Eclipse of the SALT

This year's shindig may have sucked, but it also may have been the last.
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By de:Benutzer:mrnett1974 (de:Benutzer:mrnett1974) [GFDL or CC-BY-SA-3.0], via Wikimedia Commons

By de:Benutzer:mrnett1974 [GFDL or CC-BY-SA-3.0], via Wikimedia Commons

The ninth edition of SkyBridge Alternatives Conference, usually the hedge fund industry’s biggest, most boisterous and boosterish and over-the-top extravaganza, was a somewhat more subdued affair than usual. Sure, it had its moments—Jim Chanos getting a little too deep into the gin ‘n juice at the Snoop Dogg show, the holographic Jeff Gundlach—but those were rare glimpses of joy at an otherwise downcast shindig, and one of those glimpses of joy involved a guy too embarrassed to show his actual physical face at the Bellagio. Bill Ackman came to Vegas to throw shade at his colleagues before explaining that losing $4 billion is the best thing that’s ever happened to him. All the while, event impresario and local unemployed man Anthony Scaramucci was bringing everyone down, reminding them that he wasn’t even supposed to be there and that everything sucked about everything anyway, while doing his best Charlie Brown walk from panel to panel. And it worked!

Scaramucci’s downbeat mood pervaded the gathering of approximately 1,800 hedge fund managers, investors, bankers, lawyers, and accountants, in stark contrast with earlier years, when SALT hummed with electricity….

Many of the players seemed to be going through the motions. One speaker almost literally phoned it in: DoubleLine Capital co-founder and bond king Jeff Gundlach, the lunchtime keynote speaker for the first day of the conference, had a last-minute conflict that prevented him from traveling to Las Vegas and was beamed into the Bellagio’s grand ballroom via hologram. Meeting rooms appeared more sparsely populated than in years past, while attendance at the traditional Wednesday night poolside cocktail party, which this year featured a performance by the Gipsy Kings, was noticeably lighter than usual….

“It’s lame this year,” said one New York hedge fund manager, a veteran of several SALTs. Networking opportunities seemed thinner on the ground, he said, and the event lacked the energy of earlier iterations.

Luckily for said hedge fund manager, he might not have to do it again.

If Scaramucci recedes into the sunset, it will be hard to find another person with his outsize personality and unparalleled ability to bring political power brokers, movie stars, and Wall Street gurus to the (craps) table. Scaramucci will go on without SALT, at least for the most part — he retains a partial stake in the business and is said to be mulling starting a new investment venture. But whether SALT can survive without Scaramucci is an open question.

One former hedge fund manager, however, doesn’t get all the doom and gloom. Phil Falcone’s been out of the business since 2013, when he got booted from it. But from the outside, he’s not buying all of the early obituaries or Scaramucci’s musings about secular decline or Bill Ackman’s jab at 2 and 20. Sure, Bill, no one wants to pay you that anymore, but stop projecting.

"The fee structure may have to change a bit, but there’s always going to be the need for high-quality investors," he said. "Do you pay 2-and-20 for a fund that matches what’s happening in the S&P?"…

The industry isn’t in a permanent decline, Falcone said, because there is a "tremendous amount of capital out there." It has become tougher for smaller funds to succeed because the business has become much more institutionalized, he said.

One of the most exclusive and raucous Wall Street shindigs could be coming to an end [BI]
Some Hedge Funds Still Merit 2-And-20, HC2’s Falcone Says [Bloomberg]
Falcone on Vietnam Investment, Hedge Funds, Steven Cohen [Bloomberg video]

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Phil Falcone Reveals Genius New Plan (Update)

LightSquared is a wireless venture that seeks to create “convenient connectivity for all." But those of you who've been keeping up know that to one man, it's so much more. That man, of course, being hedge fund manager Phil Falcone. LightSquared is his dream. His baby. His world. His everything. And, because he has poured his heart, soul, and firm's money into LightSquared, it is also the thing that stands to make or break Harbinger Capital. Success will mean billions for Falcone and his investors. Failure will mean Wilbur Falcone selling her eggs to a barren couple willing to pay top dollar for the DNA of a blue-eyed classically trained singer with an IQ of 150 and legs like Tina Turner. Unfortunately, things have not been going so well for LightSquared. The yachting community worries that GPS interference caused by LS will result in boats getting lost at sea. The National Oceanic and Atmospheric Administration says LightSquared“may degrade precision services that track hurricanes, guide farmers and help build flood defenses.” The FAA put out a study that estimates LS could “cost 794 lives in aviation accidents over 10 years with disruptions to satellite-aided navigation.” The only person defending the thing (besides Phil) is Karl Rove. Meanwhile, the SEC wants to see Falcone banned from the industry, Bloomberg News has put a reporter on the "Phil Falcone Pit Stains" beat, and his investors, for the most part, despise him for petty reasons that no rational adults would ever get upset about, like borrowing $113 million from a gated fund in order to pay personal taxes and tying up much of their capital in a side project building walkie-talkies that might not pan out on account of the growing opinion that it might kill a few people. At this time, a lesser man might decide to cut his losses and/or look within and say "Maybe my investors aren't the problem, maybe I'm the problem." Phil Falcone is no such man. He's figured out a few things and what they boil down to is that his impatient, pissy investors are what is standing in the way of LightSquared soaring, which it will, when it is ready. And if those pricks won't agree to stick around for an investment time horizon of inifinty, he'll find people who will. Harbinger Capital Partners' Philip Falcone, speaking at the SALT hedge-fund conference Wednesday in Las Vegas, hinted at an initial public offering, CNBC's Kate Kelly reported. "Harbinger is actually considering getting more permanent capital," Falcone said, according to Kelly, who said it suggests a potential IPO. "I'm moving toward a more permanent capital vehicle. We need to focus more on control," Falcone said, according to Kelly. No one said going from not having the cash to cover taxes to $25 billion was going to be easy. Harbinger's Falcone hints at potential IPO -CNBC [MarketWatch] Update: Falcone claims to have no idea what CNBC is talking about (asking Fox Business, "What the fuck would I IPO?")