May 9, 2019
By Svea Herbst-Bayliss
LAS VEGAS (Reuters) – After a one-year pause, the hedge fund industry schmooze fest organized by Anthony Scaramucci, the investment manager who briefly served as President Donald Trump’s communications director, returned to the Las Vegas strip this week.
But the atmosphere at the 10th annual SALT Conference was much more subdued than in past years, when celebrity hedge fund managers rubbed shoulders with former U.S. presidents at private dinners, poolside parties and late-night gambling at the Bellagio hotel.
This time, organizers and attendees said they ditched that party vibe to debate investment ideas and listen to former White House officials talk geopolitics.
“The vast majority of institutional investors would rather be sitting around and having a discussion about structured credit tranches instead of going to splashy parties,” Eric Nierenberg, chief strategy officer at the $74 billion state pension fund for Massachusetts, said in an interview at the event.
“What we are trying to do is very sober,” he added.
For the first time, investors attending SALT outnumbered hedge fund managers, said Ray Nolte, co-chief investment officer of SkyBridge Capital, the investment company Scaramucci founded and which is affiliated with the conference. There were also more panels at the expense of longer networking breaks.
The superstar managers who previously attended – including Daniel Loeb, David Tepper, William Ackman, Ken Griffin and Steven A. Cohen – did not come. Avenue Capital Group’s Marc Lasry said he opted to watch the Milwaukee Bucks, a team he co-owns, beat the Boston Celtics, instead of flying to Vegas.
And at the pool party where musical artists like the Gipsy Kings once performed, there was a disc jockey spinning tunes. In the past there were also private concerts featuring One Republic and Duran Duran.
“We want to replace the perception that this is a boondoggle with the reality of what is being offered here,” Nolte told Reuters.
The conference has taken on new importance as hedge funds are making a comeback of sorts.
After facing criticism for more than a decade over high fees and lackluster returns, some institutional investors are returning to hedge funds that pursue niche strategies, in which performance is less correlated to market moves.
Among those paying $8,000 per ticket to hear some of those ideas were representatives of the Canadian Pension Plan Investments Board, the California Public Employees Retirement System (CalPERS), the Public Employees Retirement Association of Colorado, known as Colorado PERA, the City of El Paso Employees Retirement Trust and the West Palm Beach Police Pension Fund. Many had come for the first time.
Others were Scaramucci’s friends and business associates, celebrating SALT’s relaunch after two tumultuous years.
Scaramucci joined the Trump administration in 2017 as communications director, a job that lasted only 11 days. He also tried to sell SkyBridge, which invests $10 billion, to Chinese conglomerate HNA Group, but the effort failed.
In reviving his signature event, Scaramucci was thrilled to report that he drew the second-highest attendance in its history.
“The country has to fix a lot of problems,” he said in an interview. “I don’t know if we’ll fix them here, but we will certainly talk about them.”
Panelists included President Donald Trump’s former chief of staff, General John Kelly, who fired Scaramucci, as well as former Attorney General Jeff Sessions, former New Jersey Governor Chris Christie and former U.S. ambassador to Russia Michael McFaul.
Much of the confab focused on concerns that economic growth may slow, that volatility will pick up and that the stock market boom will come to an end.
Nolte is betting that investment grade debt will lose value while assets like residential mortgages will perform well. Amy McGarrity, chief investment officer of Colorado PERA, likes multi-strategy funds focused on Asia. MassPrim’s Nierenberg is scouring emerging markets for opportunities.
On one panel, economist Nouriel Roubini described cryptocurrencies as “the mother and father of all bubbles.” On another, former Countrywide Financial Corp CEO Angelo Mozilo https://www.reuters.com/article/us-sec-mozilo-newsmaker/angelo-mozilo-from-housing-hero-to-subprime-foe-idUSTRE69E5ZU20101015 once again defended himself against accusations that he was a key architect of the 2007-2009 financial crisis. “Somehow, for some unknown reason, I got blamed for it,” he said.
Several attendees told Reuters they liked the faster-paced program and felt the subdued tone was more appropriate for the current times.
“The real test will be if there are jugglers and fire eaters at the pool party,” one hedge-fund manager joked.
There were not.
(Reporting by Svea Herbst-Bayliss; editing by Lauren Tara LaCapra AND cYNTHIA oSTERMAN)