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John Thomas graduated with a bachelor’s degree in biochemistry with honors and a minor in mathematics from the University of California at Los Angeles (U.C.L.A.) in 1974. He moved to Tokyo, Japan where he was employed by a medium-sized Japanese securities house. Thomas became fluent in Japanese... More
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  • Report On The 6th Annual SkyBridge Alternatives (SALT) Conference 1 comment
    May 20, 2014 9:50 AM

    Once again, I am writing to you from the poolside cabana B-2 at the Bellagio Hotel in Las Vegas. It is a baking hot 100 degrees in the shade and the air is bone-dry, so I'm draining my third rum punch for the day.

    The days when I risked getting dragged out to the parking lot to get my hands broken with a hammer for card counting at blackjack have long since passed, so I am able to relax. As with PIMCO's Bill Gross, that's how I worked my way through college.

    May Bugsy Siegel Rest in Peace.

    It is shocking what passes for a tattoo these days, and where they end up. I see young women with elaborate Chinese and Japanese characters inscribed in some highly immodest positions.

    Reading this unfathomable language myself, I can tell you that they look like they were brushed by a two year old or are completely unintelligible. I predict a raging bull market in regret in ten years....if it hasn't already started.

    I have to tell you that the SkyBridge Alternatives Conference (NYSE:SALT) is the best investment event I have ever attended, bar none. Never have I seen such a concentration of great minds so willing to share with the general trading community market-bending views on all assets classes, long and short.

    Some of the best known speakers were humbled, and almost at a loss for words, addressing the impressive firepower assembled before them, 1,800 of the smartest people in the world.

    Kevin Spacey started out with a hilarious series of impersonations. Former Prime Minister Tony Blair gave an eye opening assessment of the geopolitical scene. He seems to know more every year. Jim O'Neal, the just retired chairman of Goldman Sachs Asset Management, thought this week's win by Narendra Modi's BJP party in India was a game changer, the most significant emerging market event in 30 years.

    Omega's Leon Cooperman peppered us with his favorite stocks. The audience certainly perked up and took note. Last year's tip gained 65%.

    The cost for the four day assembly was a bargain at the price, given that you will probably make all of this back, and much more, on your next trade. This is an education that can make, or break, your year, and even a career. It spoke volumes that the stock market saw the lowest turnover of the year this week. All the players were here.

    SALT was hosted by my friend, Anthony Scaramucci, the managing partner of SkyBridge Capital, LLC, a world class networker and high profile operator in the hedge fund industry.

    Scaramucci is the author of two books, The Little Book of Hedge Funds: What You Need to Know About Hedge Funds but the Managers Won't Tell You, and Goodbye Gordon Gekko: How to Find Your Fortune Without Losing Your Soul.

    Meeting the "Mooch"

    SkyBridge Capital is a research driven alternative investment firm with over $10 billion in total assets under advisement or management. The firm offers hedge fund investing solutions that address a wide range of market participants from individual retail investors to large institutions.

    Their businesses include commingled funds of hedge funds products, customized separate account portfolios, and hedge fund advisory services. To learn more about their services, please visit their coolest of all websites at http://www.skybridgecapital.com.

    Anthony, or "The Mooch" to his friends, seems to get better at this game every year. One minute, he is frenetically putting out fires, and the next, coolly introducing the next high profile name in a relaxed and suave manner. Every time I saw him, he was on the way to somewhere in a high speed hustle.

    He is developing into a world-class entertainer in his own right. He surprised all by announcing this week his purchase and relaunch of the famed PBS TV show,Wall Street Week.

    Unfortunately, there was a total press blackout for all of the marquee names with the sole exception of the best one (click here for "An Evening with David Tepper"). So most of the high-grade intelligence was for ears only, With "OFF THE RECORD" projected on the gigantic screens in big bold red letters.

    You can't blame these guys for being gun shy. All have been grievously misquoted by the press in the past. This can be a dicey problem when their comments are market moving and they already own big positions. With the former world leaders, there is always the chance of an offhand comment creating an international incident.

    Given the choice between restrained, politically correct views approved by compliance departments or intelligence agencies, and the real, but unquotable skinny, I'll definitely take the latter. You'll learn the market impact of what was said in my coming Trade Alerts.

    Non-stop panel discussions kept us all up to date on the many urgent issues facing hedge funds and their investors. Fee discounts for size, once unheard of, are now becoming common. As the industry is rapidly becoming commoditized, prices are dropping.

    There is a rise in the customization of accounts for specific clients. Risk control and transparency have improved dramatically since the 2008 crash. Concerns about the popping of the bond market bubble were almost universal.

    Peripheral to the large conference halls were two vast meeting rooms, one with 100 tables, another with 50 white upholstered sofas. There, an army of young, fresh faced marketing reps sold a panoply of hedge fund products to a flotilla of hardened and wizened end investors.

    Reading the body language was fascinating. Dozens of small, start up hedge fund managers earnestly articulated their own strategies to potential partners. Every 20 minutes, the buyers of services rotated tables. You could almost feel the supercharged energy of the deals getting done and commerce coursing through the air.

    God bless America!

    No, Jim, You're Wrong!

    There are now 23 hedge fund strategy categories, some with another half dozen subdivisions. You need a PhD in math from MIT to understand some of the more abstruse ones. Managers can now outsource any service to third party providers, be it compliance, tech support, investor relations, or support staff. The business has been sliced and diced so many ways it is dizzying.

    The elevators hummed with the language of finance; duration, convexivity, alphas, betas, deltas, thetas, and price earnings ratios. Baffled vacationers from the Midwest might have thought they took a wrong turn and landed in Greece by accident.

    At night, the guests were treated to a blowout party around the Bellagio's ornate swimming pool complex. A rock band boomed out the music, and the torsos of dancers gyrated wildly in true bacchanalian fashion.

    A fire breather roamed about singeing the guests, as did elaborately dressed women on stilts wearing fantastic feathered costumes. Tarot card and palm readers were available if you wanted to learn your 2014 performance numbers in advance.

    Comely waitresses served all the iced tequila shots you could drink, which had "headache" written all over them. The hotel wisely stationed lifeguards around the pools in case a drunken reveler fell, or was thrown in. I asked one shapely attendant if she would save me if I inadvertently took a plunge, and she cautiously answered "yes."

    It was all a scene worthy of The Great Gatsby.

    Because I recently started posting my pictures on the site, I was mobbed by fans, dispensing some 200 business cards that evening. Why do I feel like the protagonist, Nick Carraway? Or am I the doomed Wall Street titan Jay Gatsby himself?

    Of course, CNBC's Fast Money crowd was there in force, and I was able to spend some quality time with Steve Weiss, Josh Brown with the permanently tousled hair,

    Jersey boy Guy Adami, and "Harvard Girl" Melissa Lee. All were in fine spirits.

    I managed to pin down short selling legend, Jim Chanos, telling him he is wrong about China for the umpteenth time. Still, he has already made a fortune there on the downside in recent years, and admitted he did carry some longs there against his shorts.

    When I first jumped into the industry 30 years ago, there were only two dozen hedge funds managing a miniscule amount of money, and we all knew each other. Most of Wall Street thought we were all crooks. Now you have 10,000 funds managing $2.7 trillion, accounting for 50%-70% of all trading volume. Pension funds have made the industry respectable, and huge.

    Asian readers still have the opportunity to sign up for the Singapore SALT Conference to be held on October 21-24, 2014 at the posh Marina Bay Sands Hotel (website: http://saltconference.com/saltasia2013/index.html ). After that, you will have to wait for the next Las Vegas conference in May, 2015.

    The highlight of the event was a private concert by rock legend, Lenny Kravitz. A production company from Los Angles hauled out ten truckloads of sound equipment to make it happen with industrial strength. "Watch out, it's going to be LOUD," warned the producer, as he handed me a pair of earplugs.

    Minutes later, the rock legend took the stage and the base notes ruffled my shirt, reverberated through my chest, and vibrated my hair. I thought I was going to have a heart attack. His rendition of American Woman was outstanding. After the show, I immediately ran upstairs and downloaded Lenny's latest album from iTunes.

    I saw one of the richest men in the world casually walk up to the stage to get his ears blasted out, dressed in blue jeans, loafers, and a blue checked shirt with the tail hanging out. Girls walked up to shake his hand, and wouldn't let go. Half the women were wearing six inch stilettos with red soles, meaning they ran a grand a pair.

    I saw my buddies, Trademonster's Najarian brothers, rocking out with their hair down, taking selfies. I have watched these two interact for years, and they make an amazing team. I wish I got along with my brother so well.

    It was sad to see film legend, Francis Ford Coppola, now a fragile 75, struggle to get into his chair. I know he inhaled great draughts of the sixties, because I saw him there. To us rebels and iconoclasts of that tumultuous decade, Francis was our god.

    I reminded him that I was an extra in his Vietnam War classic, Apocalypse Now, appearing in the USO scene when it was shot in the Philippines nearly 40 years ago.

    He looked down at me somewhat disdainfully. "You mean the one with the bunnies?" he asked. "That's the one," I replied. "That must have been interesting," he answered.

    What was I thinking? He clearly didn't have the slightest idea who I was; so I let him tap his mismatched electric blue sock clad feet in peace. The result was the same as if the kid who mixed the hay with the mud approached the man who built the pyramids.

    The next day, some of the younger kids from marketing were clearly wrecked and could have walked out of the morning after scene from The Hangover, which was shot at the Bellagio. I'm sure they spent the morning shuffling the stacks of business cards they collected, wondering who some of these people were. Ah, the price of youth!

    And who the hell is John Thomas?

    After drinking my meals for four days, I managed to cover all the bases. I even spent time with the hairy chest and silver chain crowd in the lukewarm pool, who leased office space to hedge funds. Business was booming.

    Out of suntan lotion and Lenny still ringing in my ears, I ran for a taxi and off to my next speaking engagement at 8:00 AM the next morning in Orlando, Florida.

    Oh, did I tell you how hard it is to get your clothes off when they are soaking wet?

    My dry cleaner is going to hate me.

    My Never Ending Search for New Trading Ideas

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  • Dr. Kris
    , contributor
    Comments (319) | Send Message
     
    Were there any talks at the conference on HFT?

     

    And what on earth would Francis Ford Coppola be doing at a hedge fund convention?
    20 May, 03:47 PM Reply Like
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