These managers maneuvered an increasingly volatile landscape beset with geopolitical chaos, overconcentration risk in AI, uncertainty over interest rates and the future of the Fed chair; wars in Gaza, Ukraine, and Iran; the Epstein files; and stubbornly high prices.
Also interesting is that the five highest earners after Hohn are neither exclusively stock pickers nor equity long-short managers, but multistrategy specialists or eclectic investors seeking the best opportunities. (It should also be noted that nine of the highest earners posted gains lagging the S&P 500 last year.) They include frequent Rich List members Millennium’s Izzy Englander, Appaloosa Management’s David Tepper, and D.E. Shaw’s David Shaw.
Because compounding is very real, this year’s list of hedge fund managers are a familiar cast of characters (we count individuals’ gains on their own capital invested plus their share of the fees). Just goes to show that the more personal capital you have invested in your fund, the easier it is to make the kind of money that lands you on the list — and once you’re on the list, it’s easier to stay on.
This year, 10 managers made more than $1 billion. Nearly a quarter have roots in Julian Robertson Jr.’s Tiger Management.
So, check out II’s 25th Annual Rich List here.
Insurers Ain’t Afraid of No Selloffs: While retail investors may be realizing that private credit may not be the asset class for them — hence the selloffs — insurers remain eager to continue to expand into the space.
Managers of insurance assets have made their opinions on private credit and alternative assets known in a couple of recent polls.
Most global insurers expect a recession in the U.S., yet 62 percent still plan to increase their allocation to private assets this year, according to results of Goldman Sachs’ annual global insurance survey. This is consistent with results of a poll II took with corporate and insurance allocators at a private event in March.
“Recent volatility and widening spreads in the private credit markets will attract more insurance capital not less,” said Goldman’s Mike Siegel.
Private credit has always been an asset geared for long-term institutional investors who know what they’re doing, so it makes sense that allocators of insurance assets remain bullish on the asset class. As Partners Capital CEO Arjun Raghavan recently told me over video, Blackstone and BlackRock enforcing the gates on their credit funds isn't a fundamental issue, but merely the prudent thing to do.
“If people thought they were investing in a fully liquid asset, which these are not, then this is the appropriate thing to do,” Raghavan says.
The real issue, he notes, is the fundamental issue of credit quality — particularly within software exposure. “The 2019 to 2021 vintage is going to be bad,” adds Raghavan. “A lot of large-cap lending was done on pretty loose covenants.” (We had a great talk, so be on the lookout for a possible story based on parts of our conversation in Institutional Investor Magazine.)
That’s it for this edition of Essential Allocator. Send me your thoughts and lend me your prayers at james.comtois@institutionalinvestor.com. Until next time, stay safe out there.
