The Daily Alpha: Real Talk on Paul Singer, Anthony Scaramucci, Warren Buffett and Hong Kong

May 30 2017 | 11:22am ET

Today we discuss Paul Singer’s plans for the end of the world, insider trading, the cost of a Hong Kong address and the state of the hedge fund industry.

Hair of the Dog

The top four suggestions by Google when you type “Trump considers” into its search engine.

  • Trump considers new chief of staff
  • Trump considers major shake up
  • Trump considers war
  • Trump considers military action in Syria

Quotes of the Day

“Warren Buffett can eat it.”

That’s David Blaszczak.

In 2013, he bragged in an e-mail about his ability to help his clients make a lot of money through political intelligence…

It turns out that he likely violated insider-trading laws.

All told, he helped a hedge fund earn $3.9 million in ill-gotten gains.

Blaszczak also called himself a “beast that cannot be stopped.”

We talked about this story last week at the Daily Alpha, but two writers dug up more information since then. The SEC has argued that most of the information that he had obtained for his clients came from the same source at the Centers for Medicaid & Medicare Services.

His clients, who are all facing decades in prison, are ready to go to court.

They’re arguing that they didn’t do anything wrong… but employees at one of the hedge funds began asking questions on how Blaszczak was able to obtain such sensitive information on Medicaid spending.

Now we know…

Forget the current charges for a moment.

Calling yourself a “beast that cannot be stopped” should warrant an extra year or two or at least a timeout in the corner. We like to hope that people don’t talk like that because… well they sound like a cartoon character in a movie about greed.

"One of the reasons that a lot of people quit is that they spend way too much money on their operating overhead.''

That’s Joel Werner, an equity fund manager at Solitude Capital.

Turns out that the cost of an expensive address is getting higher for hedge funds.

And that’s leading a lot of people to question whether the address is worth it anymore in Hong Kong.

“Given groupthink and the determination of policy makers to do ‘whatever it takes’ to prevent the next market ‘crash,’ we think that the low-volatility levitation magic act of stocks and bonds will exist until the disenchanting moment when it does not. And then all hell will break loose (don’t ask us what hell looks like …); a lamentable scenario that will nevertheless present opportunities that are likely to be both extraordinary and ephemeral. The only way to take advantage of those opportunities is to have ready access to capital.”

That’s Paul Singer… waiting for the next major crisis to happen.

He’s not sure when the bottom is going to fall out for the market… but one thing is sure. He’s got a war chest ready to buy on the cheap.

“If we were having this conversation last year, I’d say, ‘Wow, the state of the industry really sucks.’ But it sucks slightly less than last year.”

Anthony Scaramucci, the founder of SkyBridge Capital, sat down with Julia La Roche of Yahoo! Finance during the SALT Conference to discuss what is happening in the hedge fund industry. 

Tuesday’s Hedge Fund Reading List

Salon: America the cruel: While hedge fund managers pocket windfalls, kids lacking lunch money are shamed

Fox Business: GM says ISS advises against Greenlight share plan, board nominees

The North Platte Telegraph: Cabela's quietly sought sale before investor push; Jim Cabela tried to keep HQ in Sidney

Gulf News Money: Bond bulls get most hedge-fund support since 2007 as risks mount

New York Post: Puerto Rico governor is searching for ‘clarity’ on $74B debt

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You can also pick up a copy of the June Hedge Fund issue at Barnes & Noble.

Garrett Baldwin is the voice of the The Daily Alpha, the features editor for Modern Trader magazine, and the author of The Man with The Big Red Balloon. 


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