Philippe Laffont coatue

Summary List Placement

A rising star from billionaire Philippe Laffont's Coatue is set to become the latest addition to the extensive Tiger Management family tree.

Peter Zhou, a former senior managing director at Coatue, is launching his own fund, according to several sources with knowledge of the situation. He has at least $300 million in commitments already, sources say.

It's unclear if the new venture has a name; Zhou declined to comment when reached by Business Insider, and Coatue declined to comment as well.

Zhou, who spent nearly a decade at Coatue before leaving earlier this year, was considered a rising star at Laffont's firm. As a fundamental investor at tech-focused Coatue, he made Forbes' 30-under-30 list in 2015 as a 28-year-old, and the magazine noted he was a specialist in hardware technology stocks.

See more:A new hedge fund run by a one-time minor league baseball player is set to spin off from billionaire Leon Cooperman's Omega Advisors

His current, self-given job title on his LinkedIn page is "generalist tech investor." Prior to joining Coatue, Zhou worked at Blackstone for three years after a summer stint at Morgan Stanley, according to his LinkedIn bio. A Harvard grad, Zhou was born in Shanghai but grew up in Minneapolis, according to Forbes.

The launch environment continues to be tricky, as the pandemic has made it difficult for investors to meet with potential backers; Hedge Fund Research found that more than double the number of the funds have closed through the first half of this year than have launched, with 213 launched and 483 shut down.

Even before the virus hit though, new funds were struggling to get off the ground, thanks to the rising cost of technology and data for new managers trying to break into an already crowded space. The last year more funds were launched than liquidated was 2014, according to Hedge Fund Research.

Zhou will be another addition to Coatue's branch of the extended Tiger Management family. Unlike fellow Tiger Cubs like Viking Global and Lone Pine, Coatue has a limited number of alumni running their own firms currently, according to a Business Insider review. The only active funds founded by former Coatue employees are Scott Stevens' Grays Peak Capital and Hong Kong-based Sylebra Capital Management run by Daniel Gibson and Jeff Fieler.

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The Bull of Wall Street

Summary List Placement

Nick Maounis' Verition Fund Management has surged this year despite the pandemic, ongoing market volatility and the US election.

Sources tell Business Insider that the Greenwich-based multi-strategy hedge fund is up 22.3% for the year through October, after gaining 1.5% last month.

The performance so far puts the firm near the top of the multi-strategy category in the industry, besting some better-known peers, according to performance numbers from a recent Institutional Investor article. Verition's 22.3% is better than billionaire Ken Griffin's Citadel and billionaire Izzy Englander's Millennium, which have returned 20.1% and 15.9% respectively.

Balyasny leads the way for multi-strategy managers with returns of roughly 25% for the year. The Chicago-based fund was one of the few firms that made money during the initial market volatility caused by the pandemic in March. In an April letter to investors— after a first-quarter return of 4.75% — Dmitry Balyasny told investors that the firm was "increasing our trading oriented macro strategies across rates, FX, and equities."

Large multi-strategy firms have been able to outperform throughout the year and avoid some of the troubles that quants and structured credit managers have run into. Hedge funds as a whole have trailed the stock market's performance this year, with Hedge Fund Research's global hedge fund index up a little over 1% for the year.

See more: How $6 billion Balyasny trounced most hedge funds in the first quarter — and where it's focusing next after losing a top macro investor

Verition — which has $2 billion in assets and is run by Maounis and the firm's president Josh Goldstein — declined to comment. The firm runs five strategies — equity, credit, quant, event-driven, and convertible arbitrage — that are all positive, individually, for the year.

Maounis is best known for his previous hedge fund, Amaranth Advisors, which closed in 2006 after a natural-gas trader lost billions in a trade gone wrong. He then started Verition in 2008, and has had success, with the firm's flagship fund averaging roughly 13% annual returns since its launch, according to a source familiar with the figures.

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Bill Ackman

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Billionaire investor Bill Ackman is urging President Donald Trump to concede the election and unite the country following his loss to President-Elect Joe Biden.

Ackman tweeted at Trump on Saturday evening following the official announcement that Biden had won the presidency, four days after Election Day.

"There comes a time in the battle when one should fold the tent," Ackman wrote, adding that Trump should focus on his accomplishments instead on contesting the election.

.@realDonaldTrump There comes a time in the battle when one should fold the tent. Instead focus on your accomplishments over the last four years. Think about your legacy and what’s best for the country. Concede graciously and call for unity from all who have supported you.
— Bill Ackman (@BillAckman) November 7, 2020

Trump has yet to concede to Biden despite major news outlets calling the race as early as Friday morning.

Ackman is the founder and CEO of Pershing Square Capital, a hedge fund management firm that has stakes in Chipotle, Starbucks, and Restaurant Brands International Inc., the owner of Burger King. Ackman is considered an activist investor who has made controversial bets that have cost the firm hundreds of millions of dollars, but his bold choices have paid off, too: Pershing Square made $2.6 billion betting that the coronavirus pandemic would tank the stock market in March, according to Markets Insider.

Ackman, who has a net worth of $2 billion, has contributed money to candidates from both political parties, but he typically gives more to Democrats, according to The New York Times.

In 2016, he urged Michael Bloomberg to run for president in an essay in the Financial Times, but he also seemed to praise Trump following the election at The New York Times' DealBook conference, according to Vanity Fair.

"The US is the greatest business in the world," Ackman said at the conference. "It's been undermanaged for a very long period of time. We now have a businessman as president."

In recent months, however, Ackman has been at odds with Trump about the pandemic. In March, he pled with Trump to shut down the country in order to contain the coronavirus, warning that "America will end as we know it" without lockdowns. Critics claimed that he issued such dire warnings in order tank the markets and benefit his hedge fund, which Ackman has denied.

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Ben Axler

Summary List Placement

$330 million short-seller Spruce Point Capital has a new target in its sights: Fortune 500 manufacturer Avery Dennison.

Avery Dennison, a California-based label-and-tape-maker, has used "manipulative accounting" to conceal poor finances, Spruce Point alleges in a new report released on Tuesday morning.

Spruce Point did not disclose the size of its short position. Short sellers gain when the share price of a company they have a short position in falls.

The report states starting with this year's SEC filings, the company has "ceased disclosing R&D expenses, operating lease costs (leading to an understatement of debt), and deferred revenues. Over time, Avery has also stopped disclosing price and volume drivers of revenue, revenue from new products, sales return liability, advertising costs, and non-cash Capex."

Similarly, the report claims that the company has also been reliant on restructuring charges to inflate its bottom line.

"We believe Avery has grown so dependent on restructuring charges to perpetuate growth that it has pivoted toward accounting manipulation," a release on Spruce Point's findings reads.

"In the past 20 years, Avery has recorded nearly $1 billion in restructuring charges. As this frequency and magnitude has increased, Free Cash Flow has not structurally increased."

See more: Ben Axler, founder of $330 million short-seller Spruce Point Capital, lays out the sectors he's bet against to take advantage of a huge market disconnect

In response to the allegations in Spruce Point's report, Avery Dennison said in a statement that the manufacturer "adheres to the highest standards of financial accounting, reporting and disclosure and categorically rejects any suggestion to the contrary."

"The company has made no material changes in its accounting for — or reporting of — research and development, lease expense or deferred revenue except to conform with changes in generally accepted accounting principles," the company said.

"Over the last decade, the company has delivered strong earnings and operating cash flow. In recent years, we have maintained debt levels below our long-term target while making significant investments for growth and productivity improvement and returning cash to shareholders. The company has continued to perform in a resilient manner throughout the 2020 COVID pandemic."

The potential impact for Avery, according to Spruce Point: the loss of more than half of its market capitalization, which would mean billions in value down the drain. The minimum hit to the stock, which currently trades at roughly $150 a share, is a 35% loss, according to Spruce Point.

"Absent extreme 2020 cost-cutting measures — targeting $150 million short-term and $70 million of long-term restructuring — cash flow would contract even further. Avery's actions will be a headwind when the global economy recovers, and show how it has been willing to sacrifice long-term earnings potential to meet short-term Wall Street earnings pressures," the release from Spruce Point reads.

The firm's report offered examples of Spruce Point founder Ben Axler's past successes shorting companies in the S&P 500, including the parent company of Arm & Hammer and Trojan condoms.

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Claire Zhou headshot

Summary List Placement

For 19-year-old Claire Zhou, life has been a lesson in the art of substitutions during the coronavirus pandemic.

Zhou, who finished her first year at Harvard University this spring studying math and computer science, used to start her day with breakfast surrounded by friends before heading to her first 9 a.m. class on the Ivy League campus.

Nowadays, Cambridge, Mass., has been replaced with her hometown of Houston. Her classroom traded places with her bedroom, which doubles as an office. Late-night study sessions with friends in the dorms swapped for catchups on FaceTime.

This fall, Zhou is taking the semester off from Harvard to intern in software engineering at Two Sigma, a financial firm that manages $58 billion in assets. Its businesses include a quantitative hedge fund, private equity, and market making. In July, while Zhou was completing her first 10-week summer internship with the firm, Harvard announced that, "with only rare exceptions," it would shift all of its classes online for the fall semester.

Feeling less than enthused by the news that she would be in for another virtual semester at Harvard, akin to the one that she had completed in springtime, Zhou approached her managers at Two Sigma in the summer with an unusual request: to extend her internship through the fall semester.

"I had already started looking, honestly, quite frantically for fall internship opportunities" while awaiting Two Sigma's answer, she said.

But during her search, she ran into a snag: "Based on how the recruiting timeline is structured today," she said, "looking for a September start date internship in late July and August is really just too late."

Inside Two Sigma, Zhou's request prompted some introspection about how best to accommodate it, and what it could mean for the future of the firm's internship program. Should the firm offer this extension to all of its interns? Only a select few?

Ultimately, by early September, Two Sigma decided to offer an internship extension to Zhou and a number of its summer intern class who, given their performance, were in good standing to be invited back to complete either another summer internship at a later date, or be offered a full-time position in the future.

While not all of the interns who were offered the autumn extension accepted it, Zhou and three others — students from Harvard, Stanford, and Caltech — did, and now have the option of extending through the spring semester as well.

College students nationwide have been experimenting with alternatives to online education during the pandemic

When Two Sigma made Zhou's extension official right after Labor Day, "I was beyond thrilled," she recalled. In addition to the chance to stick around through the spring, if she desires, Zhou has already been offered an internship spot at Two Sigma for summer 2021, too.

Zhou's decision to abstain from online classes in favor of sticking with Two Sigma comes amid a broader national trend. More than one third (34.6%) of college students said they planned to withdraw from their fall semester if their classes were fully online, according to the results of a survey released in May by OneClass, a website that offers study materials for students.

Now, Two Sigma is considering making these autumn internships part of its long-term plans.

"This has been a great test case for us, and certainly something we're going to be assessing for future years to see if this is something we'll want to continue to offer," Scott Grabarski, a managing director at Two Sigma and its head of engineering HR and talent acquisition, told Business Insider.

"In terms of online schooling, I do think that there's still merit to taking online courses, but there are just some aspects of in-person learning that can't be replaced or replicated in a virtual format," Zhou said. "Coming back to Two Sigma is just a way to continue learning from the environment, all along doing something that I find challenging, fulfilling, as well as impactful."

Zhou's internship extension has led to meaningful growth

For Zhou, the experience she gained having gone through onboarding and training on her summer internship made her transition to her fall internship smoother. "I was already really familiar with how my team operates," she said, and "how to collaborate with my team on a day-to-day basis."

Among the highlights so far: working this summer on a user interface for a tool that displays recommended trades; flexing her software engineering muscle by learning a new coding language; and participating in professional development workshops about networking or how to deliver effective presentations.

See more:Colleges thought they could manage financially in the pandemic. Dropping enrollment rates and COVID-19 outbreaks cropping up on campuses suggest they're wrong.

So far, she's remained on her original team doing software work — only one of the four interns switched teams, Zhou said — but she's now exposed to a variety of projects that are challenging and deepening her knowledge, versus solely focusing on one.

Compared to online classes, this internship has provided a crucial learning opportunity, Zhou said.

"The main differentiating factor is the amount of initiative that I put into doing research ... and figuring out how to implement things on my own," she explained. "I have a lot more freedom to kind of go around and work on what I want to as well as just be really open with my teammates and collaborate with them at a level in which I'm not just an intern, but also their equal."

Many students have expressed disappointment with virtual classes

In March, colleges and universities nationwide shuttered their doors and pivoted to online classes as the coronavirus spread rapidly. But as many as 75% of students said they were unsatisfied by the quality of their digital learning experience, according to the results of survey conducted by OneClass which were published in April.

This fall, Zhou said that she has noticed "a surge in students on leave."

"A lot of my friends are actually also taking leaves of absence this semester," she said, and, while that was an element motivating Zhou's request to stay at Two Sigma, the chance to grow her skills was the overarching factor underpinning her decision.

Meanwhile, universities are likely to face tough questions over how to make a case for high tuition costs while offering a virtual-only product. Indeed, undergraduate tuition for the 2020-2021 school year at Harvard College is $49,653.

At Two Sigma, interns earn a salary that would be commensurate with a $135,000 annual salary, a source familiar with the matter told Business Insider. Representatives for Harvard University did not respond to a request for comment.

But in spite of Two Sigma's internship extensions this year, Grabarski signaled that it shouldn't be seen as the firm diminishing how it sees the value of a college degree.

"We definitely do value education and we're not looking to encourage students to be dropping out of school," Grabarski said. "While the pandemic has certainly changed how and where our employees work, and in many ways how we recruit, it is too early to say if it will have a broader impact on academic requirements."

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Chase Coleman

Summary List Placement

The insular world of hedge funds is slowly trying to crack open its doors.

Long dominated by white men with Ivy League educations, the more-than-$3-trillion industry has struggled to diversify its ranks.

Now, one of the premier funds in the space — $42 billion Tiger Global — is telling investors it has to do better and has created a new position to help them add diversity to its team.

"Our hiring practices to date have typically focused on recruiting from a limited number of New York investment firms," the firm wrote to investors in a letter dated Oct. 30.

"For us to do better, we know we must improve our outreach and recruiting processes."

The firm has started the process by hiring Lisa Rikkers to be its first director of talent in August; the letter states Rikkers, who was the director of senior hires at McKinsey, "is working with our team to expand our recruiting channels and meet diverse pools of candidates earlier in their careers."

The firm declined to comment.

See more: Chase Coleman's Tiger Global reveals why it likes TikTok parent ByteDance even more

Diversity in corporate America became a focus across industries due to the global protests demonstrating against the police killing of George Floyd in the summer. Citi CFO Mark Mason, one of the highest-ranking Black executives on Wall Street, wrote an intimate blog on the bank's website in May reflecting on how, even though he is a wealthy executive, he lives in a dangerous world as a Black man. A senior vice president at Target told The Wall Street Journal about how cops pulled guns on him as he returned to his own home after a jog. Many companies adopted Black Lives Matter as corporate policy.

In the hedge fund space, where secretive funds are typically quieter than public companies in other industries, there has been incremental change. A report from Preqin last year found that women only hold 10.9% of senior roles at hedge funds, and a EY study published Tuesday found that people of color make up 10% or less of investments teams at a majority of hedge funds.

Despite this, EY found that 70% of hedge funds have no formal diversity initiatives, and improving gender and racial diversity did not rank as a top-three priority for talent management teams at a majority of hedge funds.

At Tiger Global, which runs more money in its private funds now than its flagship hedge fund, the firm has 39 people performing investment tasks, according to a regulatory filing from March. The letter did not break down the team's diversity figures and the firm declined to disclose them.

"We know it is important to increase the diversity of our team not only for our culture, but also to ensure we incorporate different perspectives as we seek to make the best investment decisions," the letter reads.

"We acknowledge we could have done more in this respect in the past, and we are committed to doing better in the future."

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bill ackman

Summary List Placement

Bill Ackman has insured his Pershing Square hedge fund against a surge in corporate defaults after making $2.6 billion on a similar bet in the spring, according to the Financial Times.
The Pershing Square chief placed the wager on Monday after news about a promising COVID-19 vaccine broke, he said at the Financial Times' Dealmakers Conference on Tuesday.
"What's fascinating is the same bet we put on eight months ago is available on the same terms as if there had never been a fire and on the probability that the world is going to be fine," Ackman said.
Ackman described the vaccine news as "bearish" because it could spur people to take the virus less seriously, and he predicted a difficult few months before the economic recovery takes off.
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The billionaire investor Bill Ackman turned $27 million into $2.6 billion earlier this year by insuring his hedge fund against a wave of corporate defaults. The Pershing Square chief placed a similar bet — almost 30% of the original's size — on Monday after news about an effective COVID-19 vaccine broke, he said at the Financial Times' Dealmakers Conference on Tuesday.

"I hope we lose money on this next hedge," Ackman said, according to the Financial Times.

"What's fascinating is the same bet we put on eight months ago is available on the same terms as if there had never been a fire and on the probability that the world is going to be fine," he added.

Ackman described the vaccine news as "bearish" during his keynote speech, the Financial Times said. He cautioned that people could become nonchalant about wearing masks and might worry less about catching or spreading the virus with mass inoculation on the horizon.

Investors are underestimating the continued threat of the coronavirus, Ackman continued, predicting a tough few months before an economic recovery takes hold. The hedge-fund boss sounded the alarm on the pandemic in March during an emotional CNBC interview.

Hitting the jackpot

Ackman's winning idea in February was to buy credit-default swaps — which insure the buyer against an issuer defaulting — on investment-grade and high-yield bonds.

Pershing Square spent just $27 million on premiums for the hedges, which ballooned in value to $2.6 billion after the pandemic increased the odds of corporate defaults. The profits from the trade offset the blow to Pershing Square's equity portfolio when markets tanked.

Ackman and his team cashed out and decided to capitalize on depressed stock prices, plowing more than $2 billion of the windfall into Pershing Square's portfolio companies by March 18.

The fund boosted its stakes in Warren Buffett's Berkshire Hathaway — a position it exited a few months later— as well as in Hilton, Lowe's, and Burger King's parent company, Restaurant Brands, and it also reinvested in Starbucks.

Pershing Square's timing meant it benefited significantly from the subsequent market rally. The fund is up 44% this year as of October 31, it said in its latest portfolio update.

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Steven Schonfeld, Ryan Tolkin, Andrew Fishman

Summary List Placement

Schonfeld Strategic Advisors wants more money.

The $5.8 billion hedge-fund manager is in the process of raising more capital for its $2.2 billion Fundamental Equity Fund, according to a presentation sent to prospective investors obtained by Business Insider.

The presentation goes into detail on the make-up of both the fund — its expenses, structure, performance, and personnel — as well as the firm, which was founded by billionaire Steven Schonfeld and is currently run by CIO Ryan Tolkin and president Andrew Fishman. The firm declined to comment.

See more: Billionaire-run hedge fund Schonfeld fired an executive assistant who added 'Black Lives Matter' to her email signature, saying she didn't get it approved properly first

The presentation is 24 pages, and dense with information.

The firm breaks down the three different subsectors that its portfolio managers fall into — quant, fundamental equity, and tactical trading, which looks to take advantage of random market dislocations like index rebalancing — and where each of them fit in the firm's two funds.

Schonfeld has $5.8 billion in outside capital, including hundreds of millions from its own portfolio managers, across its two funds, the Fundamental Equity fund and the larger Strategic Partners fund. While Schonfeld has been investing and operating in the markets for decades, the firm only recently decided to take outside capital, in 2016.

In an interview with Business Insider in 2019, Tolkin, the firm's CIO, said that the goal was to become the premier equity manager in the world.

Driven by 52 portfolio managers, the fund's investment team headcount runs high

The Fundamental Equity fund, which was launched in 2016, has $2.2 billion of capital spread across 52 portfolio managers, and their teams. Forty-one of these teams are fundamental equity managers, while 11 are tactical trading teams; the Strategic Partners fund is the only fund that includes the quant portfolio managers' contributions.

The firm's diversified strategies help protect against one bad bet sinking the fund, but means the headcount on the investment team runs high.

Schonfeld, with its dozens of portfolio managers, has nearly 200 analysts, traders, PMs, and researchers. In total, the firm has more than 800 people working at it. For comparison, at Tiger Global, which manages $42 billion across different funds, less than 40 people work in investment roles, according to the firm's regulatory filing from March.

The firm touts its fundamental equity portfolio managers' backgrounds in the presentation to prospective investors: The most common resume pit stops are at Steve Cohen's former firm SAC Capital and current manager Point72 (12), Ken Griffin's Citadel(10), Izzy Englander's Millennium (8,) and the eponymous manager of Dmitry Balyasny (6), who used to work at Schonfeld.

See more: Inside the alumni network of billionaire Israel Englander, the founder of $46 billion hedge-fund behemoth Millennium

The presentation tries to sell prospective investors on the firm's ability to recruit and retain top portfolio managers. Schonfeld describes the terms it typically offers PMs — exclusivity for two to three years, on-demand liquidity, 15 to 20% of the profits earned for the fund — as well as the process to get hired.

The firm uses its existing portfolio managers and recruiters to get leads on new managers, and then the due diligence begins. The first stage of the process includes an independent assessment by each member of the firm's advisory committee, a back-test of performance, and a risk questionnaire.

Then a candidate will be asked for references, to construct a budget for their team, and give a vision on future hires while laying out how they come up with investment ideas. Then senior management still has to debate whether a new hire is worth the investment and finalize the deal.

"Why Schonfeld?" one slide's title reads.

"Talent Is Our Strategy."

Schonfeld's Fundamental Equity fund performance is up 6.7% this year but hasn't met the firm's goals

The fund's performance has been solid, according to the presentation: It has returned 6.7% through the end of September this year. The average hedge fund through the same time period was up roughly 0.6%, according to Hedge Fund Research. Previously, the fund has been positive every year except for 2016.

Still, it has not met the performance goals the firm lists in the presentation, which is to be positive at least 75% of the months it trades in. So far in the 51 months of performance Schonfeld is revealing to investors, the fund has made money in 36 of them — a rate of 71%.

The fund's biggest sector exposure is to IT companies, with 18% of the fund's portfolio invested in those companies, according to one slide in the presentation. Meanwhile, a majority of the fund's exposure is to American companies with Asian companies in a distant second. The firm has offices in Singapore and Hong Kong, as well as London, and is spread across the US. Portfolio managers work from typical places like New York, Chicago, and Los Angeles, as well as Dallas, South Carolina, and Florida.

A look at Schonfeld's fee structure

Investors have three different fee and lock-up structures they can access if they want into the fund, and there are some advantages for making a big bet on Schonfeld.

For those willing to put up a minimum of $25 million, Schonfeld's Class A shares charge investors a 2% management fee and 20% performance fee, but has no withdrawal fees and can pull their capital out at any time.

Class B and Class C, while offering management fees of 1.5% and performance fees of 15% and 12.5%, respectively, force investors to keep their money in the fund for a mandated stretch of time — one year for Class B, or pay a 5% withdrawal fee before the year is up. For Class C, the investment must stay in the fund for two years and investors would have to pay a 5% withdrawal fee if they wanted to pull their money out in the third year of their investment.

For the two latter classes, investors only need to put up $10 million, according to the presentation.

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masayoshi son softbank

Summary List Placement

SoftBank's new trading arm, SB Northstar, led by CEO Masayoshi Son, posted $3.7 billion in losses as bearish derivatives bets on tech stocks floundered, the Financial Times reported on Wednesday.
The arm was mostly kept secret until the Financial Times reported in September that it was making multibillion-dollar bets on tech giants through the summer's market rally.
The move into risky day trading has raised concerns at Elliott Management, a hedge fund thought to be SoftBank's second-biggest shareholder.
Elliott helped guide SoftBank's rebound from spring losses by urging asset sales and share buybacks. But Son's focus on day trading is butting heads with Elliott's more conservative investing style, The Wall Street Journal reported.
Visit Business Insider's homepage for more stories.

SoftBank's new tech-focused trading unit is already down $3.7 billion. The company's second-largest shareholder is now stepping in to offset the losses.

SB Northstar, the unit led by SoftBank CEO Masayoshi Son that trades the daily moves of tech stocks, revealed its losses for the first time on Wednesday, the Financial Times reported. The arm was kept in the shadows until September, when the Financial Times reported that it was the "Nasdaq whale" trading billions of dollars' worth of options contracts on tech stocks through the summer.

While a former Deutsche Bank trader heads the unit now, Northstar's trades are approved by a three-person panel that includes Son and Ron Fisher, SoftBank's vice chairman.

The trading arm had bought nearly $17 billion worth of shares in tech giants and another $3.4 billion in stock derivatives by the end of September, according to the Financial Times. While some of Northstar's more bullish positions gained as tech stocks rallied through the summer, short bets fueled the bulk of the quarter's multibillion-dollar loss.

Son's focus on day trading marks a shift in his investing style. Though the SoftBank founder is known for riskier investments — including a stake in WeWork, the floundering shared-workspace startup — his successes have hinged on long-term gains and profiting on secular growth trends. Whereas SoftBank's famous $100 billion Vision Fund invests in private tech companies, Northstar actively trades shares of public firms.

The riskier investing style and Northstar losses sparked concern at the hedge fund Elliott Management, The Wall Street Journal reported on Wednesday. The activist fund has slowly built up a stake in SoftBank that likely makes it the company's second-biggest shareholder.

When SoftBank shares nose-dived in the spring, Son and other executives at the company reached out to Elliott for counsel. The hedge fund's executives advised SoftBank to buy back shares and improve governance, The Journal reported. SoftBank exceeded Elliott's buyback target and sold more than $92 billion in assets to build a healthy cash buffer.

But some at the hedge fund fear that Son's move into day trading could plunge SoftBank into another risky position, according to The Journal. A few Elliott executives are so concerned that they've even hedged against Northstar's positions with put options on tech stocks. If Northstar's bullish tech bets fail, Elliott's bearish positions would counter the losses.

In recent calls with SoftBank, Elliott has emphasized the need to stay disciplined instead of pursuing another multimillion-dollar tech bet, according to The Journal. The hedge fund already helped SoftBank recover from its spring plunge, but the two still have investing styles that butt heads. Whether SoftBank follows Elliott's more cautious approach or returns to its make-or-break investing style remains to be seen.

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Paul Tudor Jones

Summary List Placement

Billionaire Paul Tudor Jones is riding the bitcoin wave.

The founder of Tudor Investment Corporation and manager of the $3.7 billion BVI Global fund is up more than 9% for the year through October, according to HSBC's most recent Hedge Weekly report. The performance can partially be attributed to his bets on bitcoin, which he told clients in April make up a low single-digit percentage of the fund's total assets.

"The best profit-maximizing strategy is to own the fastest horse. If I am forced to forecast, my bet is it will be Bitcoin," Jones said in the client note from April.

He doubled down on that stance in late October during an interview with CNBC, saying the cryptocurrency — which is trading at its highest price in years currently — "was going to be the best inflation trade." Tudor isn't the only institutional-level investor that's diving into bitcoin; Grayscale, which manages a suite of crypto trusts, said that 81% of their $1 billion in inflows in the third quarter came from institutional managers.

A spokesperson for Tudor declined to comment further.

See more: Nick Maounis' $2 billion Verition Fund Management is up more than 22% — outpacing other multi-strategy hedge funds like Citadel and Millennium

Jones' success this year — his fund is far outpacing the average hedge fund returns of 1.2% for the year, according to Hedge Fund Research — is matched and even exceeded by other big-name macro managers.

Caxton Associates, run by Andrew Law, is up more than 35% through the first week of November for the year in its $4.3 billion flagship fund. Brevan Howard has had a resurgent year, and its $830 million AS Macro Master fund, run by Alfredo Saitta, has returned more than 14% through the first week of November.

Massar Capital, run by Marwan Younes, is up more than 20% through October despite losing money last month, HSBC's report states. Younes told investors earlier this year that he leans on his childhood experiences growing up during Lebanon's civil war to stay calm during bouts of market stress.

"This background naturally shapes one's outlook to be highly defensive, based first on maximizing the odds of survivability, instead of the natural impulse to maximize profits," he wrote.

The managers either declined to comment or did not respond to requests for comment.

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steve cohen

Summary List Placement

Palantir jumped as much as 18% to record highs on Tuesday after 13-F filings revealed large stakes scooped up by hedge funds like Steve Cohen's Point72 and Daniel Loeb's Third Point Management.
On the flipside, Soros Fund Management disclosed a stake in Palantir but said it already sold it, according to a statement given to CNN Business.
Soros Fund Management said it "does not approve of Palantir's business practices" and "made this investment at a time when the negative social consequences of big data were less understood," according to CNN.
Palantir was co-founded by Peter Thiel and went public in late September.
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Palantir, the big data analytics company that counts the US government as a top customer, surged as much as 18% to record highs on Tuesday as 13-F filings revealed several hedge fund stakes in the company.

Palantir was co-founded by Peter Thiel and went public in September.

Steve Cohen's Point72 Asset Management disclosed one of the largest stakes in Palantir as of September 30, amounting to 29.9 million shares, or about a 2.0% stake in the company.

Anchorage Capital disclosed a 2.9 million share stake in Palantir, and Daniel Loeb's Third Point Management disclosed a 2.4 million share stake in Palantir.

But one hedge fund that disclosed a stake in Palantir already sold it: George Soros' Soros Fund Management.

According to a regulatory filing with the SEC, Soros Fund Management disclosed a 18.5 million share stake in Palantir as of September 30, or about a 1.2% stake in the company.

But in a statement to CNN Business on Tuesday, Soros Fund Management said the firm has already sold its stake in the company. The position in Palantir derived from an early-stage investment made in 2012, according to the statement.

Additionally, Soros Fund Management said it "does not approve of Palantir's business practices" and that it "made this investment at a time when the negative social consequences of big data were less understood," according to the statement.

Soros finished the statement by saying it would "not make an investment in Palantir today." For now, Steve Cohen and Dan Loeb are willing to take the other side of that bet.

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Hedge fund salaries composite

Summary List Placement

For many Wall Street aspirants, a career at a top hedge fund is the holy grail. For those who succeed, compensation has the potential to eclipse nearly any other profession in the country — let alone finance.

The hedge fund industry has transformed over the past 15 years. Whereas fundamental investment strategies once ruled the day, increasingly the flow of talent and capital is shifting toward firms with sophisticated quantitative strategies and data-mining operations.

Today, most of the largest and most successful funds have significant quant operations, if not a complete emphasis on quantitative investing. Firms like AQR, Bridgewater, Citadel, D.E. Shaw, Point72, and Two Sigma vigorously compete for the most promising young financial minds — and they pay hefty sums to lure in top candidates.

Bonuses play an outsized role in overall comp at most funds, especially in investment roles, but base salaries are still substantial and figure prominently especially at the more junior levels, where employees typically have a less direct impact on overall returns.

Some of the brightest minds in systematic trading and quantitative research were born and educated outside the US, and some funds stock their US rosters with foreign labor. When US companies file paperwork for visas on behalf of current or prospective foreign workers, they're required to say how much base compensation the workers are offered. And every year, the Office of Foreign Labor Certification discloses this salary data in an enormous dataset.

Business Insider analyzed the agency's disclosure data from the past three years for permanent and temporary foreign workers to shed light on what these hedge funds paid for talent. The jobs were based around the country and do not reflect bonuses, which can be substantial.

According to US Department of Labor documentation, the offered wages in the disclosure data are the minimum amounts companies provided in foreign labor certification applications for specific workers.

The wages are derived from the average compensation that similar employees in each given job, industry, and with comparable qualifications are paid, which is known as the "prevailing wage." Prevailing wage sets a floor for their salary, but salaries are often much higher than the prevailing wage.

Representatives for the funds either did not respond to or declined requests for comment.

AQR

At AQR Capital Management, the quant fund founded by Cliff Asness in 1998 that manages roughly $140 billion in assets, financial analyst is the most common role it hires foreign workers for. On average, these analysts make about $125,000 in base salary.

The Greenwich, Connecticut-based hedge fund — which has fewer than 900 employees after cuts at the beginning of the year — pays financial quantitative analysts at the associate level about $150,000 in base salary.

The firm has also used H-1B visas to hire a bevy of software developers. A vice-president level systems software developer earns a little over $190,000, while VPs in applications software development earn just over $175,000 on average.

Bridgewater

With roughly $140 billion in assets under management and 1,500 employees, Bridgewater is an industry heavyweight.

The Westport, Connecticut-based firm hires scores of foreign workers annually — second only to Citadel, according to Office of Foreign Labor Certification records.

Typically junior employees are hired to an "associate" level position. Compensation at this level can vary by job focus, given the sprawling nature of the firm.

The most typical salary starting point for these employees — comprising dozens of visa submissions for "investment associates"— was $97,000, but there was a wide range of salaries and some earned twice that much. The average range for other positions broke down like this:

Computer scientist — $100,000 to $210,000
Economic analyst — $96,500 to $180,000
Mathematics analyst — $96,000 to $150,000
Policy analyst — $97,000 to $182,000

The median salaries for other financial associate-level positions with multiple entries included:

Portfolio associate — $97,000 to $120,000
Client service research associate — $101,000 to $155,000
Research associate — $123,000 to $150,000

Applications software developers are one of the most common roles Bridgewater hires foreign workers for. Salary ranges by title include:

Technology associate — $110,000 to $146,000
Software engineer — $129,000 to $175,000
Senior software engineer — $138,000 to $222,000
Tech lead — $133,000 to $342,000

Citadel

At billionaire Ken Griffin's ultra-competitive Citadel, entry-level associates made on average $150,000 in base salary, according to the filings.

The $35 billion hedge fund, which hit 30 years old this month, hired the most foreign workers out of all hedge funds, data show.

Beyond entry-level positions, the filings show that software engineers at Citadel — the hedge fund business only, not the separate market-making entity — make a little over $152,000 a year at a minimum. The average maximum salary for this role is over $162,000.

Another popular role that Citadel recruited from abroad for was quants — in particular quantitative researchers. The average minimum salary for this position is just under $175,000, while the max is more than $180,000.

D.E. Shaw

Founded in 1988 by David Shaw, D.E. Shaw is one of the oldest quant hedge funds in the game.

The firm, which has over $50 billion in assets under management and 1,700 employees, boasts about the mathematical chops and international representation on staff, noting on its website that employees hold, 23 International Math Olympiad medals, 89 PhDs, and speak 65 different languages.

Here's how much certain roles at the firm are paid in base salary, based on H-1B salary data:

Financial analysts — $150,000
Quantitative analysts — $210,000
Systems software developers — $200,000 on average.
Statisticians — $250,000.

Point72

Billionaire Steve Cohen, Major League Baseball's newest team owner and the founder of Point72, has an array of titles and roles that he recruits from abroad.

According to the applications, the firm has hired everything from coders to data scientists to compliance professionals.

The most common role though is "research analyst"; these employees make on average a minimum of $137,946 in base salary, and a maximum of $175,000.

Two Sigma

Quant powerhouse Two Sigma — which is currently letting some students extend their internships through fall in lieu of taking virtual college classes — battles not just Wall Street, but Silicon Valley for top talent.

The New York-based manager, founded by billionaires David Siegel and John Overdeck, recruits heavily from oversees, the immigration applications show. The most common roles by far were software engineers and quant researchers, with more than 120 applications for these roles over the last three years.

The average minimum salary for both software engineers and quant researchers came in at $170,000 annually — before any bonuses.

Geoffrey Horrell, Refinitiv

Summary List Placement

Financial firms are putting more resources towards using complex forms of machine learning. And that means they'll also need to develop ways to better understand the tech and explain it both internally and to regulators.

A recent survey by data giant Refinitiv on the use of artificial intelligence and machine learning in financial services found that 75% of respondents were using some form of deep learning, a type of ML that includes a series of complex, ever-evolving calculations. Those surveyed included data scientists, quants, and executives at a variety of financial firms.

Geoffrey Horrell, head of Refinitiv Labs in London, told Business Insider that the surge of interest in deep learning means firms will need to invest resources in understanding these complex algorithms.

Deep-learning techniques can be used to handle more complex problems thanks to their ability to ingest and understand significant amounts of data. However, that additional firepower comes at a cost.

"As you see that growth in deep learning, and particularly around the text analysis part of deep learning, there's that need to have better explainability," Horrell said.

Wall Street's AI leaders are already considering explainability

The increased focus on being able to explain and interpret machine-learning techniques stems from the top, Horrell said. Leaders in the field have already set up governance teams for their AI models and are filling roles focused on ensuring the tech is used appropriately and fairly, he added.

For all the benefits the use of artificial intelligence offers— streamlining manual processes and faster analysis of data — the tech still has its hangups. AI models have been found to be racially biased, often times because of the datasets they ingest.

As a result, the industry has been hesitant about where to deploy the tech, especially when it pertains to decisions directly impacting customers.

In May, Business Insider reported that Bank of America hired Diane Daley, a former Citigroup executive, to lead its enterprise governance function. Daley's responsibilities include AI policies, standards, and oversight.

Cathy Bessant, the bank's chief operations and technology officer, has long been outspoken about the responsible use of AI. Bank of America was a founding donor of Harvard's Kennedy School of Government's Council on the Responsible Use of Artificial Intelligence in 2018.

In August 2019, Business Insider reported some of the largest Wall Street banks, including Morgan Stanley and Citi, were in the process of forming a working group.

"There is a lot of interest and activity in this whole area," Horrell said. "The people who are leading are talking about this, and I think things may follow rapidly."

Regulators also want firms to show their work when it comes to AI

The increased use of machine learning has also caught regulators' eyes, Horrell said. In particular, rule makers are keen to understand how the technology would be applied to making decisions that directly impact customers.

Things like credit decisions, know-your-customer processes, and anti-money laundering tools all fall into that category.

In short, anytime a choice is being made about whether a service will be given to someone, regulators want to understand how the firm reached that conclusion, Horrell said.

And while regulators have yet to put forth specific rules around how they want firms to monitor AI usage, considerations are already being made. The European Union currently preparing its first set of rules around AI.

"The idea that regulation might come, again, means that people will want to get interested in this," he said.

To be sure, it's not just regulators that are motivating firms. The companies themselves are eager to understand how these technologies reach different decisions.

While the use of AI for investment research or trading ideas might not catch the eye of regulators, it is important for firms to understand how those techniques will work under different market conditions.

Horrell said investors want to make sure AI-based models are robust enough to withstand various market conditions, as opposed to doing just enough data-mining to find some correlations that might not stand the test of time.

The rise of quantamental strategies— the use of quantitative and fundamental techniques — has further increased those efforts.

As traditional funds look to incorporate more quantitative modelling into their process, it's important for them to understand how the tech works, Joshua Pantony, CEO of Boosted.ai., a fintech that helps fundamental managers use quantitative skills.

"Explainable machine learning that can tell you what it's doing has probably been the single most important success factor we've seen in clients trying to take the quantamental approach," he said.

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Hedge fund salaries composite

Summary List Placement

Business Insider analyzed the agency's disclosure data from the past three years for permanent and temporary foreign workers to shed light on what these hedge funds paid for talent.

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Summary List Placement

Alternative data is a lot of things: a rapidly growing industry; the lifeblood of hedge funds; table stakes for any serious investor.

It's also untapped in Europe, and the latest hire by Nasdaq's Quandl unit is hoping to source the continent's most valuable datasets for the firm's clients. Quandl, a data platform used by hedge funds and banks to find alternative datasets, was bought by Nasdaq in late 2018 for an undisclosed amount.

Hamza Khan is Quandl's first-ever head of European data, the firm said in a release, joining the firm after founding his own alt-data firm, Suburbia, which was backed by Dutch bank ING Group. Khan will be based in Amsterdam, but will be sourcing data from across the continent, he told Business Insider in an interview.

While the firm's investor clients are interested in data on the region's biggest economies — the United Kingdom, Germany, and France, mostly — "we see companies, fintechs, disruptors, unicorns across Europe," said Khan.

See more: How one alt-data company that rates CEO performance aims to be the S&P or Moody's of tracking management teams — and expects a surge of interest from data-starved ESG investors

New datasets are being uncovered every day; an IBM study from 2016 found that 90% of data in circulation was created in the two years prior, and alternative data providers have exploded in the intervening years, with hundreds — mostly based in the US — active today.

Europe, despite its mature capital markets, has been "a challenge for us to get good information," says Bill Dague, Nasdaq's head of alternative data, in an interview. The "fragmented" nature of the continent — with different data privacy laws in different countries, has complicated data collection and cultivation.

"Investor demand for European alternative data has been rising, but supply has not kept pace," said Tammer Kamel, head of Nasdaq's Quandl, in a release.

"We need boots on the ground, someone who understands local markets," Dague said.

In steps Khan, who will work with young fintechs in Europe to help them create sellable data packages as well as seek out prepared data for investor clients.

"There's a whole lot of untapped potential in Europe because the barrier to entry is so high," Dague said. "The pockets of opportunity are very similar to what we saw in the US."

See more: Credit-card data is broken. Here's how hedge funds and banks are being forced to rethink one of the earliest alt-data plays.

Specifically, Quandl is looking at transaction data. Credit-card data and email receipt data are some of the most widely used data in the US, with nearly every hedge fund trading equities purchasing this information.

Europe's payment fintechs, Khan says, provide a potential launch point for a similar strategy abroad.

While data can be trickier to find Europe, hedge funds naturally have not shied away from the continent. Khan said funds are investing in data resources abroad — proving the demand for European alternative data.

"It's no longer just portfolio managers that funds are sending to London, it's data scientists and data scouts," he said.

"We are seeing a more dedicated data presence in Europe."

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Goldman Sachs NYSE

Summary List Placement

Hedge funds are notoriously secretive, famed for using a number of different strategies to achieve high returns for investors, including aggressive and derivative-based techniques.

Goldman Sachs has removed some of the secrecy. On November 19, Goldman Sachs' equity analysts analyzed 814 hedge funds with $2.4 trillion of gross equity to gain better insight into hedge fund positions both long and short.

The analysis predominantly looks at 13F filings as of November 16 to understand hedge funds long positions and leverage publicly disclosed short interest statistics from exchanges to understand their short positions.

The equity analysts then break down the most important stocks for hedge funds, placing the top 50 stocks that are most important to hedge funds into a bucket known as VIP ("Very Important Positions).

Hedge funds have been under pressure in recent years due to underperformance and high fees. In 2019, hedge funds posted their strongest year since 2009 but still lagged behind the broader stock market, according to MarketWatch.

Despite this, Goldman Sachs basket of top hedge fund stocks still outperformed the S&P 500.

"Due in part to its concentration in Growth stocks, our Hedge Fund VIP basket of the most popular hedge fund long positions (ticker: GSTHHVIP) has outperformed the S&P 500 by 20 pp YTD (32% vs. 12%)," said Goldman Sachs' equity analyst, Ben Snider. "This would represent the basket's strongest annual excess return on record since 2001."

However, the analysts do note that hedge funds have been increasingly relying on market beta to support returns and that funds have reduced portfolio concentration to the lowest level in five years.

"But recent vaccine announcements caused the sharpest reversal in our Momentum factor's 40-year history, eroding hedge fund alpha as well," Snider said.

Some market analysts, however, question how accurate the list is as it is based on 13F filings, which might not be reflective of current holdings.

"Importantly, we believe our analysis of hedge fund holdings based on 13F filings with 45-day delays is generally more reflective of actual current holdings than many market participants are inclined to believe," Snider said.

Goldman Sachs also provides a complimentary top 50 short basket called the "Very Important Short Positions." These are the S&P 500 stocks with the highest total dollar value of short interest outstanding. These are not based on 13Fs but publicly disclosed short interest statistics, meaning swaps and other derivatives are not included.

"The performance of a long GSTHHVIP/short GSTHVISP pair tracks hedge fund performance better than the long GSTHHVIP/short S&P 500 pair. The long/short VIP pair has generated an average quarterly return of 131 bp (5.2% annualized) since 2001, just 1 bp below the average return of the HFR Equity Hedge index but with a higher information ratio (0.36 vs. 0.28)."

Here's Goldman Sachs top 15 most important stocks to hedge funds and the top 15 short positions for US holdings.

Top 15 most important long positions:

1. Amazon.com Inc

Ticker:AMZN

YTD return: 70%

Number of funds with positions owning the stock: 179

Number of funds with stock as top 10 holding: 113

2. Facebook Inc

Ticker:FB

YTD return: 34%

Number of funds with positions owning the stock: 163

Number of funds with stock as top 10 holding: 87

3. Microsoft Corp

Ticker:MSFT

YTD return: 37%

Number of funds with positions owning the stock: 154

Number of funds with stock as top 10 holding: 82

4. Alibaba

Ticker:BABA

YTD return: 21%

Number of funds with positions owning the stock: 114

Number of funds with stock as top 10 holding: 56

5. Alphabet Inc

Ticker:GOOGL

YTD return: 32%

Number of funds with positions owning the stock: 108

Number of funds with stock as top 10 holding: 53

6. Visa

Ticker:V

YTD return: 13%

Number of funds with positions owning the stock: 94

Number of funds with stock as top 10 holding: 37

7. PayPal Holdings

Ticker:PYPL

YTD return: 78%

Number of funds with positions owning the stock: 97

Number of funds with stock as top 10 holding: 34

8. Apple Inc

Ticker:AAPL

YTD return: 64%

Number of funds with positions owning the stock: 80

Number of funds with stock as top 10 holding: 33

9. Mastercard Inc

Ticker:MA

YTD return: 13%

Number of funds with positions owning the stock: 83

Number of funds with stock as top 10 holding: 31

10. Charter Communications

Ticker:CHTR

YTD return: 32%

Number of funds with positions owning the stock: 51

Number of funds with stock as top 10 holding: 28

11. Fiserv Inc

Ticker:FISV

YTD return: -5%

Number of funds with positions owning the stock: 65

Number of funds with stock as top 10 holding: 25

12. Salesforce.com Inc

Ticker:CRM

YTD return: 58%

Number of funds with positions owning the stock: 66

Number of funds with stock as top 10 holding: 25

13. T-Mobile US Inc

Ticker:TMUS

YTD return: 64%

Number of funds with positions owning the stock: 60

Number of funds with stock as top 10 holding: 25

14. Uber Technologies Inc

Ticker:UBER

YTD return: 64%

Number of funds with positions owning the stock: 67

Number of funds with stock as top 10 holding: 25

15. Fidelity National Info Svc

Ticker:FIS

YTD return: 7%

Number of funds with positions owning the stock: 73

Number of funds with stock as top 10 holding: 24

Top 15 Short Positions:

1. Intel Corp

Ticker:INTC

YTD return: -22%

Value of short interest (as of October 30): $3.8 billion

Short interest (as of October 30) as a percentage of float cap: 2%

Number of funds with stock as top 10 holding: 0

2. AT&T Inc

Ticker:T

YTD return: -21%

Value of short interest (as of October 30): $3.7 billion

Short interest (as of October 30) as a percentage of float cap: 2%

Number of funds with stock as top 10 holding: 4

3. Advanced Micro Devices

Ticker:AMD

YTD return: 82%

Value of short interest (as of October 30): $3.5 billion

Short interest (as of October 30) as a percentage of float cap: 4%

Number of funds with stock as top 10 holding: 8

4. Comcast Corp

Ticker:CMCSA

YTD return: 13%

Value of short interest (as of October 30): $3.5 billion

Short interest (as of October 30) as a percentage of float cap: 2

Number of funds with stock as top 10 holding: 12

5. Aon Plc

Ticker:AON

YTD return: 0%

Value of short interest (as of October 30): $3.4 billion

Short interest (as of October 30) as a percentage of float cap: 8%

Number of funds with stock as top 10 holding: 8

6. Duke Energy Corp

Ticker:DUK

YTD return: 6%

Value of short interest (as of October 30): $3.3 billion

Short interest (as of October 30) as a percentage of float cap: 5%

Number of funds with stock as top 10 holding: 1

7. Analog Devices Inc

Ticker:ADI

YTD return: 16%

Value of short interest (as of October 30): $2.9 billion

Short interest (as of October 30) as a percentage of float cap: 7%

Number of funds with stock as top 10 holding: 4

8. international Business Machines

Ticker:IBM

YTD return: -8%

Value of short interest (as of October 30): $2.7 billion

Short interest (as of October 30) as a percentage of float cap: 3%

Number of funds with stock as top 10 holding: 1

9. Walmart Inc

Ticker:WMT

YTD return: 27%

Value of short interest (as of October 30): $2.1 billion

Short interest (as of October 30) as a percentage of float cap: 1%

Number of funds with stock as top 10 holding: 3

10. Adobe Inc

Ticker:ADBE

YTD return: 42%

Value of short interest (as of October 30): $2.1 billion

Short interest (as of October 30) as a percentage of float cap: 1%

Number of funds with stock as top 10 holding: 13

11. Verizon Communications

Ticker:VZ

YTD return: 3%

Value of short interest (as of October 30): $1.9 billion

Short interest (as of October 30) as a percentage of float cap: 1

Number of funds with stock as top 10 holding: 6

12. Proctor & Gamble

Ticker:PG

YTD return: 16%

Value of short interest (as of October 30): $1.9 billion

Short interest (as of October 30) as a percentage of float cap: 1%

Number of funds with stock as top 10 holding: 3

13. Texas Instruments

Ticker:TXN

YTD return: 25%

Value of short interest (as of October 30): $1.9 billion

Short interest (as of October 30) as a percentage of float cap: 1%

Number of funds with stock as top 10 holding: 1

14. Kroger Co

Ticker:KR

YTD return: 12%

Value of short interest (as of October 30): $1.9 billion

Short interest (as of October 30) as a percentage of float cap: 7%

Number of funds with stock as top 10 holding: 1

15. Johnson & Johnson

Ticker:JNJ

YTD return: 4%

Value of short interest (as of October 30): $1.8 billion

Short interest (as of October 30) as a percentage of float cap: 0%

Number of funds with stock as top 10 holding: 6

A car drives past a logo of Swiss banking giant UBS displayed on the facade of a building hosting a branch of the bank,

Summary List Placement

"Look it's obviously been a roller coaster year," said UBS asset management's head of investments, Barry Gill, at a media event.

But the question is now how markets will shape up for 2021.

UBS's asset management division, which oversees $980 billion assets globally, provides their insight into market conditions for 2021 in a new report released on November 24 titled Panorama.

The report highlights five potential market surprises for investors going into 2021 including a rise of cybercrime, a potential huge rally in the equity markets and a change in leadership toward small caps.

But the most clear expectation from the report is that rates will remain low, as governments and central banks continue to provide stimulus amid COVID-19.

"The essence of our 'Panorama' piece is to really focus on the hunt for yield, the hunt for income, in what has been a persistently low rate environment, it has already been forcing many of our clients and many market participants to extend out to take more risks than they would have in the past," Gill said.

US 10 year treasury yield

To counter this, UBS multi-asset portfolios will be both overweight equities and credit in the medium term. This decision is supported by the bank's base case that global growth will continue to rebound, policy will continue to be accommodative and economic normalization should continue into 2021.

"The recent positive vaccine news from Pfizer and Moderna with over 90% efficacy, certainly further strengthens our conviction level in this base case playing out" said Nicole Goldberger, head of multi-asset portfolio management at UBS asset management.

However, investors must remain cautious of short term wobbles in the near term, and remain focused on the bigger picture. Investors should be focusing on regions and areas of the market that have lagged recently, such as US small-cap equities, regions outside the US and select emerging markets currencies, Goldberger said.

"Our highest conviction view at the moment is emerging markets," Goldberger said.

In terms of balancing the equity investments with bonds. UBS strongly believes that the rate environment will remain low and recommends investors look to alternative diversifiers and private markets to access higher yield opportunities.

Private markets, where investors can tap into private-equity buyouts, or buy coveted stocks before they even come close to seeking an initial public offering, have in the past only really been open to the very richest customers. They were also long considered too hard to access, too illiquid, or too opaque for more traditional investors.

"There is an inevitable liquidity trade off between public and private markets, but we do think that investors are being well compensated by relaxing the liquidity constraint in portfolios," Goldberger said.

UBS recently joined forces with private-equity group Partners Group to offer its wealthiest clients access to private markets.

Here are the three alternate options for investors UBS recommends:

Private Infrastructure

Infrastructure assets are those that are conducive to building and maintaining society. These can take the form of bridges, roads, energy or buildings.

Infrastructure is compelling because it has a low correlation to the markets and can provide stable, long-term cash flows, Goldberger said.

"In the first nine months of this year, the infrastructure industry has raised approximately $74 billion which may lead to a record infrastructure fundraising year in a post COVID-19 world," Goldberger said.

Goldberger experts that stimulus packages will benefit private infrastructure. Noting that in Europe the stimulus package is infrastructure heavy.

Private Real Estate

Similar to infrastructure, real estate also provides stable income returns over with time, with low volatility and low correlation to markets.

"So in this world starved of yield, private real estate is also an attractive yield substitute for government bonds," Goldberger said.

Real estate can also act as an inflation hedge. Goldberger notes one of the biggest risks to traditional portfolios is a sustained acceleration in inflation, which could mean that bonds and equities sell off at the same time during a downturn.

The inflation scenario is not in UBS's base case but something investors should keep in mind when trying to maintain a well diversified portfolio.

Hedge Funds

Hedge funds are investment vehicles that leverage a number of different strategies to achieve high returns for investors, including aggressive and derivative-based techniques.

"[Hedge funds] could certainly help to also improve clients' investment outcomes, they can serve as a diversifier, provide a source of asymmetric returns and private credit in particular, we think looks attractive today as a yield pickup, as an enhancement relative to public fixed income markets," Goldberger said.

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steve cohen

Summary List Placement

Blackstart Capital, a $319 million hedge fund focused on investing in utilities and infrastructure stocks, has shut down and its staff have joined Point72 Asset Management.

The fund terminated its registration with the Securities and Exchange Commission effective Oct. 22, according to the SEC's website. It listed four employees on a filing earlier this year and said it managed $319 million on behalf of four clients, all pooled investment funds.

Jamie Waters, a portfolio manager there, joined Point72, Steve Cohen's hedge fund firm, on Nov. 1, along with three senior analysts, according to Tiffany Galvin-Cohen, a Point72 spokeswoman. She said they would be investing in the energy sector.

Waters worked earlier in his career as an analyst at Point72 predecessor SAC Capital.

From 2016 through 2019, thousands of hedge funds closed as investors placed their money with lower-fee asset managers. 2020 has been volatile, with $45.5 billion in net outflows from hedge funds in the first half of the year partly offset by $13 billion in net inflows in the third quarter, according to Hedge Fund Research.

According to its website, Blackstart was a long/short equity manager investing in North American utilities, power and related infrastructure sectors. Its principals were described as veteran utility and power investment professionals.

Blackstart's office landlord also sued the fund and its general partner on Monday, claiming a default under its lease and seeking the rent it would have paid through 2023. The firm emptied out its midtown Manhattan offices and turned over the keys on Oct. 1, according to the lawsuit.

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Summary List Placement

Sian Capital made waves when it announced a 3% stake in diagnostics and pharmaceutical company Opko Health in October.

The activist investor, which has put at least $81 million into the Miami-based company, said Opko could be worth three times its current market cap of $2.7 billion, and asked for the firm to consider being taken private.

Now, with coronavirus cases spiking in the US and Europe, New York-based Sian is going after the company for allegedly dragging its feet on a potential COVID treatment that had its trials fast-tracked in June by the FDA.

On Friday, Sian, run by former Scoggins Capital executive Anish Monga, wrote a letter to Opko's board stating that there is an "urgent need for the company to act swiftly to distribute Rayaldee."

"As a substantial investor in Opko, we believe the Board has not only a fiduciary duty, but a humanitarian duty to distribute Rayaldee to those in need," Monga wrote. "There is no reason that so many Americans should continue dying without having the opportunity to access potential curative drugs."

The company did not respond to several requests for comment.

See more:Low vitamin D levels may be linked to a higher chance of dying from the coronavirus — here's how to avoid a deficiency

Rayaldee, with its active ingredient vitamin D prohormone Calcifediol, raises the body's vitamin D levels, and has been used before the pandemic to treat chronic kidney disease. The FDA fast-tracked the drug in June to do trials to see its effectiveness in helping people who have COVID after doctors noticed COVID patients with kidney issues responded well to the medication.

There's been extensive evidence increased vitamin D levels helps people recover from the virus, according to studies out of Europe. The United Kingdom has even pushed for its milk and bread to be fortified with vitamin D, which people normally get through sun exposure, and Scotland is providing free vitamin D supplements for citizens during the winter when people naturally stay inside more.

In Spain, a generic version of the drug was tested, and found that only 2% of those who received the drug after contracting COVID needed to be hospitalized compared to a placebo group in which 50% were forced to spend time in the hospital.

Monga said it was expected for Opko's trials to get started in late summer with possible distribution of Rayaldee in the fourth quarter, but at a Jefferies conference last week, the company said it was just now enrolling participants in the trial — prompting Monga to write his letter, and roll out a website on the drug's benefits with a template for people to email congressional leaders about the drug.

Of course, the activist investor believes the drug could greatly increase the company's bottom-line. With the current demand from European countries for a drug like this, Monga believes Opko could generate sales of more than $850 million this year even if sold at a 90% discount. Last year, the company sold $30 million-worth of the drug.

"This is a no-brainer," he said in an interview. "The shareholders of Opko are furious."

But the investor is also raising moral flags.

"It goes beyond profits at this point," Monga said. "You should have a drug that has gone through it studies by now."

Sian's letter ends in bold and underlined print reading "you have a humanitarian and fiduciary duty to" distribute the drug before quoting Barack Obama from a 2004 speech on the need for humanity to look out for each other.

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Summary List Placement

As investors cheered over the blue-chip Dow Jones Industrial Average index hitting above the symbolic 30,000 mark on Tuesday, it was the small-cap stocks that were soaring into the stratosphere.

The Russell 2000 index, which has risen 20% in November, hit an intraday record on Tuesday and is on track to close its best month ever in the index's history, according to CNBC.

Ticker: FATE

Sector: Health Care

Market cap: $4.60 billion

Relative return YTD: 148.0%

Source: RBC

19. RH

Ticker: RH

Sector: Consumer discretionary

Market cap: $8.58 billion

Relative return YTD: 88.2%

Source: RBC