Delivering Alpha: Live Blog
Wednesday 9/14/11, 11:23 AM/ET: Goverment, Revenues, and Growth
Thomas Steyer of Farallon Capital Management, asserts that the country will not grow if government in 15 percent of GDP. Historically in the post-WWII era it's been between 18 and 20 percent. It's now abnormally low.
Wednesday 9/14/11, 11:19 AM/ET: Another Hard Truth
The real crisis? We've suppressed wages for a generation, and now households are unable to handle all their debt, says Damon Silvers of the AFL-CIO, a late addition to the panel. His comment starts a small ruckus.
Wednesday 9/14/11, 11:14 AM/ET: The Hard Truth
Former Governor Corzine says the long-term US entitlement picture needs to be addressed in a way he would have been "uncomfortable" saying were he still in office.
Wednesday 9/14/11, 11:04 AM/ET: The Deficit Question
Can we solve the chronic America deficit problem? The three participants on our panel—which starts now—gave us a sneak preview of their thoughts.
Tyler Mathisen says most attendees favor a "balanced" approach of both spending cuts and tax increases to deal with it.
Wednesday 9/14/11, 10:50 AM/ET: They Know Their Crowd
The intermission music so far perfectly suits the mostly middle-aged audience here: The Band's "The Weight" and Led Zepplin's "Hey Hey What Can I Say" play during the coffee break.
Wednesday 9/14/11, 10:45 AM/ET: Larry Fink: A Man Without A Business Card
Shortly after the panel on "The End of America," Black Rock chairman and chief executive Larry Fink was chatting with a much younger man in the back of the ballroom, says CNBC's John Carney.
After a few minutes, Fink began to move toward the door.
"I have to run to get on a call," Fink said. "We should continue this conversation."
"Do you have a card?" the young man asked.
"I don't have a card," Fink said.
Lesson: when you are Larry Fink you don't need a business card.
Wednesday 9/14/11, 10:28 AM/ET: Bigger Not Always Better
80 percent or so of all money in hedge funds is in the same couple of hundred firms, says Seides, which means that many people are, whether they know it or not, essentially following the same limited set of investment strategies. Which makes outperformance much harder to achieve.
Wednesday 9/14/11, 10:12 AM/ET: The Thing About AlphaTed Seides—co-founder of Protégé Partners—notes that in a universe of 10,000 hedge funds, the number of managers who can deliver "Alpha" (market-beating) returns is by nature going to be very small. Nonetheless, he notes that in 2011, virtually all the best asset management talent is in hedge funds.
It's telling, for example, that Warren Buffett turned to two hedge fund managers to help run Berkshire Hathaway, he says.
Wednesday 9/14/11, 10:07 AM/ET: Justify Your Fees
Do hedge fund managers really deserve 2 percent management and 20 percent performance fees? Panel attendee Jon Jacobson gave CNBC's Maneet Ahuja some of his thoughts in advance:
"Delivering fees, in my mind, comes down to delivering a net return to investors that A) has an alpha component - a return over and above that of the market, and B) is accomplished by taking less risk than that of the market.
Although there are varied approaches to achieving this, the number of managers that have a strong record of doing so over a long period of time is relatively small. As fundamental value investors, we start with the premise that security prices almost always move faster than and, in many cases overshoot, fundamental changes in the underlying businesses. This is driven by the fact that investors are alternately driven by greed on the one hand and fear on the other. Our deep fundamental research focus allows us to build a relatively concentrated portfolio of securities which we believe provides the opportunity to achieve equity-like returns with a high margin of safety. We are agnostic about geography, industry, and security type—our singular focus is crafting a portfolio that will yield the best risk-adjusted returns over the long-term. The long-term orientation and stable nature of our capital along with the investment flexibility allowed us are big advantages. This formula, together with an investment team that has been together for some time with deep knowledge of global sectors, has worked well for us."
Wednesday 9/14/11, 9:56 AM/ET: What Fink Doesn't Want
His 'must to avoid" investment is US Treasuries with 2 percent yields, and corporate bonds with slightly higher yields than that.
Wednesday 9/14/11, 9:52 AM/ET: Where To?
Whitney: It's going to be difficult to make money in the "big banks" in the US due to regulatory and legal issues. She calls them a "must avoid". Some emerging market banks look very attractive though. She says she's following banks in the Americas more than Asia.
Wednesday 9/14/11, 9:50 AM/ET: Fink on the Euro, and Europe
Things are bad in Europe, and investors are overwhelmingly shorting the market, but a solution will be found, says Larry Fink. Kicking Greece out of the Euro is not the solution.
Wednesday 9/14/11, 9:32 AM/ET: Get in the Game
The crisis of the future is likely to be under-investing, not taking on too much risk, says Fink, especially when it comes to pension funds that will have huge costs in the near future.
Wednesday 9/14/11, 9:32 AM/ET: Meredith Whitney: You have to empower the middle class to have growth.