In SuperCash: The New Hedge Fund Capitalism, hedge fund manager James Altucher examines the many new types of investments that have been developed over the past few years by top hedge funds and investors around the world. Through detailed examples and up-to-the-minute advice, Altucher reveals how you can take advantage of these investments and offers a dozen strategies that can be used to supersize your returns.
SuperCash takes it one step further by examining all of the new types of investments that have been developed over the past few years by the top hedge funds and investors in the world, including asset-backed lending, PIPEs, closed-end fund arbitrage, new types of IPOs, and even securitizing the cash ﬂows from elevator music. In the following chapters, I will show you how savvy traders and hedge fund managers are turning cash into supercash in today’s tough markets. We’ll look at the following topics and strategies for supersizing returns:
- Hedge funds as the new banks. Hedge funds are feasting on the scraps from banks. Banks will not do short-term debt, they will not do hard-to-collect loans, they will not take risks on microcap companies, and so on. So hedge funds have become the new banks on everything from subprime auto ﬁnancing to trade factoring, hard-money real estate lending, tax lien investing, life insurance premium ﬁnancing, and more.
- Activism. Much has been written about so-called “value traps,” stocks that have all the characteristics of value stocks (i.e., low P/E ratios, steady earnings, great balance sheets) but never seem to move higher. Sometimes the reasons for the trap are clear—management has become entrenched and lost whatever competency it ever had in terms of bringing value to shareholders. Or sometimes the reason is more insidious—management is raping the company blind and not leaving much excess cash ﬂow for investors. Activists invest in deep value situations where they think management is, for whatever reasons, refusing to unlock that value. The activists then begin communicating with management, expressing their opinion on how to extract value, and then, in the worst case, attempting to change things forcefully, either by taking over the board of directors of the company or by taking over the entire company. Although it is difﬁcult for the typical retail investor to be an activist investor, it is possible to piggyback on the coattails of larger activists and to learn about their investment philosophies and activities through their very public SEC ﬁlings which document their approach.
- Delinquent credit card debt. Hedge funds have become the credit card issuers of last resort. While you can’t get a VISA card from a hedge fund, they may be the holder of the outstanding balance on your card. Some banks have been unable to collect on bad debt and are now wrapping up the delinquent debt in securitized paper and selling it off to hedge funds, who then outsource the collection.
- PIPEs. Private investments in public equities (PIPEs) have been quietly replacing the traditional secondary offering as the ﬁnancing of choice for many small cap and mid cap public companies. Rather than paying an investment bank 7 percent or more in fees, dealing with expensive SEC ﬁlings, and going on six-month road shows while everyone shorts your stock, public companies are opting to raise money by going directly to hedge funds, negotiating terms, and closing ﬁnancings in a matter of days or weeks rather than months. Chapter 4 examines the various deal structures that have become popular and the post-deal performance of these PIPEs.
- A new approach with IPOs. The large banks and brokerages used to have the monopoly on IPOs and the proﬁts that could be gained by investing in those IPOs and then ﬂipping them on IPO day. But a new crop of IPOs has sprung up, simultaneously taking some power away from the blue chip investment banks and giving some power back to the retail investor. Chapter 5 looks at Dutch auctions, pioneered by investment ﬁrm WR Hambrecht, and the 90 percent or higher returns garnered by this strategy. I also examine how reverse mergers don’t deserve the reputation they’ve garnered over the years, and look at an unusual innovation combining private equity with the IPO—the specialty acquisitions corporation (SPAC). And More…
- Hedge Funds Are the New Banks
- Buying Delinquent Credit Card Debt
- Everything You Wanted to Know about PIPEs But Were Afraid to Ask
- The New New IPO
- Trade like a Billionaire
- Closed-End Fund Arbitrage
- The Finer Things in Life
- Trend versus Countertrend
- The Myth of the Index, or ETFs: Active or Passive?
- Watch Out!
- So You Want to Start a Hedge Fund?
- Classic Investment Reading and New Media Resources
- Where to Find the Data
SuperCash: The New Hedge Fund Capitalism By James Altucher pdf