It is no secret that one of Zero Hedge's favorite mainstream strategists over the years was SocGen's Dylan Grice, which perhaps in itself was a logical warning sign that his career in the mainstream was doomed to a premature end. Sure enough, several months ago, Grice, whose guiding motto has been sound money uber alles as he dutifully exposed - as much as he could - crack after crack in the facade of the status quo, announced he was leaving SocGen, and was headed for greener pastures, literally, in this case Zurich-based fund Edelweiss, run by Anthony Deden. And while lateral moves in the financial industry are nothing new, we were quite impressed to learn that unlike most other "capital preservation" managers, Dylan Grice's new home has a rather stunning allocation of AUM to precious metals. How stunning? Decide for yourselves.
That's right: 60% of Edelweiss' capital is allocated to PMs, as over the past 7 years, more and more cash was allocated to gold, silver and the like. This is orders of magnitude more invested in real assets than most other "wealth preservation" funds will allocate to the sector.
Naturally, the performance of the fund has tracked that of the precious metal sector, and has as expected, outperformed the vast majority of its competitors in the past decade.
Here is how Grice's new employer describes itself:
Founded in 2001, Edelweiss Holdings is an open-end investment company focusing on the preservation of wealth against the erosion of the purchasing power of money.
As stewards of capital, we seek to provide durable refuge in an uncertain world. We reject the hollow output of an unprincipled financial system, preferring instead the timeless substance of honest entrepreneurship.
As responsible owners, we value independence, scarcity and permanence both as to our thinking and also as to the aggregate nature of our investment collection.
Our practice is intellectually honest, conservative, disciplined, respectful of capital and entirely free from conflicts of interest. Edelweiss Holdings employs its own investment team reporting to a board of independent directors.
And the refreshing introduction letter from its founder:
Understanding what we do at Edelweiss Holdings requires an understanding of why we do it—and the ideas behind why we do it. Above all else, it requires an appreciation of what we call the sanctity of savings. This idea imparts a deep respect for honest capital and for the knowledge and wisdom embedded in that capital.
Saving involves sacrifice. Sacrifice requires fortitude. Fortitude should be rewarded over time by an accumulation of capital, granting the saver more options and freedom than he or she otherwise would have had. There is unlikely to be a second chance to re-accumulate a lifetime’s savings. When it’s gone, it’s gone. That capital is precious to the saver.
But that capital is precious to the wider community, too. In a free society, the most profitable activity is likely to be that which satisfies the greatest desire. Since savers provide the capital which makes that activity possible, they make the satisfaction of society’s desires possible too. And capital grows cumulatively, today’s capital stock laying the foundations upon which tomorrow’s prosperity is built. The better the allocation of scarce capital to its most productive use today, the more solid those foundations. Whether people realize it or not, the decisions we make with the capital and savings of today’s generation are our bequeathment to tomorrow’s. We are consequently motivated by a conviction that the wise stewardship of honest capital is a fundamentally noble endeavor and view the responsibility of managing savings as much a burden as it is a privilege.
Capital is scarce. It is valuable. And so it is vulnerable. It is vulnerable to confiscation explicit and implicit, to competitive erosion and to bad ideas. The protection of honest capital thus requires honest thought: about the world, its dangers and opportunities, about our investments, about the nature of risk. Above all it requires honest thinking about ourselves, our capabilities and our limitations.
Some might liken our approach to “value investing.” But we’re not sure what “value investing” is. The cheapest stocks are often some combination of bad businesses and poor management. Others might see us as “contrarian.” But we don’t know what “contrarian” means either. It is contrarian to cross the road with one’s eyes closed, yet we prefer to cross with our eyes open. So we are quite consensus sometimes. We currently own a relatively large holding of gold in our vaults. In the past we have had similarly large concentrations in government bonds, or in oil royalties and other types of assets. So, some might think we practice “macro investing.” But we don’t know what “macro investing” is either. Do macro investors try to predict the future and make their bets accordingly? We don’t. Our crystal ball is as foggy as the next man’s.
We are none of these things. We are independent. We see ourselves as honest entrepreneurs in search of honest entrepreneurs, patient in action and careful in thought. We are not traders. We are owners. And the ownership of productive resources run by honorable and able people is the best way we know of protecting the scarce savings of our shareholders.
It looks like Dylan has found a perfect place to call home. We look forward to presenting his periodic musings to an audience that certainly shares his employer's views regarding resource allocation and certainly capital formation.