Episode Transcript
Jamie: Hello everyone and welcome to another episode of Hedge Fund Huddle with me, your host, Jamie McDonald. Now, for those of you that haven't listened before, this is the podcast where we delve into the world of hedge funds and try to peel back the layers to reveal a bit more about how they work and why they get so much attention. And speaking of attention, today's episode looks head on at exactly that. We're talking to financial journalists that write about, amongst other things, hedge funds. So please welcome to the show, Will Wainewright, host of the podcast, Alternative Fund Insight and head of hedge fund research at Hedge Week, and Nell MacKenzie, who is the London hedge fund reporter for Reuters. Guys, welcome to the show.
Nell: Hey Jamie, great to be here.
Will: Good to be here.
Jamie: Now guys, perhaps we'll start with you then, Will. If you could give us a quick, just 60 seconds on your career up to date and how you got to where you are today.
Will: Sure thing. Thanks, Jamie. Good to be here. Thanks to LSEG and to be with you Nell. I've been a financial journalist for over a decade now, mostly covering hedge funds for the trade press and the wires. I started AFI, Alternative Fund Insight, in 2022, running a series of interviews and delivering information around the hedge fund business. And for the last year, I've been head of hedge fund research at Hedge Week. Mostly I focused on the European industry during my career. I also spent 18 months in New York, starting in September 2012, where we may have overlapped, Jamie, I know in your career prior to this, you were in the hedge fund sector. So yeah, good to be here.
Jamie: Thanks so much Will. I can't imagine there was anything to write about SAC in 2012 or 2013. It was all very quiet. Nell, how about you?
Nell: Sure, well, I cover hedge funds, their performance, what their trades tell us about financial markets and money flows in the wider economy. I'm a midlife career changer. I've written for the BBC, for Dow Jones, Risk.net, The Times, City AM, and Business Insider. I've also covered bond deals for global capital and made long form feature podcasts for euro money, also a part of global capital. In my previous life, I was an actress until I wound up in New York City trading on the floor of the New York Mercantile Exchange, the difference between crude oil and the products, and then traded for my Brooklyn apartment once the markets went electronic. And then when I was 40, I earned my financial journalism degree at City University in London with a view of returning back to the markets, which had fascinated me so much in my 20s. So that was seven years ago, and I've been at Reuters for last two years, and I just love it.
Jamie: Nell, your autobiography is just going to sell itself. Let me tell you that much. There'll be, I'll be picking that up myself. So, Will, here's a question I've been meaning to ask for a long time. And perhaps I can start with you is what exactly is meant by off the record? And when do you actually need to use these phrases?
Will: So off the record is when you're a conversation with a source who is a contact within the industry, and you want to give them the kind of flexibility and comfort that nothing they say will be attributed to them in any reporting. It wouldn't get back to them. And it just means that you can talk quite openly about things. And given the quite private nature of the hedge fund industry, you have to rely quite a lot on these conversations in the course of reporting. Another key phrase is talking on background, which means you then decide after the conversation if any of it is to be put on the record, if a quote is going to come out of it or some other piece of information that can be attributed. And it's just part of the rules of the game, which make the reporting process work.
Nell: Both of which though can be different in different jurisdictions as well. So, I think in New York, off the record is commonly used for something you can't use at all. Whereas off the record here in London, you might check quotes. So generally, I think we check very specifically beyond when people tell us, this is off the record or on background. We do make sure that people understand what we mean and what they mean before we talk to them.
Jamie: If I was to paint a picture, you're at some social occasion, you're at a game, you're in the bar or a restaurant, you end up talking to someone who's in the finance industry. Do you, do you mention that you're a financial journalist? You sort of hold that back. do you say I'm a financial journalist? Would you mind getting on the record/off the record? How do you do that dance?
Will: I think it's definitely better to be upfront about, what your role is, who you are, because if there's any notion that it's subterfuge involved, then it's not going to be the basis for a long and trusting relationship. So, I think just being open and, given what the hedge fund industry is like, people who are then talking to you will probably themselves say, okay, I can't really talk about this or, okay, I can say this, but you know, it's off the record kind of thing.
Nell: Strongly agree. And when you approach people, you always want to let them know what your job is. That's very important.
Jamie: Makes sense. So, let's dial the clocks back a little bit. I want to ask you both about the relationship the media has had with hedge funds over the years. Now just generalizing to an extent, if I think about things, hedge funds back in the nineties into two thousands was really funded by high net worth individuals who themselves wanted to be a quite private people. And then I guess since the financial crisis, more public money has been accepted from pension funds. And that led to requirement for greater transparency and has that now led to more hedge fund managers, analysts, traders, stop saying no comment to you? Are there more people in the industry that you can talk to and they're more open about it? And yeah, if you could just talk a little bit about how that relationship has changed over the past 10 years or so.
Will: I think the bottom line is that it's still a very private industry, but there definitely has been progress. It has changed a lot even in the time that I've been writing about hedge funds. Starting in 2011, the industry was starting to open up for those reasons of transparency. You had a lot of the big US public pensions being the top investors in hedge funds. And with that come new demands for transparency. It was totally different in the 70s, 80s, 90s when it was high net worth individuals and family offices who were investing in and actually provided the money for a lot of these top hedge fund managers to start trading. So, it has changed. I think there are still limits, absolutely. But that's part of a question for the hedge fund industry now is if it wants to expand and grow in the future, does it have to continue opening up more?
Nell: Yeah, one of my cautionary tales I tell myself, because I tell myself cautionary tales, is when I was trading on the floor and when I was actually at the time a clerk, I remember the story of Amaranth, the hedge fund, which was trading, kind of carry trade in natural gas. The story hit, I was a subscriber at the time of the Wall Street Journal. And so, I read with great interest the stories that the reporters were talking about Amaranth because of course I was on the floor. And everything was paper. So, what did I do? I walked to the other side of the floor to talk to the guys in Natty Gas to be like, hey, what's going on? And of course, I knew everything before the reporter. I knew who was on the other side of the paper. I found out like who owned the contracts. Traders talk to each other. So much more with such a great greater depth than they talk to the press. And I waited and read and watched for the reporters at the Wall Street Journal to get the story. And they did. But days and days and days after I had done it. And so, I always remember that because when I'm sad, I try to cheer myself up that somewhere there's on some trading floor a clerk who knows all the details.
Jamie: But also Nell, you clearly have a personality that people want to talk to. I mean, you know, just, just as you said, these people opened up to you. So, was that was that a sign to you that journalism was, you know, was a very viable option?
Nell: Jamie, yes, I have always been a chatty Cathy. But my mom and dad were both journalists. My mother just retired, so she was a journalist, and my father passed when I was young. So perhaps, I don't know, is there some genetics in what job you wind up in? Possibly. I've always been extremely nosy as well. So maybe I should have just started my career as a journalist. But yeah, part of what I loved about the floor was just what an incredible center of information. People were so knowledgeable. People were so smart. They knew what they were doing. Yeah, and so when big stories hit like that, it was a great place to be and to be in the information flow. But as a journalist, we get to talk to smart people as well, and that's part of the joy of the career.
Will: I think the Amarant example is a good one of why there is so much interest in the hedge fund industry, because it is so hard to understand and work out what's going on. Unless you're on the inside, and even when you're on the inside, it's quite difficult as well, because these firms are very kind of siloed and don't talk to each other, particularly on the investment side, very much at all. So, the whole myth and the aura around the industry grew up in the 90s, I would say. There are a couple of key instances. You had George Soros being named as the man who broke the Bank of England after his bets against sterling on Black Wednesday, which showed the power of the hedge fund industry. Actually, these hedge funds can in some cases be more powerful than central banks. And then, Nell, we were talking earlier and you mentioned long term capital management and its demise in the late 90s, that was put together by some of the supposedly cleverest people in finance and academia, and it collapsed with huge consequences. So, I think that set the scene for what has come this century, the expansion of the industry and so much interest in its key trades and personalities.
Nell: And the New York Times coverage, I'm a New York Times subscriber, so I could look back in the history of the long-term capital management coverage. And it's very interesting. If I remember correctly, it really centers on a lot of the legal and court case back and forth. And this was the public information available at the time. I think that's telling that things come out in the legal process, particularly in the American legal process where you can look things up, all the court documents are very easily accessible online. So yeah, you can see that they've very much relied on that for coverage.
Jamie: This is something I was going to come onto later, but maybe now is a good time to talk about it. It's when you go into the world of financial journalism, this is just in my head, how I think it of divides up bucket wise. You've got market commentary, which is stories about why the market is doing what its doing, why interest rates change, what the oilprice is doing, etc. And then you have sort of industry stories, which is, you know, Goldman Sachs is going to lay off people, analysts are not getting paid what they should be or whatever. And then I've got this third bucket, which is like the scoop. Which is sort of the house of cards, all the president's men. I found out that, you know, Bill Ackman wants to buy the Celtics, whatever it is. I don't know. I'm just making it up. Nell, I get the impression that what you're excited about is that bucket number three, and how do you sort of divide up your time? And when you think you've got a whiff of a scoop, how do you go about like forming that story?
Nell: Well, my colleague at Reuters has a great term for this for different kinds of journalists. And it's loosely translated from German, which is that there are two kinds of journalists, she says. There are the golden feathers who can beautify a story. They can wrap everything together. They can see from a 10,000 yard view. And then there are the truffle pickers. The people who get the scoops. And I think in all of our minds, we'd like to be a little bit of both because you can see a golden feather story coming from afar. For example, this recent market ruction we've had with the yen, bleeding into global asset prices. We covered, my colleague, Yorick Baccelli and I covered how perhaps Monday August 5th was more about positioning than it was about just very particular fears of the US recession. We wrote a big analysis about what happened in volatility in August 5th. And that was the result of months of work because we could see these trades coming, which was kind of a golden feather thing to do. Whereas on the day it produced a truffle picker result. So, you get stories by being curious and recognizing the moment that it's right to tell them. But another story that I got last year, was I had seen from HFR data that a huge amount of money had been taken, had flowed out of macro hedge funds at the end of 2022. And I just didn't understand because in 22, they did great. Why? Why? Why would you take something from a hedge fund that did awesome and redeem it? There was a little bit of rebalancing in the process, sure. But I talked to people for nine months to write the story. Finally, I wrote, which was about how a lot of long -term investors wanted to stay in their private debt, private equity investments. And so, they redeemed their more liquid hedge fund holdings. And I finally wrote that in November. It took me nine months. So sometimes you see a scoop in terms of like a data point or something that you read somewhere, and you go, but why, why? And then sometimes those truffles are so, so deep in that forest. You have to walk a really long way. And all of your editors are going, why, why, why are you, what are you doing deep in that forest? Nell, why have you walked so far? You're like, no, no, no.
Jamie: Yeah, come back to the edge of the wood.
Nell: Yeah, I think it'll be good. I think it'll be good. Sometimes it doesn't work out. Sometimes you never get people to, you're absolutely sure the story is correct.
Jamie: Well, you've got to have a good relationship with your editor in that case, right? I mean, I guess that's another thing that's important is they've got to give you the slack and the leeway to keep going on stories you believe in.
Nell: Yeah, that's why I have fun at Reuters. I really must say that my editors are curious and enthusiastic and passionate about what they do and knowledgeable. So, I really love working with the global team that I work with at Reuters, because I can run to my colleagues in the US or in Asia and be like, hey, have you heard about this thing? Does that make sense? Does it not make sense? Is it right or wrong? Or are you looking into that? There's a lot of collaboration you get in the newswire, which is really exciting because people bring as well different strengths to their reporting file.
Will: I think you've touched on what happened in markets last week Nell, as well, which was again showed why there is interest in hedge funds because everyone with any interest in markets and finance and Wall Street wants to know what is driving markets. What are the underlying causes? What has led to that sell off? And, A, often it's hedge funds that are involved in some way or another at the forefront of these trades. And B, how are they making money? People want to know where are the big opportunities in markets at the moment? What are the big trades? There was a big link storyline to what happened last week around big tech with some hedge funds stepping back, but now they're stepping right back into it. And these guys are so at the forefront of a lot of these trades that there's going be a lot of interest as a result of that.
Jamie: Will, that's a really interesting point because positioning, particularly when I was in the industry and was just such a big deal, like knowing how the bigger funds were positioned just gave you a very strong indication how some stock, sector, commodity was gonna, was gonna react, particularly when they're quite public about it. And that brings me on to the point of the relationship that hedge fund managers have with both social media and the media more recently. I mean, if you go back five, 10 years, it would be pretty rare for some of the big names and we all know who they are to do, you know, to be, very vocal on social media, to do interviews and podcasts. now, I mean, just take Bill Ackman as an example, I mean, he's even, I mean, I guess obviously he's got the Pershing IPO, which was probably affected why he wanted such a big social media following, but what is going on there in terms of an industry where people wouldn't really want to peacock, so to speak, show their cards. And now it just seems to be happening more and more.
Will: Yeah, think social media has had a big impact, particularly on activism. I think Bill Ackman is probably quite an extreme example. It's not all about his trades. It’s not all about activism. But firms which have activist positions and stories they want to tell use social media as a means of spreading that message. They've got to walk quite a fine regulatory line while they do it. But that's one part of it. I think in terms of the broader media, someone like Steve Cohen now gives more interviews. He talks about finance and markets publicly in a way that he didn't 10, 15 years ago. He probably feels more comfortable now, he owns a New York Mets, he's got that to talk about too. Often these founders have lots of different interests that they can touch on and they use to kind of get more out into the open and there are political angles too. But I definitely think that the industry as a whole is more comfortable with being out there. One other point I'd make is there's such competitive war for talent out there in terms of bringing the top traders to your firm. It means that although these firms are private, they want to have a good reputation out there in the market. They want to be known about. They want to be seen as competing. That builds the argument, I think, for being a bit more open in terms of building a firm's profile.
Nell: I think part of the friction we run up to with the free speech that hedge funds could or would have, if they so choose, is that they face two legal regimes which prevent them from talking freely, particularly in the US. And that includes if they have US clients. So, forgive my legal nerdery, but in anticipation of this podcast, I spoke to a couple of lawyers. And the biggest requirement a hedge fund faces is a fiduciary duty to their investors. So, if they, for example, talk about a trade and say, hey, I'm long yen short the dollar, right? There is a chance that other hedge funds could either pile onto that trade or could try to ruin it by front running it or getting in there before, during, or after the trade or create other trades that would change the market impact of that trade. And then if the hedge fund went big and was like, yay, yay, yay, advertise that currency trade, then that hedge fund would be breaking their responsibility to the investor because if the trade was in any way broken, then that would cost the investor money because the hedge fund performance would go down. So, always hedge funds legally are thinking about their fiduciary duties to their investors.
Jamie: Has that in any way changed because the makeup of their investors has changed. So going back, it was really high net worth individuals who are perhaps not susceptible to the same kind of regulatory discretion. mean, if you're having public money from pension funds in there, you're kind of talking with, I'm trying to think of the right diplomatic term, but perhaps not as financially educated people who don't have the luxury of high net worth individuals would presumably have very rigorous financial advice. So is what my point is like to hedge funds now from a regulatory point of view have to be more transparent and more careful because the kinds of investors they're getting now are more people on the street.
Nell: I think it works both ways. So, the fiduciary duty is from, if I'm not incorrect, and I worry because these are the words of lawyers in the mouth of a very unlawyerly lady, but it goes back to the Forty Act, which is, guess, like 1931, 1932, 33. And so therefore, the hedge fund has to be extra special careful about talking about trades. Also, in the Forty act is the advertisement rule. So, if you're going to talk about any trade that's been successful for you, you have to mention it net of fees, which if you think about it is kind of mathematically impossible.
Jamie: I'm not even sure hedge funds know what their real fees are, to be honest.
Nell: Well, that's a different topic. But so, like if I'm a macro hedge fund and I have a great long-gas short crude trade, Like how do I, at the end of the month, I'll have a whole macro picture possibly about what my fee is. But it might be impossible to dial back the success of that particular trade, take the end of the month fees, subtract it from the profits made on that and how that was distributed amongst all of my investors, by the way, which some have side letters, some are separately managed accounts, some are coming through UCITS funds. So, it actually makes the discussion of trades completely impossible. And though the wording of these regulations was slightly changed in 22, there's your pub quiz question. I don't think the language of these legal constraints on hedge funds discussing their trades are going to change anytime soon. So that makes it actually doubly, doubly, doubly more tricky. I mean, now what a hedge fund talks about with their investors on a bilateral basis is something that we're not privy to. If I could Rita Skeeter change myself into a fly, I absolutely would. But otherwise, barring the laws of time and space and my ability to be a Harry Potter character, I don't think we'll fully understand that. But in terms of what they say to the press and what they say publicly, it actually, legally is a pretty difficult rock and hard place.
Will: This all feeds into the regulatory agenda as well in terms of the SEC proposals and what they've actually passed under Gary Gensler, who has really driven the transparency agenda to the annoyance of an awful lot of hedge funds. And a lot of these rules are being contested at the moment in terms of what information they do have to make public and to what extent, and whether it's aggregated and anonymized and that kind of thing. So that's a really interesting area to watch at the moment. And it covers everything from fees to trades and market impact. And Jamie, I also think your point about pension fund money is really pertinent because after the financial crisis, there was such a spotlight on hedge funds and what role they played. And at the same time, pension funds want to put more money into them. So how to kind of balance that if it's a sector which could cause systemic risk, for instance. You've seen the rise of due diligence questionnaires and lots of big consulting firms grow off the back of that transparency agenda. But the question is, it's OK hedge funds being public with their investors but in terms of how much of that is made public more broadly that is a very contested area.
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Jamie: I was going to come onto this a little later again, but I try to think of the reputation of hedge funds and how much they bring to the market in general, because the old adage was, hedge funds are great because they provide liquidity. That's one thing you want. They're an extra pair of eyes, digging into the financials of corporates, trying to find the good from the bad. But then on the flip side, it's a pretty difficult message to sell to the public that somebody can make money off disaster and these people are getting very, very wealthy. So, this is a pretty general question. Sorry, it's not as more specific, but do you have a feel for whether hedge funds, they're a net positive for markets and, and, and the sort of economy in general.
Will: Going back to the financial crisis, hedge funds took a bit of a pasting after that, didn't they, in terms of the industry's reputation.
Jamie: I remember coming in one day and it was like short selling is banned. And the fact that people could do that, I was thinking, well, will there ever come a point again where there's another hedge fund blow up, there's another scandal and somebody comes in and says, do you know what? No more short selling. And then that business model is just completely torn up. I mean, I'm sure they'll be able to find instruments using options of having a negative view on stocks and commodities, but what my point is that regulators still have the power to shrink or destroy this industry if they wanted to.
Nell: Short selling is now banned in Korea and I believe there are further restrictions being talked about or initiated in China. That was some of the color that we gathered and it's in our article from Monday as to why Japan was such an attractive area to trade because if you were going to be in Asia and you wanted to short, you couldn't do so in certain jurisdictions.
Will: Yeah, I think it's short selling and also hedge fund use of leverage. That was a key talking point after 08 and actually they're kind of vindicated on that point because there was lots of research about how it was the banks actually who were over levered and had all the problems and were causing the risk. On the short selling point, I think a really interesting, more recent example is Wirecard, the German regulated BaFin actually banned short sales for a time over that case after the FT reported, which was partly based on the hedge fund research that had been done into Wirecard. And in that case, a huge fraud was exposed. And that is the argument for short selling that they do actually bring discipline and rigor to markets and stop firms getting away with things that they shouldn't be getting away with. And that's on a scale from that at one end to just encouraging them to perform better by changing in different ways. So, there's definitely a balance and short selling does present risks of fraud and market manipulation in itself. That's definitely true. But I think there have been lots of cases where it does perform quite a useful function.
Jamie: Well, there was also an argument that hedge funds provide diversification for portfolio. So obviously you could have your real estate and stocks and bonds, but in terms of alternative investment options, you got private equity now, hedge funds. And the idea was, in theory, and I'm using the air quotes, hedge funds are less risky because they should be able to make money in any kind of market. Now, obviously that's not the case when they're being run poorly. But is that still a rhetoric that's out there that hedge funds are going to continually have this wall of money going into them because they do provide this diversification?
Will: I mean, the diversification argument is the big opportunity for the sector now because, the events of 2022.
Jamie: Especially with multi-manager platforms.
Will: Yeah, yeah, they're a good example of that. Multi-manager platforms, sometimes referred to as pod shops, which have lots and lots of different trading teams working different strategies, which is kind of balanced and risk managed centrally. They've been able to deliver pretty strong risk adjusted returns. 2022 was a really good example where stocks and bonds sold off in unison. If you're a 60-40 investor, it was pretty brutal. And actually then it was the hedge fund managers led by the multi-manager platforms who delivered pretty good gains, diversification, CTAs as well. That was another very good time for them. The argument for hedge funds is can they become a key part of alternative portfolios when you've seen such a huge rise in private markets, private equity in the last decade and then private credit since the pandemic performed pretty well. Attracted lots and lots of inflows. And in the last year or two, the growth has slowed down for those asset classes. And yet, because of the lockup periods, as Nell referenced earlier, that money is tied up. And it's hard to get liquidity there. So that makes it harder then for hedge funds to get new sources of capital. But if they can continue to make that argument for diversification, it should be the time where active management actually performs pretty well because in a decade up to 22, you could just be 60, 40, a passive investor, maybe focus on big tech and you'll do even better. And you didn't really have to worry too much, but it looks now with rates higher, we're in a new market paradigm.
Nell: It's also crazy to say hedge funds this or hedge funds that. There's such an incredible range in the product suite of hedge funds. You got guys with 30 vol this year who've made over 200 % in cocoa. And then you have usage funds who are buying pretty safe fixed income products. It's just so wildly different, you know, between like, or you have some hedge funds that increasingly look a lot like private debt and private credit, or perhaps they're on one timeframe of that private debt and credit time span or lifespan. So, the saying really goes, I think it's really about market timing for the investor and what their taste is. If I was a sovereign wealth fund with a lot of assets and a long timeframe. I imagine my investing horizon and what kind of hedge funds I would be picking would be very different from being someone who's looking after a small amount of family wealth. I would look completely at different hedge funds.
Will: What about you, Jamie? Do you see this as big moment of opportunity to get back into the hedge fund business?
Jamie: Well, why do think I'm doing this podcast? I've been waiting for somebody to ask me that for the past couple of years. No, mean, truth be told, when I left in 2014, it was a really hard time for performance, or at least that's the story that I'm telling everyone and I'm sticking to it. It was a really, it was a really hard time to make money. and I know, markets were pretty strong, but at a hedge fund, was tough to do stock picking, to find alpha. And throughout the teens, 2014 to sort of 2017, I was grateful I wasn't in the market. But now as I see these performances getting better and better, the funds under management are growing again. Going back to your hunt for talent, from what I read, from what you guys are saying, and I'm sure it's true, that some of these big guys are really paying up to get some big names. It's a great time to be a hedge fund manager with performance right now because people are really in high demand. But turning it back onto you guys, by the way, cause you guys, you guys are the pros here. We haven't got too much longer left, but there's a couple more things I wanted to ask. Will, I know you've spoken before about Brexit. So, these big political binary events, and perhaps you can reference Brexit, they're obviously huge in terms of how hedge funds are positioned and are they going to win or lose on that day? But then you have this side angle, which is, you know, these funds donating to these campaigns. So, I know you worked on this issue, like, were there, I mean, were there funds donating large amounts to remain to Brexit? Was it possible in talking to people how you felt the market was positioned going into the day?
Will: Yeah, this was a really interesting series of stories to work on in the build up to the Brexit referendum in 2016 and then subsequently too, because you did have the issue of how are hedge funds actually positioned, are they looking to make money out of a surprise Brexit results, out of the UK economy choosing to remain and what would be the consequences of that. And at the same time, these hedge fund founders, they are some of the richest people in the country and have the money to fund these campaigns. And the wider perception out there was that any hedge fund manager with an interest must be backing Brexit. And there were certainly a few of them, quite high profile characters who did back Brexit very vocally and fund the Brexit campaign. But it was interesting because you probably had as many hedge fund managers actually backing and funding remain. But they just didn't create the same kind of publicity and headlines. I'm thinking about people like David Harding, Andrew Law at Caxton. There were several who gave a lot of money to the Remain campaign, ended up being on the losing side, and it was the Brexiteers who carried the day in the end. And then on the trading side of things, it was great reporting on how some of these funds actually made money and some funds had actually lost a lot of money over that. And it is an example of how political outcomes where, it is quite hard to get an edge if you're a hedge fund manager, you probably look to the kind of political insiders and the pundits, but they are absolutely big issues that they have to take into account when they are, when they're putting their trades together. And the other point I'd make, you know, particularly in election year is that often these founders have so much money, they can put it to work in different places, but what it's hard to buy is kind of influence. And now you're seeing hedge fund founders take more of an interest in media organizations, continuing to donate a lot to different political campaigns, because that is a way in which they can actually have an influence that, you could say money can't buy, although maybe it can.
Jamie: Well, well, Will, how about this? I have a quote here, which I wasn't going to say, but I will now because the timing is perfect. From the daily upside January 2024, more than half of America's daily newspapers are now controlled or owned in part by hedge funds, private equity firms or other asset managers, according to estimates gathered over the past few years. And many of them like New York based Alden Globe and Capital, a hedge fund notorious for its vulture capitalism, claim to want to save newspapers from extinction, but deprioritize the quality of those publications content in favor of the bottom line. How do you feel about that?
Will: Well, I would say that that speaks less to the question of media influence and more to the very story.
Jamie: Well, it seems like they're trying to pretend like that they're trying to be the white knights and save these institutions, but really, they're trying to buy influence.
Will: Yeah, I don't know if it's influence. I think it's just local newspapers and the very sorry state of that market and how, you know, maybe these hedge funds do see an opportunity in one way or another, but I'm not entirely sure. I'm going to pass that one to Nell.
Nell: I will only say that the media, the arts, everything that you would have studied at liberal arts, at a liberal arts college, is a difficult investment in the moment. And that is a tragedy. don't know why. There is a big part of the global culture that values the arts. And I sort of count journalism in the arts in terms of writing, even though it of skirts the arts. But there is a de-emphasis on the arts in our global cultural generally. And an example of this actually is there's a publication called Lapham's Quarterly, and Lewis Lapham just died, so, I certainly hope that Lapham's quarterly continues because I'm also a subscriber of that one too. Spend more money than I make on journalism! No, it's fine. There is an interesting set of plans that Lapham's Quarterly, I think, reported some years ago, but it sticks in my mind, where they found the plans, Walt Disney planned to create the first park as an American town. And one of the biggest buildings on the main street was the local paper. And that always struck me very sadly because that is not, I think, the same anymore. You don't have the main street of an American or British town and a fixture of the main street is the paper. So, I would say that that is reflected in your question as an answer to your question. And that's a really sad, I mean, it's my job, right? So, I don't want it to go away because I really love it. And it's what my parents did too. So, I certainly have an attachment to it.
Jamie: Well there you go. Hedge funds do support the arts. That's another positive for them. All right, so we're coming towards the end of the podcast now. I got a new section here, which is questions from listeners. A few people have actually even got in touch with me and said they wanted to ask a couple of questions. So, I'll fire them to you, quick fire, and you can kind of just say yes and no with a quick answer. So, to both of you, can London remain the financial hub for Europe?
Nell: Yes.
Will: Yes.
Jamie: Any competitors Will? Geneva I was going to say would be the one most likely to compete.
Will: Yeah, absolutely. I mean, Paris, Milan, Geneva, Yeah, and I'm guessing the background to that question is what's happened in the last few years when Brexit has definitely dented London from a financial perspective, although perhaps not to the extent that was predicted before the referendum. Another point I would make is there was so much talk about how other European hubs would benefit if Brexit happened. And to be honest, it just seems like the US has been the big winner in New York. And other cities in the states have just kind of soared away even further and now we're looking at the rise of hubs in the Middle East as well with more hedge funds setting up in Dubai and Abu Dhabi.
Jamie: Do you feel the hedge fund industry is going to grow or shrink over the next 12 to 24 months?
Nell: Flat.
Will: Grow.
Jamie: Flat from Nell, Will grow. And do you think there's any chance of a large scale blow up from a hedge fund in the next 12 months?
Will: I'd say there's always a risk.
Jamie: Pretty unlikely though. It seems increasingly more unlikely.
Nell: I wouldn't say. As a reporter, if you say anything is unlikely,
Jamie: Yeah, it just comes back to haunt you.
Nell: Yeah, yeah, I think superstition-wise, one never says never.
Jamie: Yeah, well, that seems like a very good place to finish. Guys, this was absolutely fantastic. I want to hand it back to you to just either say where Nell, someone could catch some of the movies you did when you were an actress, but also to say if someone wants to get in touch, what's the best way of getting in touch with you guys?
Nell: I think you can find us both on LinkedIn. You can find me on Reuters. My email is usually at the bottom of my stories.
Will: Yeah, I'm on LinkedIn. Very happy to hear from anyone to discuss industry trends and ideas and thoughts for the future.
Jamie: Well, Nell and Will, I've really loved this episode. Thanks so much for coming on and yeah, good luck with everything.
Will Thanks Jamie.
Nell Thanks, Jamie.
Jamie: Thanks once again for listening everyone and please as usual, give us a follow, like us or subscribe to us wherever you get your podcasts. The information contained in this podcast does not constitute a recommendation from any LSEG entity to the listener. The views expressed in this podcast are not necessarily those of LSEG and LSEG is not providing any investment, financial, economic, legal, accounting or tax advice or recommendations in this podcast. Neither LSEG nor any of its affiliates makes any representation or warranty as to the accuracy or completeness of the statements or any information contained in this podcast and any and all liability therefore, whether direct or indirect is expressly disclaimed. For further information, visit the show notes of this podcast or lseg.com.
