roster of America’s next top pot investors, and a breakdown on what could be a long battle ahead, even after November’s vote... 

2. “Sixteen weeks at the end of 2008 make this look like a walk in the park.”

Here’s a non-story that became a story for sheer gossip reasons.

The New York Post took to Page Six on Monday to speculate that Citadel head Ken Griffin was buying another $200 million in Manhattan real estate ahead of his pending divorce settlement. And while someone might say this is a real estate story about New York’s rich and famous, it’s clear that Griffin’s divorce is becoming theme in News Corp publications. 

This latest story seems dedicated to wrapping whatever content can be gathered from an unnamed source on Griffin’s real estate prospects to again print his recent quote comparing his divorce to the 2008 Financial Crisis. 

While Griffin has said this his estranged wife has attempted to humiliate him since their separation went public, he recently said that the aftermath of Lehman Brothers’ collapse has made this messy process look like a stroll through Central Park. 

“Sixteen weeks at the end of 2008 make this look like a walk in the park,” he told the Wall Street Journal, another News Corp publication. 

Page Six strangely doesn’t report it when Griffin donates $10 million to the Chicago Metropolitan Art Museum or what really matters to investors – to whom he is accountable during what is likely a difficult period in his personal life: Citadel’s flagship fund was up 1% in August during a month that many titans struggled and several funds closed.
Divorce stories aren’t entertainment, nor are they news… When you’re using unnamed sources to discuss someone’s personal life, you’re no longer in journalism.

You’ve become Star Magazine…  Wait… who founded that magazine again?

3. “Get out as soon as possible [otherwise] it will take 10 to 15 years before you get your money back.”

One real estate market that isn’t looking too hot in the near future is down under.

Paul Nugent of Wakelin Property Advisory issued a dire warning this week, one shared by several other real estate experts, about the health of the property market in Melbourne, Australia. The city announced new regulations to try to limit the height of future buildings to 24 floors – with a few exemptions – in order to limit new construction. But that isn’t going to stop a “correction” for apartment prices across the city.

The correction is coming, according to BIS Shrapnel managing director Robert Mellor. The downturn is projected to start next year. By late 2018, investors can expect to see a dwindling supply of tenants. By 2019, Mellor anticipates a 15% to 20% correction in the Melbourne housing market.

Nugent, however, issued the dire warning that this downturn could take 10 to 15 years to correct itself. He continued: “It’ll take a generation until things settle down to a point where the apartments have a genuine value.”

Meanwhile, in New York City… The Real Deal is wondering whether New York City truly is the best safe haven for real estate investors… The answer might surprise you.

4. “Real Estate Attractive Despite Pricing Concerns.” 

Things look a lot brighter in the broader private equity real estate markets – particularly in terms of investor sentiment. That is the conclusion of the Preqin September Real Estate Spotlight for September 2015. It’s a must read, and it includes a wealth of important graphs and charts, and more invitations to real estate conferences than one could possibly visit unless they lived in an airport.

Long story short: Private equity investors are very content with real estate as an asset class, and 90% say that the asset class has met or exceeded their expectations over the last 12 months. Just 9% were disappointed.

But the one data point that turns one’s attention is the chart about the level of annualized returns that investors anticipate from private equity real estate.

Apparently, 1% of surveyed investors anticipate a 22% or greater return annually.

This is clearly an outlier. And if they’re not satisfied with their fund, perhaps they should call the Federal Correctional Institution Butner Medium and ask for Prisons Register #61727-054… Inmate Madoff might have a few great investment idea that never provide negative returns and promise such lofty annual payoffs.

You can download Preqin’s latest real estate report, right here.

5. “They're vicious horrible miserable human beings.”

It wouldn’t be a LinkedIn or Alpha Pages post on Wednesday without mentioning the Republican frontrunner Donald Trump.

A few weeks ago, Donald Trump explained to Reuters why he dropped Carl Icahn’s name in during a campaign speech and then went on to say that most good business negotiators are "vicious, horrible, miserable human beings."

Trump quickly tacked away from implying that he was including hedge fund legend Carl Icahn into that mix. He even went onto say that he’d consider putting Icahn in charge of handling trade negotiations between the United States and Japan should Trump win the White House.

Trump had even floated the idea of making Icahn the Treasury Secretary, something Icahn expressed no interest in doing in June.

But it brings up an interesting question for our audience…

Who else in the world of finance would you appoint to a place on the President’s cabinet or other top jobs in Washington?

  • Bill Ackman as head of Health and Human Services?
  • Jamie Dimon for Secretary of the Treasury?
  • How about Jim Cramer as White House Spokesperson?

Sound off on Twitter @GarrettBaldwin.

Meanwhile, be sure to read Doug Litowitz’s insight into Donald Trump’s financial conditions.

Editor’s Note: Remember, the Alpha Pages is currently boosting its contributor list, and we’re actively seeking content from individuals with original views on the alternative investment industry. Be sure to visit the Alpha Pages right here and scroll to the bottom for a list of topics that we are regularly covering and take part in the conversation.

Also, be sure to check out today’s top hedge fund and private equity news at FinAlternatives.com, and visit FuturesMag.com for daily updates on all things trading.

Finally, be sure to read the first issue of MODERN TRADER, which was recently nominated for the prestigious EDDIE award for the BEST ISSUE in the Business and Finance category.

See you tomorrow…


About Garrett Baldwin

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Garrett Baldwin is the Managing Editor of the Alpha Pages and the Features Editor of Modern Trader. He has covered the financial markets since the onset of the RBS collapse in 2007. An author and Baltimore native, he earned a BS in journalism from the Medill School at Northwestern University. He holds an MA in Economic Policy (Security Studies) from The Johns Hopkins University, an MS in Agricultural Economics from Purdue University and will finish an MBA in finance from Indiana University in 2015.

Twitter: @garrettbaldwin, @alphaeditors, @TheAlphaPages


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