Despite today's resurgence in stocks, the mood was more downbeat during this morning's Bloomberg Invest Global virtual conference.
Take Bruce Flatt, CEO of Brookfield Asset Management, who runs $626 billion in the Toronto-based asset manager, and who said that now is a "good time" to be liquidating assets: "there is significant money out in the markets today so it's been a very good time for realizations both in infrastructure, renewables, private equity and real estate and we've been realizing a lot of assets. And we've been realizing a lot of assets - we've sold $13 billion in the first quarter, $10 billion in the second quarter, and will continue this year... It's a very good time to be liquifying assets. The wedge is opening up and we've been realizing assets"
Or take Dawn Fitzpatrick, CIO of $27 billion Soros Fund Management family office which manages the personal capital of the prominent liberal billionaire and Democratic donor. Speaking to Bloomberg's Erik Shatzker, she said that after putting $5 billion to work in March 2020 amid the market turmoil caused by the Covid-19 pandemic, she has rebuilt the firm's cash buffer, i.e., she has been selling, adding that if there were a crisis today, the firm could put another $5 billion to work “in pretty short order.”
Not that Soros is selling everything: Fitzpatrick said that recovery stocks are still too cheap and should be bought. “These companies have learned to do things better” and the U.S. consumer is now “flush with cash, and they want experience not goods.”
Not surprisingly, following the escalating spat between Soros and Beijing, the CIO said that the firm is steering clear of investing in China: "we are not putting money into China right now,” she said adding that investors need to be “really careful” about putting cash into U.S.-China listings. She elaborated that investors have been caught by surprise by what China is doing and the extent of economic damage the government is willing to tolerate for its plan.
The real reason why Soros would not put money into China is that the money would be promptly gone: George Soros has vocally criticized the policies of China's President Xi Jinping’s policies and said in a Wall Street Journal op-ed last month that “pouring billions of dollars into China now is a tragic mistake.”
In any case, according to the Soros CIO, Chinese companies currently traded in the U.S. will largely have to delist and move to Hong Kong, and it will be “a while” before early-stage venture companies in China have an avenue to go public. As a result, though some big names might go public near-term in Hong Kong, overall, the path from private to public in China is going to take longer.
“For twenty years, Chinese tech companies having Western capital and a Western vested interest in their success very much suited China’s goals. They don’t need that anymore, so they can take their $700 billion and take it back onshore into Hong Kong,” Fitzpatrick said. “And I think that’s what they’re going to do.”
One other notable observation: Soros is the latest hedge fund to have entered the crypto fray following in the footsteps of Steve Cohen's Poin 72 and Dan Loeb's Third Point. “We own some coins -- not a lot -- but the coins themselves are less interesting than the use cases of DeFi and things like that” she said, noting that "cryptocurrencies have gone mainstream."