Raphael Stevens

More stories

  • 88 Shares99 Views

    in Finance

    What does America’s next treasury secretary believe?

    TO HEAR DONALD Trump’s transition team describe it, everyone wants to work for him. Howard Lutnick, the boss of Cantor Fitzgerald, an investment firm, and a co-head of the recruitment crew, has bragged that he is in touch with “the top 150 businesspeople across the United States of America”. A vast array of names have been bandied about for all kinds of roles, including treasury secretary—from Jamie Dimon, boss of JPMorgan Chase, a bank (who has repeatedly clarified he has no interest in the job), to Jay Clayton, who ran the Securities and Exchange Commission during Mr Trump’s first term (but is apparently more interested in running the CIA this time) and Steven Mnuchin (who did the job last time but does not want it back). More

  • 150 Shares169 Views

    in Finance

    Hedge funds performed better under Democratic presidents than Republican ones, history shows

    Traders work on the floor of the New York Stock Exchange. 

    There’s been a rush of enthusiasm on Wall Street regarding Donald Trump’s election win, but hedge funds actually generate more alpha when the White House is occupied by a Democrat president than a Republican one, according to HFR, collating data going back to 1991.
    When compared with the S&P 500, the industry underperformed regardless of who was president. But during Democratic administrations, the gap was about 183 basis points, with hedge funds delivering average, annualized returns of 10.16%, compared to 11.99% from the S&P 500. The underperformance gap during Republican administrations was 331 basis points. (1 basis point equals 0.01%.)

    Arrows pointing outwards

    When compared with the a bond index, HFR found that hedge funds under both parties outperformed – with stronger alpha when a Democrat was in the White House.
    The total net asset flows were higher under Republican administrations (about $450 billion) than Democratic ones (about $400 billion), even though since 1991, Democrats served six more years in the highest office than Republicans.

    Arrows pointing outwards

    Surprisingly, the way that hedge fund participants donate in elections was a bit more tilted toward one party. According to a recent report by Open Secrets, in the 2024 election cycle, individuals in the industry donated $31 million to Democratic candidates, while almost half that amount — $16 million — went to Republican candidates.

    Arrows pointing outwards

    Open Secrets

    Of course the takeaway here is that hedge fund returns are far more correlated with positioning relative to various asset-class performances than particular policies by the administration. So, it’s hard to make any predictions about what the next four years entails for the industry.
    At Wednesday’s 14th annual Delivering Alpha event, we should get a sense as to how money managers may be reconfiguring their portfolios. More

  • 175 Shares199 Views

    in Finance

    David Einhorn to speak as the priciest market in decades gets even pricier postelection

    David Einhorn speaking in New York City on April 3, 2024.
    Adam Jeffery | CNBC

    Hedge fund investor David Einhorn’s cautious stance all year made his performance suffer as he navigated what he believes is the priciest stock market of his career at Greenlight Capital.
    Einhorn’s hedge fund returned just 9% in 2024 through the end of the third quarter, net of fees and expenses. That compares with the S&P 500′s more than 20% gain during the same period.

    The high-profile investor said he’s neither calling the market a bubble nor being outright bearish, but sky-high prices caused him to be conservatively positioned.
    “The market isn’t just making all-time highs. It is, by many measures, the most expensive stock market that we have seen since the founding of Greenlight,” Einhorn said in the latest investor letter last month. Einhorn founded Greenlight in 1996.
    Einhorn is speaking at CNBC’s Delivering Alpha Investor Summit on Wednesday in New York City. It will be the first chance for investors to hear from Einhorn postelection and whether his views on equity valuations and inflation have changed with the Trump and Republican policies on the way.
    After a buyers’ strike at the end of 2023, Einhorn came back in the market hunting opportunities, acquiring medium-sized positions in names like software firm Alight and drugmaker Viatris. Investors will be interested to hear if he’s still finding any values.
    Last month, he made a bullish case for Peloton, saying the shares are significantly undervalued.

    Last third of the bull market?

    These new stock picks didn’t necessarily create a ton of alpha, however. Greenlight was hurt this year by its low net exposure to the market and a lack of investments in the red-hot Magnificent 7 names.
    “We are likely to continue to underperform a rising market, as we have all year, but we don’t wish to position ourselves to lose money should the market continue to rise,” he said in the letter. “We think Paul Tudor Jones is right when he says that managing the last third of a great bull or bear market move is often the toughest.”

    Stock chart icon

    S&P 500, 5 years

    Meanwhile, he spent most of this year calling for a reacceleration in inflation, making gold a very large position in his portfolio. This bet has fared relatively well even as inflation has moderated with spot gold hitting a record high in late October, up 27% this year.
    Einhorn, a 55-year-old Cornell grad, founded Greenlight Capital nearly three decades ago and went on to produce a whopping 26% annualized return for the next decade, far outpacing the broader market and many peers. He then thrived during the financial crisis, predicting the fall of Lehman Brothers. His stellar track record made him one of the most followed hedge fund managers on Wall Street. In recent years, he’s found some success purchasing value stocks that have buyback strategies in place. More

  • 88 Shares189 Views

    in Finance

    Why crypto mania is reaching new heights

    Donald Trump’s victory has a flavour of revenge—not just for the man but also for crypto bros and their assets of choice. Over the course of election night, as it became clear Mr Trump had won America’s presidential election, the price of bitcoin, the most widely traded cryptocurrency, jumped by 10%. On November 11th, as Republicans edged closer to taking control of Congress, it hit a record $89,000. Since mid October it has surged by 45% (see chart). More

  • 175 Shares169 Views

    in Business

    Boeing delivers fewest planes since 2020, warns factory restart after strike will take weeks

    Boeing said it will take weeks before it can fully restart factories after a more than seven-week machinist strike.
    The manufacturer handed over 14 aircraft in October, the fewest since November 2020, during the pandemic and the tail end of a worldwide grounding of its bestselling 737 Max.
    Machinists are required to return to their jobs no later than Tuesday.

    An employee works in the cockpit of a Boeing P-8 Poseidon maritime patrol aircraft on the production line at Boeing’s 737 factory in Renton, Washington, November 18, 2021.
    Jason Redmond | Reuters

    Boeing’s more than 32,000 machinists who were on strike are required to return to their factories no later than Tuesday, but getting factories humming again will take weeks, the manufacturer said.
    Boeing machinists approved a new contract last week that included 38% pay raises over four years and other improvements, ending a more than seven-week strike that halted output of most of Boeing’s aircraft production. They first walked off the job on Sept. 13, turning down a proposal with 25% raises.

    The company said Tuesday that it handed over 14 jetliners in October, the fewest since November 2020, during the depths of the pandemic and the tail end of the worldwide grounding of Boeing’s 737 Max in the wake of two fatal crashes. Nine of the deliveries last month were 737 Maxes. A spokesman said workers unaffected by the strike performed the delivery procedures.
    Boeing’s troubles have put it further behind Airbus this year. The U.S. manufacturer handed over 305 airplanes so far this year compared with its European rival’s 559 aircraft.
    As the workers return, Boeing has to assess potential hazards, restate machinist duties and safety requirements, and ensure that all training qualifications are current, a spokesman said.
    “It’s much harder to turn this on than it is to turn it off,” CEO Kelly Ortberg said during the company’s quarterly call last month. “So it’s absolutely critical that we do this right.”
    The company is resuming production in Washington state and Oregon for the 737 Max, 767 and 777 programs, as well as military versions of its aircraft. Boeing’s 787 Dreamliner production continued during the strike because those planes are made in a nonunion factory in South Carolina.
    Despite the strike pause, Boeing continued to sell dozens of aircraft in October, with 63 gross orders, two shy of September’s total. Forty of them are 737 Max 8s for the Avia Solutions Group. It also handed over 10 787 Dreamliners to LATAM Airlines.

    Don’t miss these insights from CNBC PRO More

  • 113 Shares99 Views

    in Business

    Family offices becoming ‘economic powerhouse’ in private company deals

    Family offices — the in-house investment and service firms of high-net-worth families — are becoming more confident about finding and negotiating their own private equity deals.
    Half said they plan to invest directly in a private company without a private equity fund over the next two years, according to a family office survey from Bastiat Partners and Kharis Capital.

    Closeup of late 40s handsome executive man driving in the back seat of a luxury limousine and using a smart phone. 
    Gilaxia | E+ | Getty Images

    A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high-net-worth investor and consumer. Sign up to receive future editions, straight to your inbox.
    Family offices are increasingly bypassing private equity funds and buying stakes in private companies directly, according to a new survey.

    Half of family offices plan to do “direct deals” — or invest in a private company without a private equity fund — over the next two years, according to a family office survey from Bastiat Partners and Kharis Capital.
    As they grow in size and sophistication, family offices are becoming more confident about finding and negotiating their own private equity deals. Since family offices — the in-house investment and service firms of high-net-worth families — are typically founded by entrepreneurs who started their own companies, they often like to invest in similar private companies and leverage their expertise.
    More than half (52%) of family offices surveyed prefer doing direct deals through syndicates, where other investors take the lead, “reflecting a cautious approach and reliance on the expertise of established sponsors,” according to the report.
    “Family offices are being gradually recognized as an economic powerhouse in private markets,” according to the report.
    The big challenge for family offices as they do more direct deals is so-called deal flow, or the volume of possible deals. Since most deals are either unattractive or not suitable, family offices may see 10 deals or more for every one that works, according to the report.

    At the same time, family offices fiercely protect their privacy and prefer to remain largely unknown to the public. Without a public profile, they aren’t likely to be included in deal offerings or banker calls and miss out on potential investments. Fully 20% of family offices surveyed cited “quality deal flow” as a primary concern.
    One solution, according to the report, is for family offices to start developing more public profiles and network with each other more to attract deal flow. According to the survey, 60% view networking with other family offices as “important,” and 74% are “eager for more introductions.”

    Get Inside Wealth directly to your inbox

    The other challenge for family offices doing direct deals is due diligence, according to family office experts. When a private equity fund or company invests in a private company, they often have teams of bankers or in-house experts able to dissect a company’s financials and its prospects. Family offices typically lack the infrastructure for rigorous due diligence and risk buying into troubled companies.
    To formalize their deal process, more family offices are creating boards of directors and investment committees. According to the survey, 54% of North American family offices have established investment committees to help vet investments.
    When it comes to their preferred private investments, they like to venture “off the beaten path,” focusing on niche and emerging asset classes. Family offices, for instance, are increasingly investing in real estate tax liens, fertility clinics, sale-leasebacks of real estate, whiskey aging and litigation financing.
    “These approaches provide family offices with access to private investments that offer attractive returns, cash yields and low correlation to traditional markets,” according to the report.

    Don’t miss these insights from CNBC PRO More

  • 150 Shares169 Views

    in Business

    Netflix ad-supported tier has 70 million monthly users two years after launch

    Netflix’s ad-supported tier has reached 70 million global monthly users.
    The streaming giant introduced the cheaper tier with commercials in November 2022 as one of its responses to slowing subscriber growth.
    Netflix also said it’s sold out of its ad inventory for two live Christmas Day NFL games.

    People wait in a line to enter “The Lab,” a “Stranger Things” Netflix series experience in Madrid on June 2, 2022.
    Beata Zawrzel/ | Nurphoto | Getty Images

    Netflix’s cheaper, ad-supported tier has reached 70 million global monthly active users two years after it was launched.
    The company said Tuesday that more than 50% of its new sign-ups are for ad-supported plans in countries that offer the option. Netflix said it continues “to see positive momentum and growth across all areas of the business,” adding it has seen “steady progress across all countries’ member bases.”

    Netflix launched the option in November 2022 as one of its responses to a slowdown in subscriber growth.
    Recently, subscriber growth hasn’t been an issue. Last month Netflix reported it added 5.1 million subscribers during the third quarter, beating Wall Street estimates. In total, Netflix counts 282.7 million memberships across all of its pricing tiers.
    Beginning next year, Netflix said it will no longer update investors on its subscriber numbers as it shifts focus toward revenue and other financial metrics as performance indicators.
    When Netflix launched its ad platform two years ago, the company said Nielsen would rate its content.
    Netflix in May announced it would air two National Football League games on Christmas Day this year as part of a three-year deal. On Tuesday it said it sold out of its ad inventory for the two live games.

    Netflix also said it’s brought on FanDuel and Verizon as advertisers for the games. FanDuel will become the exclusive pregame sportsbook betting partner, Netflix said, and will have a sponsored in-show feature.
    Media companies have been focusing on ad-supported strategies for their streaming options that woo customers with cheaper plans and also offer advertising revenue that can help move the streaming businesses toward profitability. While the ad market has been slow for traditional TV, it has grown for streaming and digital businesses.
    Netflix offered its last update on its ad-supported tier in May, when it said it reached 40 million global monthly active users, nearly doubling the figure it had shared in January. That announcement came during Upfronts, when media companies make their pitches to advertisers.
    Netflix also announced in May it would launch its own advertising platform, ending a partnership with Microsoft for that technology. It’s rolled out the platform in Canada and plans to launch it in the U.S. by the end of the second quarter next year. It plans to set the platform live everywhere by the end of 2025.

    Don’t miss these insights from CNBC PRO More

  • 125 Shares189 Views

    in Business

    GM’s newest EV is a Cadillac ‘baby Escalade’ called Vistiq

    General Motors’ newest all-electric vehicle and the last of a lineup of new EVs announced for its Cadillac luxury brand is a three-row SUV called Vistiq.
    The 2026 Cadillac Vistiq will arrive in dealer showrooms beginning next year, starting at $78,790.
    The vehicle features a 102-kilowatt-hour battery pack, estimated 300 miles of range, 615 horsepower and 650 pound-feet of torque.

    2026 Cadillac Vistiq EV

    DETROIT — General Motors’ newest all-electric vehicle is a three-row SUV for its Cadillac luxury line, which the brand is dubbing a “baby Escalade.”
    The 2026 Cadillac Vistiq will be the last in a lineup of new EVs in the brand’s portfolio when it goes into production and arrives in dealer showrooms beginning in 2025.

    The SUV will start at $78,790. It will slot between the roughly $63,500 Lyriq and forthcoming $130,000 Escalade IQ EVs.

    2026 Cadillac Vistiq EV

    Brad Franz, Cadillac director of marketing, described the new vehicle as being closer to a “baby Escalade” than a larger version of the Lyriq, which was the brand’s first EV, in 2022.
    “This is an outstanding platform that’s a heck of a lot closer to an Escalade than it is to the Lyriq,” he said during a media event.
    The Vistiq’s interior and exterior styling are in line with Cadillac’s current and upcoming EVs, including the Lyriq and Escalade IQ. The interior features a long screen across the dashboard, while the exterior includes sleek vertical and horizontal front lights and an illuminated grille.

    The vehicle has a 102-kilowatt-hour battery pack and offers 615 horsepower and 650 pound-feet of torque. The Cadillac-estimated range of the vehicle fully charged is 300 miles.
    The Vistiq will be sold globally, including in the U.S. and Canada, with production starting in early 2025 at GM’s Spring Hill Manufacturing plant in Tennessee. At launch, the Vistiq will offer three trims: Luxury, Sport and Premium Luxury. A top-end “Platinum” trim will be offered starting in summer 2025.

    2026 Cadillac Vistiq EV More