Hedge Fund Titans Parry on Fees, China, Making Money, Golden Age

  • ‘Don’t be embarrassed about making money,’ Rubenstein says
  • ‘I’d rather invest with communists vs capitalists’: Brownstein

The SkyBridge Alternatives Conference in Las Vegas has been a spirited gathering of top hedge fund managers and investors, who parried on everything from China and Donald Trump to high fees and poor performance. Here’s a roundup of remarks.

On Fees and Performance

David Rubenstein, co-founder of Carlyle Group:

  • “Don’t be embarrassed about making money. It’s been a great industry for the U.S. and created a lot of jobs and made companies valuable. You shouldn’t be upset about that.”
  • “It does seem surprising that so many macro people got it wrong. But many of them will probably do pretty well in the future. I suspect when returns come back the industry will thrive again.”

Leon Cooperman, founder Omega Advisors, who called the period between 2000 and 2007 a “golden age”’ for hedge funds:

  • “At age 73 I’m not going to learn a new game.”

Roslyn Zhang, managing director of China Investment Corp., the nation’s sovereign wealth fund:

  • “All kinds of strategies, they run different strategies, they all have the same trade. They really don’t know much about China but they just spend two seconds and put on the trade. Should we pay 2 and 20 for treatment like this?"

  • "Only less than 10 percent of managers are actually capable of adapting to the new reality. Probably 90 percent of the managers think they are part of the 10 percent anyway."

Jim Chanos, founder of Kynikos Associates:

  • “I think long-only hedge fund guys charging two and twenty should start looking to cut their expenses.”
  • I’m shocked fees have “stayed too high for so long." He called them “ridiculous,”

Kyle Bass, founder Hayman Capital Management:

  • “It’s easy to maintain conviction. It’s just how do you maintain investors?”

On Short Positions

Chanos on his SunEdison Inc. short bet:

“We made money, but we could have made more.”

On China

CIC’s Zhang:

  • “China is actually not that scary. If you’re worried about China, you should be twice as worried about here.”

Don Brownstein, founder Structured Portfolio Management:

  • “China came out of a huge, huge mess and it is a huge country with a very, very diverse population. I would rather put my money with a communist government than a capitalist government.”

Emanuel Friedman, co-founder EJF Capital:

  • “People said, ‘Well Korea, it’s finished, it’s collapsed. People are in the streets.”’
  • “We are going to have ripples in China. But this is a very powerful country. And the people who use it as some kind of bogey man -- it’s make believe."

Milton Berg, founder MB Advisors, responding:

“The issue is not that. The issue is not that!” he shouted. “People are in the streets!"

John Burbank, Passport Capital’s founder:
“Tencent will be one of the largest market stocks in the world,” Burbank said. He said his hedge fund’s earnings estimate for Tencent Holdings, which owns six of the top 10 smartphone apps in China, is 30 percent higher than bank analyst projections. “The analysts who cover Tencent don’t seem to understand what’s happening with Facebook, they don’t understand the upside from monetizing mobile ads, which we think will be a big theme this year,” he said.

On Politics

T. Boone Pickens, chairman BP Capital:

  • "If I don’t get Donald Trump, with change, I’m going to get Hillary Clinton. Now tell me, who are you going to vote for? There is no way you can vote for her."

  • "So you judge a trapper by his pelt," he said of Trump. "He’s done pretty well. Let’s see what he does. I haven’t seen his plan.”

John Boehner, former House speaker:

  • Anyone who thinks Trump can’t win, “just watch.”
  • Shutting down the federal government to derail Obamacare, a move pushed by Ted Cruz, was the “dumbest idea ever.”

Karl Rove, Republican political consultant:

  • “Millennials do not like Hillary. Period.”
Before it's here, it's on the Bloomberg Terminal.