THE DAILYALTS PLAYBOOK

February 12, 2020

Today, the DailyAlts Playbook talks about the Rise of Bernie, the Plight of Tesla Bears, and the Surge of Ponzi Schemes.

PRIME OVERVIEW

Pitchers and catchers report to camp Wednesday, which offers some reminder that warmer weather will eventually find itself returning to the Northeast. That said, the Baltimore Orioles’ roster looks like Lou Brown’s Cleveland Indians in Major League, so I’ll be more focused on the markets.

This morning, investors are shrugging off coronavirus fears again. Even though Fed Chair Jerome Powell said that coronavirus was a great threat to the global economy, it appears that no one is listening. The Dow Jones is up more than 100 points. Stocks are hitting new records. And we saw another big bounceback in the Asian markets.

Once again, I’m still limited due to the germ factory that is my child’s Montessori school. Today, we’ll try a much simpler format. Let me know what you think of the streamlining at Info@DailyAlts.com.

MORNING MOMENTUM

SLIPPING: The hedge fund industry lost 0.18% in January, according to the Barclay Hedge Fund Index compiled by BarclayHedge. The S&P 500 Total Return Index, meanwhile, was more or less break-even with a 0.04% loss in January. eVestment, however, put the monthly loss at -0.22%.

$12 BILLION: That’s how much 15 hedge fund managers collectively earned last year. Bloomberg Billionaires Index says that five of them earned $1 billion each: Chris Hohn, Jim Simons, Ken Griffin, Steve Cohen, and Chase Coleman.

TAX TALK: Those billions would be taxed heavily under any presidency of Sen. Bernie Sanders (I-VT), who won the New Hampshire Primary on Tuesday. South Bend mayor Pete Buttigieg came in second, while Sen. Amy Klobuchar finished in third. A weak performance by Andrew Yang drove him to suspend his campaign. Meanwhile, former VP Joe Biden’s campaign looks cooked.

WARNING: Ex-Goldman CEO Lloyd Blankfein warned about the possibility of a Sanders presidency. “If Dems go on to nominate Sanders, the Russians will have to reconsider who to work for to best screw up the US. Sanders is just as polarizing as Trump AND he’ll ruin our economy and doesn’t care about our military,” Blankfein tweeted. “If I’m Russian, I go with Sanders this time around.

ACCRUED INTEREST

ACTION!: Seoul-based hedge fund Ryukyung PSG Asset Management had down something out of the box. It once invested about $500,000 into a little movie called “Parasite.” The bet paid off.

BIG BET: Brookfield Asset Management has surpassed private equity firm Blackstone Group as the top private investor in India.

CARRIED INTEREST

FINTECH FORTUNES: Preqin says that venture capital-backed deals for fintech companies topped $3 billion in 2019.

CASH HUNT: Morningstar says that investors are on the hunt for fixed income. Its research shows that global mutual funds and exchange-traded funds doubled their asset flows to $1 trillion last year. The data says that investors had a stronger desire for fixed income over equities.

ELECTRIC BLUES: Stanphyl Capital founder Mark Spiegel is wondering how his thesis on Tesla (NASDAQ: TSLA) was wrong.

QUOTES OF THE DAY

“Because of the temporary nature of that, I would expect more of a rebound. It most likely will be something that in another year or two will be well beyond what everyone will be talking about.”

Ray Dalio doesn’t expect coronavirus to have a long-term impact.

“At the last earnings briefing I used the words ‘I regret’ 20 times. But after a difficult winter always comes spring. The tide is turning.”

That’s SoftBank Group founder Masayoshi Son. He appears open to a deal with Elliott Management.

ACTIVE MANAGEMENT

THAT WAS FAST: It is a good day for Elliott Management. Last week, we noted that the hedge fund had taken a stake in the Japanese conglomerate Softbank Group (OTCMKTS: SFTBY). Today, shares of Softbank surged nearly 12% after a U.S. judge approved a merger between T-Mobile (NYSE: TMUS) and Sprint (NYSE: S). Softbank is a majority shareholder of Sprint.

CASHING IN CHIPS: Barrons notes that Chipotle (NYSE: CMG) continues to rally. However, Bill Ackman and Pershing Square are selling their stock.

LIABILITIES

GOING UNDER: Grocery chains backed by private equity firms are struggling. A few are going under. Expect for this to become a political talking point ahead of super Tuesday.

SCAM SURGE: Finally, Ponzi Schemes hit their highest level in a decade. It’s a possible sign of trouble.

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ABOUT THE DAILYALTS PLAYBOOK

Garrett Baldwin is the author of the DailyAlts Playbook.

An economist and author based in Naples, Florida, Garrett has an extended history of financial analysis, business journalism, public relations and consulting experience in hedge funds, private equity, alternative investments, housing policy, commodities, and public equity coverage. He holds degrees from Northwestern University, Johns Hopkins University, Purdue University, and Indiana’s Kelley School of Business. He also has a Certificate in Global Business from Harvard Business School.

An avid Baltimore Orioles and Buffalo Bills fan, he would prefer to discuss other sports, please.