At Hedge Funders’ Annual Confab, Expect Lavish Displays of Wealth and Trump-induced Tension
Poor performance has yet to stop the hedge fund party.
On Wednesday, the highest profile hedge fund conference of the year kicks off at the ritzy Bellagio hotel in Las Vegas. And it’s bigger than ever.
The Sky Bridge Alternatives Conference, which is known as SALT, each year draws some of the biggest names in the hedge fund business. This year the conference is expected to draw 2,000 attendees, up about 200 from last year.
There’s plenty of talk about stock picks and investment strategy at SALT. But the annual confab has also been dubbed “Davos in the Desert” for its draw on politicians, celebrities, and policy wonks, who come to talk about the economy, income inequality, and advances in medical technology. Whether Washington and Wall Street can get along has in year’s past been a big topic of conversation at the conference.
This year, SALT kicks off with a discussion of the economy featuring former Treasury Secretaries Robert Rubin and Larry Summers. One of the most anticipated talks this year will be a one-on-one conversation with Michael Bloomberg, who is expected to discuss the current presidential election—a race that many of the former NYC mayor’s supporters wanted him to join.
Citadel hedge fund manager Ken Griffin will also speak at the conference. Earlier this week, Institutional Investor reported that Griffin made $1.7 billion last year, the most out of any hedge fund manager. It was the second year in a row that Griffin topped the list. But on Tuesday, reports surfaced that the SEC is investigating Citadel’s stock-trading operation. Michael Lewis, the author of The Big Short and Flash Boys, which accused high frequency trading firms like Citadel of taking advantage of average investors, will address the conference as well.
Celebrities speaking at SALT this year include Ron Howard, Caitlyn Jenner, and Will Smith.
One topic that is not on the agenda, but sure to come up, is the poor performance of hedge funds recently. Last year marked the fifth year in a row that hedge funds have underperformed the stock market in general. This year, the average hedge fund is up just 0.3% through April, according to Hedge Fund Research. Last month, Warren Buffett took time at Berkshire Hathaway’s annual meeting to give hedge funds a tongue lashing, highlighting his winning bet that he made a few years ago that hedge funds would underperform the market.
Recently, a number of large investors have started to pull their money out of hedge funds, which typically carry high fees. Last month, AIG (AIG) announced that it would dramatically cut its investment exposure to hedge funds. And earlier this month MetLife (MET) said it would follow suit. And for the first time in years, the number of hedge funds shrunk last year. But at least so far, the withdrawals have only made a small dent in the $2.9 trillion of assets managed by hedge funds.
Amid all the high-minded talk, SALT attendees will find time to party. Much of the action at the conference takes place in cabanas around the pool at the Bellagio, where hedge fund managers meet with potential investors and others. On Wednesday night, SkyBridge, which hosts the conference, will throw a party around the Bellagio pool that in the past has featured Las Vegas style dancers and magicians. This year, the party features a performance by former Bob Marley back-up band The Whalers. And on Thursday night, attendees will be treated to a private performance by The Killers.
It’s safe to expect a bit of presidential election controversy at this year’s conference. GOP candidate Donald Trump has called to end a tax loophole that favors hedge fund managers and others. Earlier this week, though, Anthony Scaramucci, who runs SkyBridge and the SALT conference, officially signed onto the Trump campaign as a fundraiser. Trump’s finance director Steven Mnuchin, also a hedge fund manager of Dune Capital, is reportedly at SALT looking to scoop up dollars for Trump. The conference could be a good proving ground for whether Trump can win over Wall Street.