Israel Englander raises $2.5 billion for his Millennium Management fund which, is a multi-strategy hedge fund and one of the world’s largest alternative asset management firms with over $40 billion assets under management.
Israel Englander, a self-made billionaire with a net worth $5.2 billion (2017) is a big fish in a big pond, he is the 91st richest man in the US and the 8th highest-earning hedge fund manager in 2016. Israel Englander’s Millennium has been consistently profitable for the past decade.
Although the funds returned less than 10% last year, a third of the S&P.
Nevertheless, Israel Englander raises $2.5 billion should come as no surprise in an environment where near-zero rate cash deposit account does not keep up with monetary inflation and, the dividend drought along with dismal yields show no signs of abating.
“Israel Englander’s Millennium has been consistently profitable for the past decade”
WEALTH TRAINING COMPANY
Israel Englander raises $2.5 billion without investor even batting an eyelid but what is surprising is that investors have willingly agreed to Millennium’s long lock-ups
Regular readers may recall a piece we wrote entitled, Israel Englander, extends lock-up period dated November 2018. We noted almost two years ago to the date that this could be another bearish indicator that this aging bull market and the economic cycle may have peaked. Indeed, the 2020 pandemic great global lock-downs triggered the worse first quarter for stocks since the Great Depression. What then followed was an unprecedented multi-trillion-dollar asset purchase program by the Fed, the world’s central bank by default, and its cohorts the ECB, BoJ, BoE to put the bear market back into hibernation.
Israel Englander raises $2.5 billion with the usual lock-ups, and it is the latter, the lock-up, that investors are willingly signing up to that has got me thinking whether this period of forced optimism ends with yet another black Swan event
The let the music play bull market spurred on by the central banks’ willingness to create currency and buy assets could hold its ground for as long as the central bank leads the bulls with their infinite monetary cannons. With the central banks signaling that they are on the side of the bull, no bear worth its skin will stand in its way.
“Israel Englander raises $2.5 billion without investor even batting an eyelid but what is surprising is that investors have willingly agreed to Millennium’s long lock-ups”
WEALTH TRAINING COMPANY
The shape of the economic recovery of the post-pandemic economy could determine the next stock sell-off. Paradoxically, a better than anticipated recovery could sway central banks to tighten monetary policy too quickly, sending the markets into a taper tantrum, similar to what was experienced in 2013. Perhaps there is no easy way to remove the Monetary bunch bowl without investors experiencing a massive hangover.
“A queue of investors eager for the self-made billionaire hedge fund manager to manage their funds could also be why Israel Englander raises $2.5 billion with the usual lock-ups” – Wealth Training Company
It’s the anticipation of another taper tantrum when the central banks eventually taper could be why Israel Englander raises $2.5 billion with the usual lock-ups without investors resisting
Israel Englander’s Millennium has some of the most draconian lock-ups in the hedge fund industry. According to a February 12 letter from the fund to investors, the share class open to new investments would limit clients withdraws to just 5% of their money invested each quarter. Put another way it would take Millennium investors five years to fully cash out. The 5% quarterly redemption limit means that in a quarter in which markets tank and investors want to pull their money, they will only be allowed to pull just 5%. In other words, Millennium investors have pre-emptively agreed to tie up at least 95% of their capital following a “market event.” for the privilege of being allowed to invest in Englander’s hedge fund.
A queue of investors eager for the self-made billionaire hedge fund manager to manage their funds could also be why Israel Englander raises $2.5 billion with the usual lock-ups
Millennium had another stellar year, returning 14.7% this year through September, far more than the average hedge fund, which according to the HFR Global Hedge Fund Index is up a paltry 1.7% YTD.
“Englander’s firm previously told clients it plans to return at least $5 billion to investors in 2020” – Wealth Training Company
A hedge fund manager with a winning track record has no shortage of investors and therefore has greater leverage over its investors. Indeed, Israel Englander Millennium raised $4.1 billion in 2019, when it opened to new capital for the first time in two years. Back in February, it expected new capital would reach $7.1 billion by March. The total would propel its total assets under management to approximately $50 billion, even as its regulatory assets under management surpass $200 billion.
Englander’s firm previously told clients it plans to return at least $5 billion to investors in 2020. That money was to come from its older share class, which represented about $37 billion of Millennium’s total $45.4 billion in assets.
Israel Englander raises $2.5 billion with the usual lock-ups with a plan to halt mass investor redemptions when the markets become volatile
Millennium had withdrawals of at least $1 billion in 2008 as investors found themselves in need of capital during the financial crisis. As I noted above, by effecting pre-emptive “gates” which limit investors to pulling just 5% of their capital, Englander could be implicitly saying to investors the bull market is over but you can’t run for the exit door. Believe it or not, there is no shortage of investors who will dance to Israel Englander lock-ups.
Perhaps investors have also figured out that QE will also be there if the markets tank in the short term. So, lock-ups actual protect investors against making short term emotional impulse investment decisions which could cost them dearly if the central banks taper and markets take a wobble.