Forget Bitcoin: These Growth Stocks Can Run Circles Around Crypto

But not all assets have been clobbered by COVID-19 concerns. The most popular cryptocurrency on the planet, bitcoin, has been virtually unstoppable …

This has been a trying year for Wall Street and the investment community. Though volatility is always present in the stock market, the swings we’ve witnessed this year are far beyond historical norms. For instance, the uncertainty caused by the coronavirus disease 2019 (COVID-19) initially sent the benchmark S&P 500 lower by 34% in less than five weeks. For some context, it’s taken the S&P 500 an average of 11 months to decline 30% during previous bear markets.

But not all assets have been clobbered by COVID-19 concerns. The most popular cryptocurrency on the planet, bitcoin, has been virtually unstoppable this year. By the early afternoon of Wednesday, Nov. 18, bitcoin was up 148% on a year-to-date basis, which is considerably better than the year-to-date return of 10% for the broad-based S&P 500.

A physical gold bitcoin standing up in front of a digital chart.

Image source: Getty Images.

Why the resurgence for bitcoin? There’s no obvious answer. With bitcoin not being tethered to a fiat currency or having traditional fundamental metrics that can be critiqued by investors, its price movements are almost always driven by emotions.

What I can comfortably say is that bitcoin is a potentially dangerous (if not terrible) long-term investment. The market value of all bitcoin currently circulating is $328.3 billion, which pales in comparison to global gross domestic product of $81 trillion in 2017. What’s more, around 40% of all bitcoin holders aren’t using their digital tokens — they’re simply sitting on them for investment purposes. This means bitcoin’s utility is minimal in the real world. Broader-based adoption at the retail level is extremely unlikely.

Bitcoin also lacks scarcity. Whereas physical materials like gold can be truly scarce (i.e., we can only mine the gold we find on Earth), bitcoin’s perceived scarcity is a product of software programming. It can, in theory, have its token count increased.

I strongly believe investors should ditch bitcoin and put their money to work in innovative growth stocks. These companies have tangible fundamentals, substance behind their financial reports, and real products.

Here are three growth stocks that can run circles around cryptocurrency.

A hacker wearing black gloves typing on a keyboard in a dark room.

Image source: Getty Images.

CrowdStrike Holdings

It might not be the fastest-growing industry this decade, but there’s little doubt that cybersecurity is going to be the safest double-digit growth trend of the 2020s. That’s why cloud-native cybersecurity stock CrowdStrike Holdings(NASDAQ:CRWD) is a much smarter long-term investment opportunity than bitcoin.

Cybersecurity is now a basic-need service. Hackers and robots don’t care if the economy is in a recession or if a business is struggling. With the pandemic forcing businesses online and, in many instances, into the cloud, those businesses have no choice but to seek out on-premises or third-party security solutions to protect sensitive data.

Built within the cloud, CrowdStrike’s Falcon platform is considerably cheaper than on-premises cloud-security solutions. It also happens to be faster and smarter at detecting threats. That’s because Falcon leans on artificial intelligence to evaluate more than 3 trillion events each week.

The beauty of CrowdStrike’s subscription-based model is that it’s designed to scale with its clients’ growth. Back in the fiscal first quarter of 2018, a mere 9% of the company’s clients had subscribed to four or more cloud modules. But by the fiscal second quarter of 2021 (13 quarters later), 57% of its clients had four or more cloud module subscriptions. Scalability and increased spending by existing clients enabled CrowdStrike to reach its long-term adjusted subscription gross margin target of between 75% and 80%.

Cybersecurity looks to be a surefire winner for patient investors, and CrowdStrike should be one of the top performers within the industry.

Multiple clear jars packed with cannabis buds.

Image source: Getty Images.

Cresco Labs

U.S.-focused marijuana stocks also have a good chance at outperforming emotionally driven cryptocurrencies like bitcoin over the long run. I’d suggest investors consider multistate operator Cresco Labs(OTC:CRLBF).

Though it’s listed on the over-the-counter (OTC) exchange and not a major U.S. exchange, don’t be alarmed. Cresco can’t uplist to a major exchange only because cannabis is illegal at the federal level. While OTC-listed stocks don’t have the best reputations, Cresco is the exception to that rule.

The first of two operating models that will drive Cresco Labs’ growth is its retail operations. Nearly half of its operational dispensaries are located in Illinois. The Land of Lincoln opened its doors to recreational weed sales on Jan. 1, 2020, and should become a market capable of more than $1 billion in annual sales by 2024.

The second and arguably more exciting opportunity for Cresco is its wholesale segment. In January 2020, Cresco acquired Origin House in an all-share deal. Whereas most pot stock deals were about capacity, this buyout was about Cresco Labs getting its hands on Origin House’s cannabis distribution license in California. The completion of this deal meant Cresco could place its products into more than 575 dispensaries throughout the most lucrative state for weed sales in the country. In the recently ended third quarter, Cresco racked up an industry-leading $90.5 million in wholesale revenue.

With a real shot at hitting recurring profitability in 2021 and perhaps topping $1 billion in sales by 2022 or 2023, Cresco Labs is a much smarter buy than bitcoin.

A Facebook engineer inputting computer code on his laptop.

Image source: Facebook.

Facebook

Megacap stocks can be growth stocks, too. Just because social media kingpin Facebook(NASDAQ:FB) has a $775 billion market cap doesn’t mean its growth rate has slowed to a crawl. In fact, I’m pretty confident that Facebook can run circles around bitcoin.

Facebook ended September with 2.74 billion monthly active users and 3.21 billion family monthly active people, up about 40 million and 70 million from the end of June, respectively. These family plans include other owned sites, such as Instagram and WhatsApp. Advertisers fully understand that there isn’t a platform on this planet that gets them more targeted eyeballs. This gives Facebook exceptional ad pricing power, even during a pandemic.

Facebook hasn’t even played its full deck of cards yet. It’s monetizing Facebook and Instagram via ads, but not Facebook Messenger and WhatsApp. These are four of the six most-visited social platforms in the world, and Facebook has only tapped the keg, so to speak, on two of them. There’s real opportunity for Facebook to double its sales and cash flow over the next four years if it introduces ads or revenue channels on WhatsApp or Facebook Messenger.

The company also has opportunities to expand its revenue base. For now, ads comprise 99% of Facebook’s sales. However, Facebook has avenues to expand into the payment space, or it could become a popular content streaming destination in coming years.

The choice between owning bitcoin and Facebook stock is a no-brainer: Facebook all the way.

Van Eck declares Bitcoin ‘less volatile than many’ stocks

Van Eck’s latest research appears to be an effort towards calming investor fears about Bitcoin… as well as the SEC’s. 285 Total views. 2 Total shares.

On Friday, investment management firm Van Eck released new research indicating that Bitcoin’s price movements are less volatile than between a quarter and a third of the stocks listed on the S&P 500.

In a blog post the German issuer of exchange-traded products said that while Bitcoin has long been considered a “nascent and volatile asset outside of the traditional stock and capital markets,” the reality shows that the world’s largest cryptocurrency trades with volatility comparable to that of some of the largest companies in the world.

On a year-to-date basis, 29% of S&P 500 stocks experienced more volatile price fluctuations than the digital currency, while 22% did the same on a 90-day basis, said Van Eck.

The research is notable, given that Van Eck’s flagship offerings are largely couched in an asset class long considered to be a competitor to Bitcoin: gold.

Of Van Eck’s nearly $50 billion in assets under management, the majority are related to gold funds, and the company founded both the first gold stock fund in 1968 (INIVX), and the first — now wildly popular — gold miners ETF in 2006 (GDX).

Despite their emphasis on bullion, Van Eck has never been shy about exploring Bitcoin, however. The company currently offers a Bitcoin exchange-traded product to institutional investors, and has previously sent applications to the SEC to offer a Bitcoin ETF.

The company also recently issued a report arguing that institutional investors should consider having Bitcoin on their books.

Perhaps, given the regulatory hurdles Van Eck encountered during their last Bitcoin ETF venture, this latest research might be aimed more at assuaging SEC fears than those of investors, who to date have demonstrated a remarkable appetite for BTC-backed securities.

How hedge fund traders known as the SPAC Mafia are driving an $80 Billion investment boom with …

But the hedge funds that purchased Landcadia’s IPO units did just fine. Virtually all recouped their initial investment, with interest, and many profited by …

How hedge fund traders known as the SPAC Mafia are driving an $80 Billion investment boom with a no lose trade.


By Antoine Gara, Eliza Haverstock, and Sergei Klebnikov

In May 2018, Landcadia finally located its target: a budding online restaurant delivery service called Waitr that would merge with the SPAC in exchange for $252 million in cash. Fertitta touted the fact that the Louisiana startup, with $65 million in revenue, would now have access to 4 million loyalty members of his restaurant and casino businesses, and a new partnership with his Houston Rockets NBA franchise. Two years later, though, you very likely have never heard of Waitr. As such, its stock recently traded at $2.62, down more than 70% from its IPO price (the S&P 500 has climbed 76% over the same period).

Waitr was a disaster for pretty much anyone who bought the stock early. But the hedge funds that purchased Landcadia’s IPO units did just fine. Virtually all recouped their initial investment, with interest, and many profited by exercising warrants in the aftermarket. “SPACs are a phenomenal yield alternative,” says David Sultan, chief investment officer at Fir Tree Partners, a $3 billion hedge fund that bought into Fertitta’s Landcadia SPAC IPO—and pretty much any other it could get its hands on.

The SPAC boom of 2020 is probably the biggest Wall Street story of the year, but almost no one has noticed the quiet force driving this speculative bubble: a couple dozen obscure hedge funds like Polar Asset Management and Davidson Kempner, known by insiders as the “SPAC Mafia.” It’s an offer they can’t refuse. Some 97 percent of these hedge funds redeem or sell their IPO stock before target mergers are consummated, according to a recent study of 47 SPACs by New York University Law School professor Michael Ohlrogge and Stanford Law professor Michael Klausner. Though they’re loath to talk specifics, SPAC Mafia hedge funds say returns currently run around 20%. “The optionality to the upside is unlimited,” gushes Patrick Galley, a portfolio manager at Chicago-based RiverNorth, who manages a $200 million portfolio of SPAC investments. Adds Roy Behren of Westchester Capital Management, a fund with a $470 million portfolio of at least 40 SPACs, in clearer English: “We love the risk/reward of it.”

What’s not to love when “risk” is all but risk-free? There’s only one loser in this equation. As always, it’s the retail investor, the Robinhood novice, the good-intentions fund company like Fidelity. They all bring their pickaxes to the SPAC gold rush, failing to understand that the opportunities were mined long before they got there—by the sponsors who see an easy score, the entrepreneurs who get fat exits when their companies are acquired and the SPAC Mafia hedge funds that lubricate it all.

It’s about to get far worse for the little guy. Giant quant firms—Izzy Englander’s Millennium Management, Louis Bacon’s Moore Capital, Michael Platt’s BlueCrest Capital—have recently jumped in. Sure, they all raised billions based on algorithmic trading strategies, not by buying speculative IPOs in companies that don’t even have a product yet. But you don’t need AI to tell you the benefits of a sure thing. And that means torrents of easy cash for ever more specious acquisitions. Says NYU’s Ohlrogge: “It’s going to be a disaster for investors that hold through the merger.”

In the first 10 months or so of 2020, 178 SPACs went public, to the tune of $65 billion, according to SPAC­Insider—more than the last ten years’ worth of such deals combined. That’s just one indication that the current wave of blank-check companies is different from previous generations.

In the 1980s, SPACs were known as “blind pools” and were the domain of bucket-shop brokerage firms infamous for fleecing gullible investors under banners such as First Jersey Securities and The Wolf of Wall Street’s Stratton Oakmont. Blind pools circumvented regulatory scrutiny and tended to focus on seemingly promising operating companies—those whose prospects sounded amazing during a cold-calling broker’s telephone pitch. The stockbrokers, who typically owned big blocks of the shares and warrants, would “pump” prices up, trading shares among clients, and then “dump” their holdings at a profit before the stocks inevitably collapsed. Shares traded in the shadows of Wall Street for pennies, and the deal amounts were tiny, typically less than $10 million.

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Former stockbroker and convicted felon Jordan Belfort was immortalized in The Wolf Of Wall Street. In the late 1980s and early 1990s, blank check companies, similar to today’s SPACs but known as blind pools, were his stock and trade.

Getty Editorial

In 1992, a Long Island lawyer named David Nussbaum, CEO of brokerage GKN Securities, structured a new type of blank-check company, with greater investor protections including segregating IPO cash in an escrow account. He even came up with the gussied-up “special purpose acquisition company” moniker.

The basics of the new SPACs were as follows: A sponsor would pay for the underwriting and legal costs of an initial public offering in a new shell company and have two years to use the proceeds to buy an acquisition target. To entice IPO investors to park their money in these new SPACs as the sponsors hunted for a deal, the units of the IPO, which are usually priced at $10 each, included one share of common stock plus warrants to buy more shares at $11.50. Sometimes unit holders would also receive free stock in the form of “rights” convertible into common stock. If a deal wasn’t identified within two years, or the IPO investor voted no, holders could redeem their initial investment—but often only 85% of it.

GKN underwrote 13 blank-check deals in the 1990s, but ran into regulatory trouble with the National Association of Securities Dealers, which fined the brokerage $725,000 and forced it to return $1.4 million for overcharging 1,300 investors. GKN closed in 2001, but Nussbaum reemerged in 2003 running EarlyBirdCapital, which remains a big SPAC underwriter today.

SPACs fell out of favor during the dot-com bubble years, when traditional IPO issuance was booming. In the early 2000s, interest in SPACs returned with the bull market, and the deals started getting bigger. Leading up to the 2008 crisis, dealmakers Nelson Peltz and Martin Franklin both turned to SPACs for financing, raising hundreds of millions of dollars each.

Around 2015, SPACs began to offer IPO investors 100% money-­back guarantees, with interest; the holder would also be entitled to keep any warrants or special rights, even if they voted against the merger and tendered their shares. Even more significantly, they could vote yes to the merger and still redeem their shares. In effect, this gave sponsors a green light on any merger partner they chose. It also made SPAC IPOs a no-lose proposition, effectively giving buyers a free call option on rising equity prices. As the Fed’s low-rate, easy-money policy propelled the stock market higher for over a decade, it was just a matter of time before SPACs came back into vogue. And so they have, with unprecedented force.

Hedge funders may be the enablers of the SPAC boom, but they certainly aren’t the only ones getting rich. In September, a billionaire-sponsored SPAC called Gores Holdings IV said it would give Pontiac, Michigan–based entrepreneur Mat Ishbia, owner of mortgage lender United Wholesale Mortgage, a $925 million capital infusion, which would value his company at $16 billion. If the deal is completed, Ishbia’s net worth will rise to $11 billion, making him one of the 50 richest people in America. “I never knew what a SPAC was,” Ishbia admits. “I felt like it was a more efficient process.”

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SPAC MVP: United Wholesale Mortgage’s Mat Ishbia won a national basketball championship with Michigan State twenty years ago but missed his only shot in the finals. His first attempt at the SPAC game could be a slam dunk.

Jacob Lewkow for Forbes

There are also the sponsors, underwriters and lawyers who create SPACs, each taking their pound of flesh from the deals. Sponsors, who pay underwriting and legal fees to set up and merge SPACs, normally wind up with a generous shareholder gift known as the “promote”—roughly 20% of the SPAC’s common equity after the IPO.

Alec Gores, the private equity billionaire who helped take United Wholesale Mortgage public, has listed five SPACs and raised over $2 billion. In the United Wholesale deal, Gores and his partners are entitled to purchase $106 million worth of “founder shares” for $25,000, or $0.002 a share. Gores’ private equity firm hasn’t raised a new fund since 2012. With easy scores like this, why would he?

Among SPAC sponsors, few can match Chamath Palihapitiya’s frenetic pace. Palihapitiya, 44, is a former Facebook executive who founded Silicon Valley venture capital firm Social Capital in 2011. With his venture business slowing down, Palihapitiya has recently turned to the public markets. In the span of 37 months, he has raised $4.3 billion in six New York Stock Exchange–listed SPACs that go by the tickers IPOA, IPOB, IPOC, IPOD, IPOE and IPOF. The founder’s stock he has received for his “promote” will amount to no less than $1 billion, by Forbes estimates. In late 2019, Palihapitiya used one of his SPACs to take Virgin Galactic public. Two other deals have already been announced: mergers with home­buying platform Opendoor at a $5 billion valuation and with medical-insurance company Clover Health at $3.7 billion. Palihapitiya and Gores point out that they intend to invest hundreds of millions via private placements in their deals.

Of the $65 billion raised in SPAC IPOs so far in 2020, Forbes estimates that all told, sponsors like Gores and Palihapitiya should net more than $10 billion in free equity. Great for them, but terrible for the rest of the shareholders. In fact, by the time the average SPAC enters into a merger agreement, warrants afforded to hedge funds, underwriting fees and the generous sponsor’s promote eat up more than 30% of IPO proceeds. According to the study of recent SPACs by Ohlrogge and Klausner, a typical SPAC holds just $6.67 a share in cash of its original $10 IPO price by the time it enters into a merger agreement with its target company.

“The problem with the typical founder-shares arrangement is not just the outsized nature of the compensation or the inherent misalignment of incentives, but also the fact that the massively dilutive nature of founder stock makes it difficult to complete a deal on attractive terms,” says billionaire Bill Ackman.

A handful of billionaires like Ackman are structuring fairer deals with their SPACs. In July, Ackman raised a record $4 billion SPAC called Pershing Square Tontine Holdings. He’s shopping for deals, but his shareholders will face much less dilution because his SPAC has no promote.


“A handful of billionaires are structuring fairer deals with their SPACs. but most SPAC deals don’t come with benevolent billionaires attached. “


Billionaire hedge fund mogul Daniel Och, backer of unicorn startups Coinbase, Github and Stripe via his family office, recently raised $750 million in a SPAC IPO called Ajax I but reduced its promote to 10%. His investing partner in Ajax, Glenn Fuhrman, made billions in profits running Michael Dell’s family office; the SPAC’s board includes an all-star lineup of innovators: Kevin Systrom of Instagram, Anne Wojcicki of 23andMe, Jim McKelvey of Square and Steve Ells of Chipotle. The group has pledged their personal capital into Ajax’s future deal.

“We’re lowering the sponsor economics to make clear that this is not about promoting someone’s capital,” Och says. “It’s about investing our own capital, and then finding a great company that we can hold for a long period of time.”

Most SPAC deals don’t come with benevolent billionaires attached. In fact, if history is any guide, the average post-merger SPAC investor is in for a fleecing not unlike the ones dealt out in the shoddy blind-pool deals peddled by those bucket shops of the 1980s and ’90s.



According to NYU’s Ohlrogge, six months after a deal is announced, median returns for SPACs amount to a loss of 12.3%. A year after the announcement, most SPACs are down 35%. The returns are likely to get worse as the hundreds of SPACs currently searching for viable merger partners become more desperate.

Problems are already surfacing in the great SPAC gold rush of 2020.

Health-care company MultiPlan, one of the most prominent recent deals, may already be in trouble. Acquired by a SPAC called Churchill Capital Corp. III in a $1.3 billion deal, its shares plunged 25% in November after a short seller published a report questioning whether its business was deteriorating more than it let on.

The Churchill SPAC is one of five brought to market by former Citigroup banker Michael Klein, which have raised nearly $5 billion. Klein and his partners now sit on stock holdings worth hundreds of millions, thanks largely to the lucrative promotes. Klein’s investment bank, M. Klein & Co., has made tens of millions of dollars in fees advising his own SPACs on their deals. In the case of MultiPlan, Klein’s bank earned $30 million in fees to advise Churchill to inject SPAC capital into MultiPlan. IPO proceeds, however, are now worth only 70 cents on the dollar.

“Coming out of the financial crisis there was all this talk about the expected outcomes when you have all these traders who have heads-they-win-tails-they-don’t-lose incentives, because it’s somebody else’s money,” says Carson Block, the short seller who called out MultiPlan. “Those incentive structures are alive and well on Wall Street in the form of SPACs.”

Nikola Motor, the SPAC that broke the dam on electric-vehicle speculations, now faces probes from the Department of Justice over whether it misled investors when raising money. Its founder, Trevor Milton, is gone, and a much-hyped partnership with General Motors is in doubt. Shares have traded down 36% from where they stood when the SPAC merger was completed.

Electric vehicles aren’t the only overhyped SPAC sector. So far 11 cannabis SPACs have either announced a deal or are searching for one. And in online gaming, there are no fewer than 10 SPACs in the works.


Blank Checks For Billionaires

SPACs were once shunned by savvy investors. Today they’re beloved by THE WEALTHIEST.


It wasn’t long ago that fracking was all the rage on Wall Street, too, and SPAC IPOs provided quick and easy capital infusions. Energy private equity firm Riverstone Holdings issued three large SPACs—one in March 2016, for $450 million; then two more IPO’d in 2017, raising $1.7 billion—all intent on profiting from shale oil-and-gas investments.

Riverstone’s Silver Run II SPAC acquired Alta Mesa Resources in 2018, but the company quickly went bankrupt, incinerating $3.8 billion of market capitalization on oil fields in Oklahoma. Its other two SPACs completed mergers, and now both are trading below $3 per share.

Despite its dismal track record, Riverstone had no trouble raising $200 million in October for its fourth SPAC IPO, “Decarbonization Plus Acquisition.” Shale fracking is yesterday’s game, so Riverstone has moved on to clean tech.

Hope springs eternal—especially when you can count on hedge fund money to back you up.

Facebook, Apple and Other Big Tech Stocks Aren’t Too Expensive. Here’s Why.

Shipping Giant Maersk Raises Guidance Again and Launches $1.6 Billion Share Buyback. U.S. Demand Is Leading the Recovery.

Lately, investors have taken note of the drastic surge in the five stocks’ valuations. Since September 2, the group is down about 3% on average. Meanwhile, large-cap value stocks, judging by the Vanguard S&P 500 Value ETF (VOOV), have climbed 5.2%. Now, the so-called FAAMG group is trading at roughly 31 times earnings, compared with 20 times for the other 495 stocks.


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Many on Wall Street are wary of big tech as these multiples would seem bound to continue falling after their meteoric rise this year, and as interest rates rise when the economy starts to see a more solid recovery. Tech stocks, after all, would see less of a benefit from a firming economy. Mostly, growth stocks such as these five tend to have idiosyncratic revenue drivers that aren’t affected by changes in the economy—while the revenues of value stocks like consumer discretionary are very much tied to consumer spending trends and economic growth.

Evercore strategists recently said they only see S&P 500 gains of roughly 5% in the next year or so because they don’t expect big tech to outperform the way it has in recent history.

But David Kostin, Goldman Sachs’ chief US equity strategist, argues in a note that “fundamentals support higher valuation for FAAMG.”

Kostin noted that the near-term earnings outlook for FAAMG stocks supports the current valuations. Goldman is looking for S&P 500 companies to post a median annual earnings per share growth of 8% for the next few years. The tech group is expected to see EPS growth of about 17%.

Comparing these companies’ earnings multiples to their near-term earnings growth rates—which many analysts do to determine how fair a valuation is—further justifies Kostin’s point. Facebook’s PEG ratio—calculated by taking the stock’s forward price-to-earnings ratio and dividing by its projected earnings growth rate—is 1.2 times, roughly in line with in its five-year average of 1.1, according to data from FactSet. Amazon’s PEG ratio is 1.6 times, notably lower than its five-year average of 2.4. Alphabet’s PEG is at 1.9 against an average of 1.5, although its five-year high is above 2. Microsoft’s PEG is 2, in line with its average. Apple is the most overvalued by the metric, with a PEG of 2.6 against an average of 1.5.

With the exception of Apple, these companies are expected to see EPS compound an annual rate between the midteens in percentage terms to above 30%. If investors are willing to pay top dollar for these stocks, earnings growth could continue to take them higher.

All five have dominant platforms that create seemingly endless synergies. Amazon’s new online drug business, for example, offers perks to their roughly 70 million Prime members. This can drive adoption of the new offering, but can also drive new prime customers.

The point is tech stocks are pricey for good reason—don’t count them out.

Eurekahedge Hedge Fund Index up 3.25% YTD

Opalesque Industry Update – Global hedge funds were down 0.05% in October, outperforming the global equity market by 2.24% for the second …
Opalesque Industry Update – Global hedge funds were down 0.05% in October, outperforming the global equity market by 2.24% for the second consecutive month.

In year-to-date terms, the Eurekahedge Hedge Fund Index was up 3.25%, compared to -3.29% of the MSCI ACWI, with around 70% of the constituents of global hedge funds outperforming the global equity market in 2020.

Assets under management for the global hedge funds industry have rebounded, increasing by US$97.7 billion over the seven months ending October 2020. This has come from performance-driven gains of US$127.7 billion partially offset by net investor outflows of US$15.0 billion. This marks a sharp recovery following a US$264.1 billion asset decline in Q1 2020.

The Eurekahedge North American Hedge Fund Index was up 0.34% in October, outperforming the S&P 500 and NASDAQ by 3.10% and 2.63% respectively.

In terms of year-to-date returns, North American hedge funds were up 4.39%, outperforming their European counterparts who were down 2.29% over the first 10 months of the year.

The Eurekahedge Greater China Hedge Fund Index was up 1.69% in October, supported by the positive performance of the Hang Seng Index and CSI 300 which gained 2.76% and 2.35% respectively. On a year-to-date basis, the Greater China mandates are up 21.28%, outperforming their Asian peers who generated 7.54% over the first 10 months of the year.

Eurekahedge Long Short Equities Hedge Fund Index up 0.08% in October

The Eurekahedge Long Short Equities Hedge Fund Index was up 0.08% in October, outperforming the MSCI ACWI which was down 2.29%.

Supported by the strong performance of the equity market since end-March, long/short equities hedge funds were up 4.79%, with more than 30% of its constituents having generated a double-digit return over the first 10 months of 2020.

The Eurekahedge Emerging Market Long Short Equities Hedge Fund Index was up 0.57% during the month, supported by the positive performance of the developing equity market as represented by the 1.14% return of the MSCI Emerging Market IMI.

In terms of year-to-date returns, the emerging market long/short equities funds were up 8.78%, outperforming their developed market counterparts in North America and Europe who returned 6.28% and -2.08% respectively as of October 2020.

Hedge fund managers utilising arbitrage strategies up 0.67% in October

Hedge fund managers utilising arbitrage strategies were up 0.67% in October, outperforming most of their major strategic peers over the month, with macro and multi-strategy hedge funds down 0.83% and 0.42% respectively.

On a year-to-date basis, arbitrage focused hedge funds also consistently outperformed their peers as they gained 6.66%, compared to 3.67% and 0.68% of macro and multi-strategy hedge funds over the first 10 months of 2020.

Hedge funds utilising structured credit strategies were up 0.70% during the month, recording their seventh consecutive month of positive returns, which accumulated to 18.18% since end-March as captured by the Eurekahedge Structured Credit Hedge Fund Index.

In terms of year-to-date returns, structured credit hedge funds were down 7.83% as of October 2020, underperforming their fixed income and distressed debt peers who returned 0.80% and -0.95% respectively.

Fund managers focusing on cryptocurrencies were up 14.88% in October as tracked by the Eurekahedge Crypto-Currency Hedge Fund Index, underperforming the performance of Bitcoin which was up 26.10%.

Looking at year-to-date return, cryptocurrencies hedge funds are up 89.25%, slightly ahead compared to the 87.19% return of Bitcoin over the first 10 months of 2020.