The Daily Alpha: Alternative Thinking on Financial Media, Goldman’s Gamble and the SALT Conference

The Daily Alpha: Alternative Thinking on Financial Media, Goldman’s Gamble and the SALT Conference

Garrett Baldwin

“Goldman Sachs’ planned exchange traded fund tracking the 50 most popular hedge fund stocks might be better shorted than purchased.”

This morning in the Financial Times, Stephen Foley dissects the mood at the recent SALT Conference in Las Vegas and the fleeting hopes that hedge funds will be able to receive longer lockup periods for capital.

Having read financial news reports from SALT, one would have thought it was a bunch of people sitting around a table fretting about the global economy, looking for any blanket to hide under when Donald Trump’s name wasn’t uttered.

Having attended SALT for the first time, I had a completely different takeaway, particularly when Mark Cuban offered the quote of the week: “Anyone who thinks the American Dream is dead is an idiot.”

It was a remarkable event, with an incredible message of self-determination, the importance of charity, the ability to find successful investments in any environment, winning, and – of course – critical networking opportunities among like-minded people.

Sports analyst Jay Williams kicked off the event in an interview with an inspiring message about life in the years following a motorcycle accident that derailed his NBA career.

The event raised money for multitude of charities like The Reeve Association, which has helped four paralyzed individuals overcome remarkable odds through innovative technologies and allowed them to stand and move their limbs again.

From the press coverage, you would have thought it was just a bunch of rich people standing around in circle feeling sorry for themselves.

But this wasn’t just a financial conference.

Admiral James Stavridis provided insight on U.S. cyber threats, while former Mexican President Felipe Calderon and filmmaker Matthew Heineman discussed the horrors of the cross-border drug trade and solutions to this national problem.

One would think the press would report on those as well… but that’s not the state of financial journalism these days. They wanted sound bites instead – and they found a few to feed the daily lust of clickable headlines. Of course – days later – these quotes are already forgotten.

SALT is an Agora – a forum of ideas that transcended mere politics and discussions about “carried interest.”

When the real messages of charity, personal reliance, hard work, and critical thinking – lessons that need to be shared… lessons that have no shelf life… are ignored by some national media members.

Had the press not been invited – it would have been billed as a secretive meeting of hedge funds.

Given that they were, they simply reported on the wrong things, because that’s what people in this profession do these days.

“If I was to draw an analogy to where we are today, comparatively speaking, to where we’ve been in the past, I think we’re in March or April 2007 in the context of the credit and equity markets.”

That’s Kyle Bass speaking at the 2016 SALT Conference.

The Hayman Capital founder famously shorted the housing market in 2008, and is now raising concerns about the global economy.

Leon Cooperman, Paul Brewer and Ken Tropin also chimed in on a panel during the event.

Julia La Roche at Yahoo Finance offers some key quotes from the event. 

Just in case that something does happen in the global economy, be sure to hold on to this article. That way, when someone at CNBC says that “no one saw this coming” when talking about the next financial crisis, you can quickly retrieve this insight.

“It’s a winner-take-all world. It’s important for me to be No. 1."

That’s Ken Griffin, speaking about the importance of culture at the SALT Conference.

In a conversation with Anthony Scaramucci, the event’s host and the CEO of SkyBridge Capital, Griffin discussed how he built Citadel. It was a talk we covered at SALT the other day at FinAlternatives, and really hit home. The culture at Citadel has helped it recruit and maintain some of the top talent in the industry. It was all built on a pretty simple philosophy.

Instead of marrying himself to a specific strategy, Griffin built a platform that would attract the best people possible. From there, he would delegate.

Anyway, that lesson didn’t quite make the front pages. Instead, New York Magazine has dug into a report last week by Institutional Investor that showed Griffin was the world’s top paid hedge fund manager for the second year in a row last year. He earned roughly $1.7 billion.

So how did he accomplish this? NY Mag says one word: leverage.

"There is no doubt that we are in the first innings of a washout in hedge funds and certain strategies."

That’s the infamous “washout” comment from Daniel Loeb’s April letter to Third Point investors.

The statement comes just weeks after Institutional Investor points out in a May 10 survey that half of hedge funds lost money in 2015. Ouch.

“I'd put Bill 'in charge of revitalizing the economy.”

Finally, that’s Democratic frontrunner Hillary Clinton – making the two-for-one speech again on the campaign trail. She wants to put her husband in charge of the U.S. economy – because she says that he knows something about revitalizing it.

Well, I wasn’t aware that Bill Clinton was running for Federal Reserve chair… or president.

Exit questions: What is she planning on doing for four years?

Shouldn’t the presidential candidate be in charge of revitalizing the economy?

That’s all for today. We’re finishing up our next issue of Modern Trader.

Be sure to pick up a copy of our latest edition “The Issues With Hedge Funds,” which features an interview with Skybridge CEO and SALT founder Anthony Scaramucci, a breakdown on the Brokaw Act, and a wealth of actionable trading insight.


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