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GM expects new labor contracts with the UAW and Canadian union Unifor to increase its costs by $9.3 billion and add approximately $575 in costs per vehicle during the terms of the deals.
The UAW’s targeted strikes, which ended in late October, cost GM $1.1 billion in adjusted earnings before interest and tax, or EBIT, in 2023.
The company is finalizing a budget for next year that will “fully offset the incremental costs of our new labor agreements,” GM CEO Mary Barra said Wednesday in a statement alongside a broad business update.

United Auto Workers members strike the General Motors Lansing Delta Assembly Plant on September 29, 2023 in Lansing, Michigan. 
Bill Pugliano | Getty Images

General Motors expects new labor contracts with the United Auto Workers and Canadian union Unifor to increase its costs by $9.3 billion and add approximately $575 in costs per vehicle during the terms of the deals.
Most of those cost increases stem from GM’s deal with the UAW that’s set to expire in April 2028. The pact, which was ratified earlier this month, includes at least 25% hourly pay raises, the reinstatement of cost-of-living adjustments and enhanced profit-sharing payments, among other benefits.

The GM-UAW deal was reached after contentious talks between the sides that included personal attacks, political mudslinging and roughly six weeks of targeted labor strikes by the union.
Some of the increased costs could be passed on to consumers in the form of higher vehicle prices, however GM — as well as fellow Detroit automakers, Ford Motor and Stellantis, which also negotiated new labor agreements — has several other options such as operational cuts, headcount reductions and other means to help offset costs.
GM disclosed the expected labor deal impact as part of a business update Wednesday in which it initiated a $10 billion accelerated stock buyback program, increased its dividend and reinstated its full-year 2023 guidance.
GM said Wednesday the UAW’s targeted strikes, which ended in late October, cost it $1.1 billion in adjusted earnings before interest and tax, or EBIT, in 2023. Additional wages, bonuses and other benefits for that labor contract and the Unifor agreement will cost another $200 million this year, the automaker said.
GM said the $9.3 billion in labor cost increases are expected to occur as follows: $1.5 billion in 2024; $1.8 billion in 2025; $2.1 billion in 2026; $2.5 billion in 2027; and $1.1 billion from January-April 2028.

The company is finalizing a budget for next year that will “fully offset the incremental costs of our new labor agreements,” GM CEO Mary Barra said Wednesday in a statement.
GM’s expected vehicle cost increase includes $500 per vehicle in 2024. Last month crosstown rival Ford estimated it would see additional costs of between $850 and $900 per vehicle assembled.
At the time, Ford CFO John Lawler said the company was working to “find productivity and efficiencies and cost reductions throughout the company” to offset the additional costs and deliver on previously announced profitability targets. That included canceling or postponing $12 billion in investments related to electric vehicles.
Ford is expected to update investors further on the cost impacts soon.
Chrysler parent Stellantis, which was the second of the so-called Big 3 U.S. automakers to reach a deal with the UAW, has not disclosed expected costs of its labor pact with the union.
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General Motors is working to regain Wall Street’s confidence leading into 2024 with several investor-focused initiatives Wednesday following a tumultuous year.
The Detroit automaker is initiating a stock buyback, increasing its dividend and reinstating its full-year 2023 guidance.
GM CEO Mary Barra in a statement said the company is finalizing a budget for next year that will “fully offset the incremental costs of our new labor agreements.”

General Motors is working to regain Wall Street’s confidence leading into 2024 with several investor-focused initiatives Wednesday following a tumultuous year of labor strikes and setbacks in its plans for electric and autonomous vehicles.
The Detroit automaker plans to increase its quarterly dividend next year by 33% to 12 cents per share; initiate an accelerated $10 billion share repurchase program; and reinstate its 2023 guidance to include an estimated $1.1 billion in earnings before interest and tax, or EBIT-adjusted, impact from roughly six weeks of U.S. labor strikes by the United Auto Workers union.

GM CEO Mary Barra in a statement said the company is finalizing a budget for next year that will “fully offset the incremental costs of our new labor agreements.
“The long-term plan we are executing includes reducing the capital intensity of the business, developing products even more efficiently, and further reducing our fixed and variable costs,” she said.
Shares of GM jumped roughly 8% during premarket trading Wednesday. Heading into the announcement, the stock was down 14.1% so far this year.
GM’s reinstated 2023 guidance also includes:

Net income attributable to stockholders of $9.1 billion to $9.7 billion, compared with a previous outlook of $9.3 billion to $10.7 billion.
Adjusted EBIT of $11.7 billion to $12.7 billion, compared with the previous outlook of $12 billion to $14 billion.
Adjusted earnings per share of roughly $7.20 to $7.70 including the stock buyback, compared with the previous outlook of $7.15 to $8.15.
EPS in the range of $6.52 to $7.02, including the stock buyback, compared with the previous outlook of $6.54 to $7.54.
Adjusted automotive free cash flow of $10.5 billion to $11.5 billion, compared with the previous outlook of $7 billion to $9 billion.
Net automotive cash provided by operating activities of $19.5 billion to $21 billion, compared with the previous outlook of $17.4 billion to $20.4 billion.

GM pulled its guidance when it reported its third-quarter earnings on Oct. 24, citing volatility caused by the UAW negotiations and labor strikes. The work stoppages ended Oct. 30 when the sides reached a tentative deal.

UAW impact

Before the UAW strikes, CFO Paul Jacobson said the company was on track to achieve “toward the upper half” of its earnings forecast.
On Wednesday the automaker said new labor deals in the U.S. and Canada are expected to increase costs by $9.3 billion and add approximately $575 in costs per vehicle. A majority of that impact is from the UAW deal, which expires in April 2028.
The UAW deal includes at least 25% hourly pay raises, the reinstatement of cost-of-living adjustments and enhanced profit-sharing payments, among other benefits.

Stock chart icon

GM stock after a slew of business updates on Wednesday.

To offset some of those increased costs, GM said Wednesday it now anticipates 2023 capital spending to be between $11.0 billion and $11.5 billion, down from prior guidance of between $11 billion and $12 billion. That’s driven by previously announced plans to delay some new products and investments, specifically regarding EVs.
Barra in a letter to shareholders Wednesday said she was “disappointed” in the company’s production this year of its next-generation EVs, known as Ultium vehicles. She said the company expects “significantly higher Ultium EV production and significantly improved EV margins.”
“We’ve spent years preparing the company for an all-electric future, and our long-term EV profitability and margin goals are intact, despite recent headwinds,” Barra said.
GM has said it plans to earn low- to mid-single-digit EBIT-adjusted margins on its EV portfolio in 2025, before the positive impact of clean energy tax credits. It also has said it plans to exclusively offer electric vehicles by 2035.

Cruise

Barra also said the automaker is “addressing challenges” at its majority-owned autonomous vehicle subsidiary Cruise.
Cruise recently issued a voluntary recall affecting 950 of its robotaxis and suspended all vehicle operations on public roads following a series of incidents that sparked criticism from first responders, labor activists and local elected officials, especially in San Francisco.

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The events, specifically an October accident involving a pedestrian, led to CEO and cofounder Kyle Vogt resigning from the company.
“Our priority now is to focus the team on safety, transparency and accountability,” Barra said. “We must rebuild trust with regulators at the local, state and federal levels, as well as with the first responders and the communities in which Cruise will operate.”

Stock buyback

The accelerated stock buyback includes an aggregate of $10 billion to the banks executing the program, including Bank of America, Goldman Sachs, Barclays and Citibank.
GM will immediately receive and retire $6.8 billion worth of its common stock. GM had approximately 1.37 billion shares of common stock outstanding prior to the program.
The total number of shares ultimately repurchased under the initiative will be determined at the end of the program, which is expected to occur during the fourth quarter. It will be based on the average of the daily volume-weighted prices of GM stock.
Outside of the announced program, GM said it will have $1.4 billion of capacity remaining under its share repurchase authorization “for additional, opportunistic share repurchases.”
The company said it has returned $4.2 billion in common stock dividends and buybacks from the start of 2022 through the third quarter of 2023, while generating more than $20.5 billion in adjusted automotive free cash flow after business investments.
“These strategies are designed to keep our margins and free cash flow strong, and we are well-positioned as we head into 2024,” Barra said at the end of her letter to shareholders. “I’m confident we’ll be able to execute our plan and excited about what the future holds. We look forward to sharing our progress with you.”
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Billionaire Mark Cuban is selling a majority stake of the NBA’s Dallas Mavericks to Miriam Adelson and her family.
Adelson, the largest shareholder of Las Vegas Sands, is selling $2 billion worth of company stock.
The company said in a filing that Adelson would use proceeds to buy a sports team.

Billionaire investor Mark Cuban is selling a majority stake of the Dallas Mavericks to Miriam Adelson and her family, a source familiar with the deal told CNBC.
Cuban still owns a stake in the team and will run basketball operations.

Adelson is selling $2 billion worth of Las Vegas Sands stock, or roughly 10% of her stake, according to an announcement from the company. The proceeds will be used to buy a professional sports team, the casino company said in a filing Tuesday.
Adelson and her family are the largest shareholders in Las Vegas Sands.
“We have been advised by the Selling Stockholders that they currently intend to use the net proceeds from this offering, along with additional cash on hand, to fund the purchase of a majority interest in a professional sports franchise pursuant to a binding purchase agreement, subject to customary league approvals,” Las Vegas Sands said in the filing.
Las Vegas, which has become a sports mecca, has been rumored to be a destination for an NBA team. The WNBA’s Aces play there, and the city will host the final games of the NBA’s midseason tournament.
The league did not comment on the news, and the Mavericks referred CNBC to the Adelson family for comment. CNBC has reached out to Cuban for comment.

Adelson is listed as the fifth-richest woman in the world by Forbes. She and her family inherited 56% of the shares of the world’s largest casino company when her spouse, Las Vegas Sands founder Sheldon Adelson, died in 2021. At the market close Tuesday, shares owned by the Adelson estates were valued at more than $20 billion. 
Shares of LVS are roughly flat year to date, an indication investors are discounting the reopening of casinos in Macao, where the company has the biggest real estate footprint in the market, and in Singapore.  
Las Vegas Sands disclosed in filings Tuesday that it will buy $250 million worth of Adelson’s shares. The company announced a $2 billion share repurchase authorization during its third-quarter earnings call Oct. 18. The stock fell more than 4% in extended trading after the news of Adelson’s share sale.
“As we consider our future capital return, we expect share repurchase will be more heavily weighted than dividends. We believe repurchases will be more accretive than dividends over time, as they reduce the denominator,” Patrick Dumont, Sands’ president and chief operating officer and Adelson’s son-in-law, said on the earnings call. “We fundamentally believe in the compounding long-term benefit of share repurchases.”
Owning a sports franchise will be a significant departure from the activities that Miriam Adelson and her late husband were known for.  
The couple set records for political giving, including more than $218 million to Republican and conservative causes in the 2020 election cycle alone, according to the Center for Responsive Politics, which tracks political spending.
According to published reports, Miriam has recently met with GOP candidate Nikki Haley in Las Vegas, as well as former President Donald Trump. 
As a medical doctor, Miriam Adelson is also widely known for her focus on addiction.
Born in Israel, she has made significant philanthropic donations toward causes that improve Jewish relations in the United States. Recently, she has been a vocal critic of people protesting Israel’s military response to Hamas’ terrorist attacks of Oct. 7.
– CNBC’s Jessica Golden contributed to this article.
Disclosure: CNBC owns the exclusive off-network cable rights to “Shark Tank,” which features Mark Cuban as a panelist.
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Foot Locker beat third-quarter earnings and sales expectations.
The shoe and apparel retailer said it expects better same-stores sales this year than it previously did.
Foot Locker has been hit by customers dealing with inflation and Nike’s focus on direct sales.

A Foot Locker store near the Times Square neighborhood of New York, US, on Monday, Nov. 13, 2023. 
Bing Guan | Bloomberg | Getty Images

Shares of Foot Locker rose on Wednesday after the company posted surprise earnings and sales beats and said it saw strong results over Thanksgiving weekend.
The sneaker and sportswear retailer narrowed its full-year forecast, reflecting slightly better sales trends. It said it now expects sales to drop by 8% to 8.5% for the year, compared with a previously issued forecast of an 8% to 9% decrease. It projects a same-store sales decline of 8.5% to 9%, compared with its previous guidance of a 9% to 10% drop.

Yet Foot Locker lowered the high end of its adjusted earnings guidance, dropping the range to $1.30 to $1.40 per share, down from the previous $1.30 to $1.50 per share.
In a news release, CEO Mary Dillon said the company has made progress with its turnaround initiatives. She pointed to a new marketing deal with the NBA.
She said Foot Locker updated its outlook to reflect that momentum and capture “strong results over the Thanksgiving week period, against the backdrop of ongoing consumer uncertainty.”
Here’s how Foot Locker did in the three-month period that ended Oct. 28 compared with what Wall Street was anticipating, based on a survey of analysts by LSEG, formerly known as Refinitiv:

Earnings per share: 30 cents adjusted vs. 21 cents expected
Revenue: $1.99 billion vs. $1.96 billion expected

In the fiscal third quarter, Foot Locker reported net income of $28 million, or 30 cents per share, compared with $96 million, or $1.01 in the year-ago period.

Foot Locker’s same-store sales fell 8% year over year, which the company said reflected “ongoing consumer softness,” a change in its mix of vendors and a 3% negative impact as it closes some Champs stores. Even so, that was slightly better than the 9.7% drop that analysts expected, according to FactSet.
Like many retailers, Foot Locker has gotten hurt by shoppers cutting back on discretionary spending as inflation forces them to spend more on food, housing and everyday needs and as experiences, rather than goods, become a priority. Foot Locker has also faced company-specific troubles, such as having some stores in struggling malls and leaning heavily on merchandise from Nike, a brand that’s making a bigger push to sell directly through its own stores and website.
Too much inventory has also been a problem for Foot Locker, particularly as shoppers watch their spending. At the end of the third quarter, the retailer’s inventory was 10.5% higher than at the end of the year-ago period. Yet Foot Locker said about 6% of that was strategic, as the company stocked up on merchandise to sell during the holiday season.
Dillon said in a news release that the company remains on track to end the fiscal year with inventory levels flat or down slightly compared with the prior year.
As of Tuesday’s close, shares of Foot Locker had tumbled by about 37% this year. That compares to the approximately 19% gains of the S&P 500 during the same period. Foot Locker’s stock closed at $23.84 on Tuesday, bringing its market value to $2.25 billion.
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Thanksgiving festivities from the Macy’s Thanksgiving Day Parade to football notched impressive TV ratings across the board.
NBC and CBS both reported record-breaking ratings for their Thanksgiving broadcasts.
The success comes at a critical time for traditional TV, as the industry continues to grapple with cord-cutting.

Macy’s Thanksgiving Day Parade, 2023: Birds Of A Feather Stream Together – Peacock Float
NBC | NBCUniversal | Getty Images

Thanksgiving TV viewership gave media companies a lot to be grateful for this year.
A range of events over the holiday broke ratings records.

NBC drew an all-time record 28.5 million viewers this year during its broadcast of the 97th annual Macy’s Thanksgiving Day Parade, up 6% from last year, Variety reported Friday.
The feat is impressive as swaths of consumers opt to cut the cord and move away from linear TV. Despite the trend, more than two-thirds of the parade audience, about 22.3 million viewers, tuned in via traditional TV, according to Variety.
Football was another ratings monster over the holiday.
CBS’ Thanksgiving broadcast of the Dallas Cowboys’ win over the Washington Commanders was the most watched program on any network since Super Bowl LVII earlier this year, the network said in a Friday post on X, formerly Twitter. The game captured 41.8 million viewers based on Nielson data, peaking at nearly 44.3 million viewers. The broadcast’s viewership rose a whopping 31% from last year’s CBS Thanksgiving game, but came in about 500,000 viewers lower than last year’s Cowboys-Giants matchup in the comparable timeslot.
While CBS did not release ratings numbers for Paramount+, the network said it notched its most-streamed NFL regular season game ever on the streaming platform.

Fox’s Packers-Lions matchup grabbed 33.7 million viewers per Nielson, the most watched Thanksgiving Day game ever for the 12:30 p.m. ET timeslot and up 6% from the comparable game last year, the network said Tuesday. Fox, unlike its competitors, does not have a dedicated streaming platform for its main programming.
NBC Sports said on Friday that its broadcast of the San Francisco 49ers’ victory over the Seattle Seahawks was the second-most watched Thanksgiving primetime game ever, behind 2015’s Thanksgiving Bears-Packers matchup. The broadcast averaged 26.9 million viewers across the network’s platforms based on fast national Nielson data.
The game was also NBC Sports’ most-streamed primetime NFL Thanksgiving game ever, with viewership led by its platform Peacock, NBC Sports said Friday.
As a whole, average viewership across all three games was 34.1 million, the highest for Thanksgiving Day on record, the NFL said Tuesday.
Amazon also joined in on the fun this year. The company paid a reported $100 million to broadcast the New York Jets and Miami Dolphins matchup the day after Thanksgiving, in hopes that the Black Friday NFL game would become a tradition on Amazon’s Prime Video platform. The hefty price tag adds to the $1 billion per year Amazon already pays to broadcast NFL’s Thursday Night Football. The e-commerce giant also attempted to use the NFL broadcast to drive product sales on the busiest shopping day of the year. Ratings numbers for the Friday game have not yet been released.
“It would make sense that it’s not going to do as well as the Thursday games because it’s a different platform on a different day,” said sports media consultant and former Fox Sports executive Patrick Crakes. “That does not mean that it doesn’t have a lot of value.”
As for that whopping $100 million price tag paid to broadcast the Friday game, don’t expect Amazon to make up that money in any straightforward way. The investment serves as a marketing tool to grow value elsewhere, whether it be Prime subscribers or retail sales, Crakes said.
More broadly, the Thanksgiving broadcasts were successful for the advertising market, according to Kevin Krim, the CEO of data analytics firm EDO Inc.
“The ratings were quite good from Nielson and the ad performance was quite strong,” Krim said Monday on CNBC’s “Squawk Box.”
“Consumers responded very aggressively” to big discount messages, Krim said.

Traditional TV’s Thanksgiving ratings success comes at a critical time, as the industry tries to survive and adapt while consumers cut the cord. Viewership also indicated that linear TV does not have to suffer for streaming to capture strong ratings, and vice versa.
“Everybody knows where to find the NFL,” said Crakes. “It shows that the power of traditional TV is still amazing. When it gets the right content in the right context, it blows everything else away. It’s not going to stop declining, but it shows why it’s not going to go away.”
The record-breaking ratings on Thursday show how the streaming and linear mediums can work at the same time, though the two can appear to be at odds, Crakes said.
The complementary performance could fit into predictions that companies may offer consumers cable and streaming offerings under one price tag, instead of fragmenting the two.
Liberty Media Chairman John Malone said earlier this month that he expects the ad-supported tier of streaming platforms to be bundled with cable plans because cable and streaming “are kind of tied to the hip.”
Crakes echoed the sentiment, saying linear and streaming viewing will coexist going forward and probably get reintegrated into some kind of bundle.
“The question is, how do you make the monetization work? We haven’t figured that part out yet,” Crakes said. “But part of it is understanding that linear and streaming are co-operative together and that linear can continue to decline and streaming can continue to grow. But for the medium run, they clearly go together.”
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Rupert Murdoch is being deposed in the $2.7 billion Smartmatic defamation lawsuit against Fox Corp.
Murdoch is expected to sit for questioning in Los Angeles on Tuesday and Wednesday, according to a source.
It is the second time this year that Murdoch, 92, has been deposed in a high-stakes defamation lawsuit accusing Fox News of airing damaging lies about the 2020 U.S. presidential election.

Rupert Murdoch arrives at the Sun Valley Resort of the annual Allen & Company Sun Valley Conference in Sun Valley, Idaho, on July 10, 2018.
Drew Angerer | Getty Images

Rupert Murdoch is being deposed Tuesday as part of the $2.7 billion defamation lawsuit filed against Fox Corp. by the voting technology company Smartmatic, a source familiar with the matter told CNBC.
Murdoch is expected to sit for questioning in Los Angeles on Tuesday and Wednesday, according to the source.

It is the second time this year that Murdoch, 92, has been deposed in a high-stakes defamation lawsuit accusing Fox News of airing damaging lies about the 2020 U.S. presidential election.
Under questioning in January as part of a similar defamation lawsuit filed by Dominion Voting Systems, Murdoch admitted that some Fox News hosts and personalities “endorsed” the false narrative that the election was stolen from then-President Donald Trump.
Fox paid $787.5 million to settle Dominion’s lawsuit, nearly half the $1.6 billion figure initially demanded by the voting company.
Smartmatic’s lawsuit accuses Fox and a handful of its hosts and guests of knowingly lying, or acting with reckless disregard for the truth, by entertaining or endorsing the false claim that the company rigged the election for President Joe Biden over Trump.
Smartmatic, which is suing in New York Supreme Court, is seeking “in excess of $2.7 billion” in damages it says were caused by the defendants’ “disinformation campaign.”

Murdoch is not named as a defendant in the lawsuit, which was filed against Fox personalities Maria Bartiromo and Jeanine Pirro and former opinion host Lou Dobbs. Trump’s former attorney Rudy Giuliani and pro-Trump lawyer Sidney Powell are also included as defendants.
A New York appeals court in February declined an attempt by Fox to dismiss the defamation suit.
Murdoch officially stepped down as chair of Fox and News Corp. earlier this month, putting his son Lachlan in charge of both. The elder Murdoch is now chairman emeritus of the companies.
Fox spokesman Brian Nick declined CNBC’s request for comment on Murdoch’s latest deposition.Don’t miss these stories from CNBC PRO: More

Disney CEO Bob Iger spoke Tuesday in New York at an employee town hall.
Iger was joined on stage by Disney executives Josh D’Amaro, Jimmy Pitaro, Dana Walden and Alan Bergman.
Iger said his three priorities for building in 2024 were expanding theme parks, developing a full ESPN streaming service and improving the studio business.

Bob Iger, Disney, at Apple program
Source: Apple

Disney Chief Executive Officer Bob Iger told employees Tuesday during an internal town hall that he is looking forward to “building again” after spending 2023 mending parts of the business that “needed attention.”
“I feel that we’ve just emerged from a period of a lot of fixing to one of building again, and I can tell you building is a lot more fun than fixing,” said Iger, who was interviewed by ABC News anchor David Muir at New York’s Amsterdam Theater. After speaking alone for about 15 minutes, Iger was joined by Disney head of parks and resorts Josh D’Amaro, ESPN chief Jimmy Pitaro, and Disney Entertainment co-chairs Dana Walden and Alan Bergman.

Disney’s 2023 has been defined by 7,000 job cuts and a company-wide mission to cut spending. Disney said this month it projects to save $7.5 billion this year, largely through job elimination and content spending rollbacks.
Iger noted he acquired Pixar and Marvel in the early part of his tenure as Disney’s CEO, which began in 2005, to jumpstart an era of building at the company. This time, Iger won’t rely on acquisitions. Rather, he plans to expand Disney’s theme parks with a $60 billion commitment over the next 10 years, build an ESPN direct-to-consumer platform no later than 2025 and rebuild Disney’s movie studio business, which Iger said has suffered from making too many films.
Iger and Pitaro said they want to launch an ESPN streaming service with additional features such as advanced statistics and integration with fantasy sports to appeal to a younger audience. Pitaro is conducting research on how expensive to make the platform and when to launch, he noted.
“What Bob and I have talked about is we don’t just want to flip the switch,” Pitaro said. “We don’t want to just move our networks over and make them available over the top without significant product enhancements.”

Fixing the studio business

Iger and studio head Bergman acknowledged the quality of Disney films has suffered, while they emphasized the importance of movies for the entire company.

“When it comes to creating a perception of the company, nothing is more powerful than movies,” Iger said. “That’s perception among investors, perception among the audience, obviously consumers and also perception among our own employees.”
Iger noted that a string of hit movies can make people at Disney “giddy,” not only because the company’s brand is elevated within the culture, but also because of the synergies that flow through the business. A movie such as “Frozen” can churn out profitable sequels, boost Disney’s streaming service Disney+, set the foundation for theme park attractions and jumpstart consumer products.
Disney shares have risen 6.8% this year, underperforming the S&P 500, which is up about 18%. Iger is optimistic about Disney’s chance to build in 2024. But it’s unclear if investors will reward the company without more dramatic changes, such as selling off the company’s declining linear businesses or finding strategic partners for ESPN.
Iger acknowledged he’s still considering those options, but hasn’t made a decision on a path forward.
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Family offices now have more of their money invested in private markets than the public stock market — even as the market rallies.
The new survey results underscore a sweeping shift in the investment practices of family offices, the private investing arms of families with assets typically of $100 million or more.
Along with private markets, family offices are also showing increasing interest in alternative assets, including real estate and commodities.

A pedestrian passes in front of a statue of a bull in the Wall Street area in New York City.
Doug Kanter | AFP | Getty Images

Family offices now have more of their money invested in private markets than the public stock market — even as the market rallies — according to a new survey.
A survey of North American family offices conducted by Campden Wealth and RBC found that family offices had 29.2% of their investments in private markets, which include private equity, venture capital and private debt, compared to 28.5% in publicly traded stocks.

It marks the first time in the survey that family offices had more invested in private markets than public stock. Their stock allocation has come down from 31% the year before, while their private investments increased from 27%. The remaining assets were invested in cash, bonds, alternatives, hedge funds, commodities, real estate and other investments.
“Family offices have maintained a consistent pattern of augmenting their allocations to private markets,” according to the study.
And they plan to concentrate even more heavily on private markets in the coming months, according to the survey, which found 41% of family offices plan to boost their allocations to private equity funds, and a third plan to put more money into direct private equity deals.
Only 23% planned to add to their developed-market public stocks, while 15% plan to trim their stock holdings, according to the survey.
The results underscore a sweeping shift in the investment practices of family offices, the private investing arms of families with assets typically of $100 million or more, even despite a recent rally in stocks. The S&P 500 is up 19% so far this year.

Over the past decade, and especially after the pandemic, family offices have rushed into private equity and so-called direct deals, where they buy stakes in private companies on their own. Family offices say private markets offer better returns over the long term without the volatility of stocks.
Many family office founders, typically entrepreneurs who made their fortunes starting and selling private companies, also like to leverage their experience by finding companies in their area of expertise and providing advice along with capital.
It’s unclear whether the bet will continue to pay off. Private equity funds are struggling with tight financing and expensive loans, along with a lack of exits given the drought of IPOs.
Meantime, as investors expect interest rate cuts in 2024, stocks may continue to rally.
When asked which asset class will give them the best returns in the coming years, family offices ranked “private equity and venture capital” first, followed by public equities.
“Despite the cautious approach adopted by family offices in response to the (2022) retreat of financial markets, their perspectives on the sources of the best long-term returns remain steadfast,” the report said. “Private equity and venture capital continue to head the list.”
Along with private markets, family offices are also showing increasing interest in alternative assets, including real estate and commodities. When asked about their investment priorities for the coming year, the number one choice was to “invest in alternative asset classes.”
Still, family offices remain cautious about the year ahead. Nearly 60% cited “recession risk” as the largest financial risk, followed by China tensions and “excessive Fed tightening.”
Their bond holdings, currently representing 8% of investments from the group, could expand further, with a third planning to add to their bond positions.
Family offices also have a large amount of cash waiting for the right opportunity. They hold 9% of their assets in cash, nearly double the levels in 2021.
“They have a lot of cash on the sidelines,” said Angie O’Leary, head of wealth planning for RBC Wealth Management, U.S. “They can deploy that cash on things like real estate or an acquisition or investing in private markets. They’re not in a hurry, they’re just looking for that great opportunity.”
The survey spanned 330 single-family offices and private multi-family offices around the world, with 144 in North America. The family offices surveyed had an average of $1.3 billion in total wealth, including private businesses. More