• A software company called Amenity Analytics reviews earnings-call transcripts, press releases, company research, and more to try to help hedge funds spend less time looking for important nuggets of information and more time trading.
• The natural-language-processing software incorporates "publicly available" CIA interrogation techniques to find certain phrases and euphemisms that executives use to cloud the truth.

After a year of returns so poor that it prompted investors to redeem more than $33 billion, hedge fund managers are hungry for anything that gives them an edge on competitors and the market.

This has resulted in rapid expansion of alternative data providers, which mine for useful and actionable info in nontraditional ways.

One of these companies, Amenity Analytics, wants to cut the time analysts and portfolio managers spend poring over earnings-call transcripts by getting straight to the point: Some CEOs are not completely honest.

By using natural-language-processing software to review companies' transcripts, press releases, and public comments, Amenity assigns sentiments to key phrases and points. For example, the technology will identify words like "expanding" as positive while "limit" and "damage" are flagged as negative.

But the software goes a step beyond that as well, according to the Amenity Analytics cofounder Nate Storch, who was previously a portfolio manager at the New York-based hedge fund Talpion Fund Management as well as a mergers-and-acquisitions banker at Morgan Stanley. The tool also picks out phrases and euphemisms executives use to couch bad news, something the firm calls its "deception score."

While the deception tracker does not give a numerical rating to the different phrases executives use, it does assign one of 10 descriptions to each deceptive "event." Examples include selective memory — "when an executive claims not to be able to remember information"— and negative clichés that "are overused and betray lack of original thought."

To train the software to detect deceptive language, Amenity built "publicly available" interrogation methods used by the CIA and others into the system, Storch said.

Read more: Nasdaq is buying a company that offers hedge funds obscure data to give them a trading edge

The goal of the technology is to read body language through written text.

"For us, it's really a spotlight for analysts to say 'this is where you need to be digging,'" Amenity's marketing director, Mark Zepf, told Business Insider in an interview at the firm's Manhattan office.

With hedge funds down 4% on average last year and investors pushing portfolio managers to justify their fees, alternative data providers like Amenity have blossomed. According to AlternativeData.org, there are more than 400 providers providing datasets to 78% of the hedge fund industry. The industry group predicts that in 2020 hedge fund managers will spend more than $1.7 billion on alternative data, up from $400 million in 2017.

Amenity has hired aggressively to match the increased interest, tripling its workforce from 20 employees at the beginning of 2018 to 60 employees now, split between offices in New York and Tel Aviv, Israel.

Read more: Hedge funds spend billions of dollars a year on alternative data. A new product is hoping to give investors an edge.

The company has attracted notable names in the software space, with Intel investing in the 3-1/2-year-old company when Amenity was raising seed capital and holding a board seat. Nasdaq, Evercore, and Barclays are clients that have posted research using Amenity's software.

Storch said his firm was not trying to replace widely used data providers like Bloomberg or Thomson Reuters but instead sought to amplify the information provided by them.

"It's all the stuff that's not in your Bloomberg," he said. "It's an analyst for your analyst," he said.

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• PG&E, California's biggest utility provider, said on January 14 that it intends to file bankruptcy as a result of its potential liabilities tied to last November's deadly California wildfire.
• Last week, a new finding from the California Department of Forestry and Fire Protection concluded that the California utility wasn’t responsible for the 2017 Tubbs Fire, the second-most-destructive fire in the state's history.
• Spurred by the new finding, a group of hedge funds, including Paul Singer’s Elliott Management, has sent PG&E a $4 billion financing proposal that could keep it from bankruptcy.
• Watch PG&E trade live.

PG&E, California's biggest utility provider, reportedly received a $4 billion plan Monday to keep it from filing for bankruptcy as a result of its potential liabilities tied to last November's deadly California wildfire. Shares were up as much as 20% following the news before returning to the flat line.

A group of hedge funds, including Paul Singer's Elliott Management, has sent PG&E a financing proposal backed by convertible notes maturing in about five years, Bloomberg reported, citing sources familiar with the matter. At least one other group, that includes Ken Griffin's Citadel, is pitching a competing financing plan that would save the company from bankruptcy, Bloomberg's sources said. Citadel is among the biggest shareholders of PG&E, owning a 0.55% stake.

On January 14, the company said it intends to file bankruptcy petitions at the end of the month to reorganize under Chapter 11 protection — two months after the deadliest and most destructive wildfire in California history broke out. PG&E said it was having trouble with its transmission lines when the blaze erupted and that it may be responsible.

In a filing dated on January 21, the utility said that it has lined up $5.5 billion from four banks — JPMorgan Chase Bank, Bank of America, Barclays Bank PLC and Citigroup Global Markets — to provide debtor-in-possession financing for its operations during the bankruptcy process that it expects to take about two years.

BlueMountain, one of PG&E's largest shareholders, recently spoke out to challenge the bankruptcy plan, arguing that it was "damaging, avoidable, and unnecessary."BlueMountain owns a 0.83% stake in the utility, according to its most recent disclosure.

Last week, a report from the California Department of Forestry and Fire Protection (CAL FIRE) concluded that the California utility wasn’t responsible for the 2017 Tubbs Fire, the second-most-destructive fire in the state's history. That was "another example of why the company shouldn't be rushing to file for bankruptcy," a representative for BlueMountain Capital Management said on Thursday.

But PG&E said it still "faces extensive litigation, significant potential liabilities, and a deteriorating financial situation," despite of the new findings, according to a statement seen by Reuters.

The CAL FIRE report spurred some investors to seek financing proposals that could provide PG&E with time to seek solutions to current and future wildfire claims, such as legislative relief, Bloomberg reported. That group includes Pacific Investment Management, Apollo Global Management, and Davidson Kempner Capital Management.

PG&E was down 72% in the past year.

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• Nvidia on Monday slashed its fourth-quarter revenue guidance, and sounded the alarm on its sales in China.
• Shares plunged nearly 14% on the news.
• Nvidia's plunging stock could have caused the company's five biggest hedge-fund investors to lose $202 million in total.
• Watch Nvidia trade live.

Nvidia plunged 14% Monday after the chipmaker slashed its fourth-quarter revenue guidance, citing significantly weaker economic conditions in China. Five hedge funds could have lost hundreds of millions of dollars as a result of the warning.

"Q4 was an extraordinary, unusually turbulent, and disappointing quarter,"Jensen Huang, Nvidia founder and CEO, said in a filing with the Securities and Exchange Commission.

"As we worked through Q4, the global economy decelerated sharply, particularly in China, affecting consumer demand for NVIDIA gaming GPUs. Also, with initial shipments of new high-end RTX GPUs selling above MSRP, some customers may have delayed their purchase while waiting for lower price points and further demonstrations of RTX technology in actual games."

The chipmaker cut its revenue guidance to $2.2 billion, plus or minus 2%. Previously, it expected revenue of $2.7 billion, plus or minus 2%.

And some of Nvidia's biggest shareholders, famous names in the hedge fund industry, could be paying the price. By Markets Insider's calculation, Nvidia's plunge on Tuesday could have caused the five biggest hedge-fund investors to lose $202 million in total.

To clarify, the firms could have sold their shares before Monday, avoiding some or all of the decline. Additionally, they could have hedged their positions, offsetting any losses.

Below are five hedge funds that own the largest positions in Nvidia, according to their most recent filings:

Coatue Management

Position: 1,110,330 shares

Percent of Nvidia outstanding: 0.18%

Potential loss: $24.6 million

Source: Bloomberg

AQR Capital Management

Position: 1,554,254 shares

Percent of Nvidia outstanding: 0.25%

Potential loss: $34.4 million

AQR did not immediately respond to request for comment.

Source: Bloomberg

Renaissance Technologies

Position: 2,091,465 shares

Percent of Nvidia outstanding: 0.34%

Potential loss: $46.3 million

Renaissance did not immediately respond to request for comment.

Source: Bloomberg

• The billionaire David Tepper's Appaloosa LP on Tuesday made a strongly worded call for change to the drugmaker Allergan's board leadership structure.
• Appaloosa wants Allergan's board to separate the roles of chairman and CEO, which are both held by Allergan's Brent Saunders.
• In a Tuesday letter, Appaloosa slammed Allergan's executive decision-making, "the record for which," it said, "has been fraught with ill-considered initiatives and self-inflicted wounds for several years now."

David Tepper's Appaloosa LP hedge fund just put out a harsh call for change at the $50 billion drugmaker Allergan, and it's also a strongly worded critique of the company's leader, Brent Saunders.

Appaloosa specifically wants Allergan's board of directors to separate the roles of chairman and CEO, which are both held by Saunders. In a letter Tuesday, the hedge fund called it a "first step" to turning things around at Allergan. But the letter also makes clear that Appaloosa is condemning Saunders' leadership.

Allergan's stock has declined about 38% since Saunders became chairman in late October 2016. The Standard & Poor's 500 Index has jumped 27% over the same time period.

When Appaloosa began asking for the change last April, "we believed that the introduction of a seasoned independent Chairman with extensive pharmaceutical experience could exert a favorable influence on executive decision-making, the record for which has been fraught with ill-considered initiatives and self-inflicted wounds for several years now," the Appaloosa letter said. "AGN's moribund corporate performance and flagging stock price since our letters only deepens our conviction on this point."

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Appaloosa also noted that it had made the request four times in less than a year, including Tuesday's letter. It said the board's inaction bordered "on blind obedience and raises serious fiduciary concerns."

In a statement, Allergan told Business Insider that it had received Appaloosa's proposal and was "committed to continuing to engage with them, as we do any shareholder who has input and constructive ideas."

"The company has been executing its strategy to drive growth and value for shareholders as it transforms into a global biopharmaceutical leader," the statement said. "Allergan has a strong long-term outlook across its four key therapeutics areas and a highly promising R&D pipeline."

Read more:David Tepper has gone full activist on the healthcare giant Allergan

Appaloosa isn't the only one with frustrations about the pharma company, which Saunders has led for the past four years. Allergan is best known for its profitable Botox product, but an imaginative 2017 effort to extend patent protection on another best-selling product turned into a high-profile stumble.

The company acknowledged investors' frustrations last year and announced a strategic review.

Read more: Investors are frustrated with the Botox maker Allergan — and its CEO says it's 'deep into the process' of figuring out what to do next

But when Allergan reported its financial results in late January, the RBC Capital Markets analyst Randall Stanicky downgraded it, saying the company hadn't delivered growth for three years and calling its 2019 guidance "disappointing."

This question about board leadership structure has long been controversial. Having a CEO who also serves as chairman is a common practice and has been in past years.

The two roles have distinct purposes, which is why critics say it's a conflict for one person to do both. The CEO heads up the company's daily operations, while a chairman leads a board that makes key company decisions on behalf of shareholders.

"By separating the positions, a company clearly differentiates between the roles of the board and management, and gives one director clear authority to speak on behalf of the board and to run board meetings," two professors at the Stanford Graduate School of Business wrote in a 2016 case study on the subject. "Separation eliminates conflicts in the areas of performance evaluation, executive compensation, succession planning, and the recruitment of new directors."

Read more:Chairman and CEO together or separate? Citigroup has to decide

But there's not much evidence that having one chairman and CEO on average affects a company's future performance or governance quality, the two Stanford professors, David F. Larcker and Brian Tayan, found.

"Why do activists advocate that corporations—especially large corporations—strictly separate the chairman and CEO roles?" they asked. "How much of this activism is publicity-seeking rather than an attempt to improve corporate governance?"

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• The inside story of Eli Lilly's 18-day race to secure an $8 billion deal in time for the 'Super Bowl' of healthcare

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• Short-selling positions in the credit agency Equifax have spiked to their highest level since its data-leak scandal in 2017.
• Rep. Alexandria Ocasio-Cortez has slammed the company as part of what she calls a "dice game" of privatized credit scoring.
• Part of short-sellers' motivation may relate to class-action lawsuits resulting from the 2017 Equifax data breach, one of the largest in US history.

Short-sellers are piling in to bets against Equifax, one of the US's largest credit agencies, after class-action lawsuits and criticism by Rep. Alexandria Ocasio-Cortez heighten focus on what the New York Democrat calls a "dice game."

Part of short-sellers' motivation may be related to class-action lawsuits resulting from the 2017 Equifax data breach, one of the largest in US history.

Bearish hedge funds have built up a $600 million short position in Equifax, according to data from IHS Markit. That's the highest amount since September 2017, when Equifax announced a data breach that could have jeopardized sensitive information from 143 million customers.

The shares have plummeted about 25% since. But IHS Market says the number of short positions in Equifax have increased alongside the company's share price in recent weeks.

The data breach put the role of private credit scores into the public consciousness, with Ocasio-Cortez tweeting out against the industry on Saturday:

The company was also sued by the renowned short-seller Carson Block, the founder of Muddy Waters Capital, over the scandal.

A short-seller borrows shares, sells them, waits for the stock to fall, and then repurchases them at the lower price. The short-seller then returns them to the lender and pockets the difference.

Equifax reports in early March. Business Insider has attempted to contact Equifax for comment.

SEE ALSO: A little-known hedge fund just made a surprising short bet worth $182 million on Italian high-end clothing maker Moncler

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• One of Barclays' largest investors, US hedge fund Tiger Global, has sold its entire holding in the bank. 
• It is a major blow to the lender as it bids to turnaround its performance in its investment banking division. 
• Tiger Global had been a major backer of CEO Jes Staley, but the move points to a weaker sentiment in the lender. 

One of the largest shareholders in Barclays has cut its stake in the lender during a crucial period for the bank. 

Tiger Global, a hedge fund, had held a top 10 stake in Barclays but has since cut its entire holding, according to the Financial Times.

It's a major blow to Barclays CEO Jes Staley who had received backing for his plan to reinvigorate the lender's investment banking operations and focus on the UK retail sector from the fund. 

The multibillion dollar fund had been reducing its stake since last summer and has now entirely offloaded its shareholding during a tricky period for Barclays as it fights off a challenge from activist investor Edward Bramson.

Staley's plan for the lender was well received initially with Barclays' share price touching £2.17 ($2.80) last March but its share price stands at £1.59 as of 9.40 a.m in London — down 0.5%. 

Tiger spent more than $1 billion building up a roughly 2.5% stake in Barclays due to its sizeable presence on Wall Street. Part of the decision to build the stake was the belief that the bank would likely see a boost from rising US interest rates and the corporate tax cuts last year. 

Barclays recently transferred billions in assets to Dublin and has spent large sums preparing for Brexit. 

SEE ALSO: This US tech start-up helped a maker of football helmets tap investors with new VC funding platform

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• A 24-year-old associate at a hedge fund in London with an annual income of $325,000 outlined her weekly spending habits.
• There's some color on the financial industry: 12-hour work days. Earnings calls at ungodly hours. But all in all, it reads as pretty typical 24-year-old stuff.

A 24-year-old associate at a hedge fund in London with an annual income of $325,000 (£244,000) outlined her weekly spending habits, and the results were ... meh. 

The anonymous woman, writing in Refinery29, is an expat from New York with a base salary of $125,000 (£94,000) and a $200,000 (£150,000) variable bonus. Take the bonus figure with a huge grain of salt — Wall Street bonuses are by no means guaranteed.

But it's still a hefty salary, especially for someone so young. She brings home $8,265 (£6,486) a month.

Her rent for a London flat, which she shares with roommates, is $1,842 (£1,385). There are coffees, dinners out with friends, tube rides, and the occasional clubbing. (Virgin Wines gets a huge shout-out: "Hooray for saving money and trying new wines from the comfort of your sofa.")

There's some color on what it's like in the financial industry: 12-hour work days. Listening to earnings calls at ungodly hours. But all in all, it reads as pretty typical 24-year-old stuff.

She goes into much more detail about her non-spending activities though. We learn when she has morning sex (6.00 a.m. on Day 6), and how she was reticent to open up about her parents' divorce with her new boyfriend. 

What's notable is that it's not very notable at all.

If anything, she's bland. No new music tips — she has Queen on repeat. No finding out the hot new spots in London — her favorite area is Green Park, home of Mayfair hedge-fund bros, the posh Wolseley brunch crowd, and veritable hordes.

Total spend for the week? $581.26 (£437.11). 

So with very few overhead expenses, a 60-ish hour workweek and London as her oyster, this hedge-fund gal is pretty boring.

Join the conversation about this story »

NOW WATCH: Billionaire investment banker Ken Moelis reveals his thoughts on taxes, regulation, and winning the talent war against tech

• Tesla shares will tank below $100 this year, the former hedge-fund manager Whitney Tilson reportedly said Monday.
• Last week, Tesla warned it might not be profitable in the first quarter.
• Tilson used to manage the $50 million hedge fund Kase Capital, which he closed in September 2017 following underperformance.
• Watch Tesla trade live.

Tesla shares will lose more than 60% of their value this year, the former hedge-fund manager Whitney Tilson said on Monday.

"Today I'm making one of my rare big calls: we will look back on last Friday as the beginning of the end for Tesla's stock," Tilson said in a newsletter distributed Monday that was seen by the research firm Quoth the Raven. He added that stock would be at "under $100" before the end of 2019.

"I sense that the number of investors who are losing confidence in Musk is finally exceeding those who are drinking his Kool Aid," Tilson said.

On Thursday, CEO Elon Musk warned that Tesla might not be profitable in the first quarter of 2019 after ending last year with two consecutive quarters of profitability. As recently as February, Musk expressed optimism that the company would be profitable in "all quarters going forward."

Tesla also announced it planned to shift to online-only sales and close most of its 378 retail stores. Using that strategy and other cost efficiencies, Tesla slashed the prices of its Model 3, Model S, and Model X vehicles by about 6% on average, according to a blog post.

The company's announcement showed that Tesla had lost its rising momentum, according to Tilson. "If Tesla had any positive card to play, they would have played it on Thursday afternoon in order to soften the blow," he said. "I think this means they are out of bullets."

Tilson previously managed Kase Capital, a $50 million hedge fund. He closed Kase in September 2017 amid underperformance.

Tesla was down 2.54% to $287.29 a share early Monday and was down 5% this year.

Join the conversation about this story »

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• The hedge fund Deerfield Management is investing $100 million in a partnership with Harvard University.
• The research-and-development alliance will create Lab1636 to support Harvard's research into therapeutics and other clinical innovations.

Harvard University researchers may be able to get drugs to market far quicker after a hedge fund plowed $100 million into a new research-and-development partnership.

Deerfield Management, a specialist healthcare investor, will provide the funds to create a joint partnership called Lab1636, a nod to the university's founding date.

The funding will go toward pioneering life science and biomedical research with the aim of developing novel therapeutics for market use.

Harvard has launched more than 70 startups in the past five years, most of them life-sciences companies, university officials told The Boston Globe.

Deerfield is no stranger to investing in universities, and it has similar deals in place with other entities such as the University of North Carolina at Chapel Hill, Northwestern University, Johns Hopkins University, and the Broad Institute of MIT and Harvard.

Deerfield has been profitable for at least the past five years, according to Institutional Investor. The hedge fund has posted double-digit returns in four of the past five years and gained nearly 11% in 2018 — a time when major equity indexes finished the year down.

R&D projects funded by Lab1636 will be selected by a joint advisory committee.

"By working with an alliance partner who is prepared to support early-stage research and to invest in the success of preclinical and clinical-stage commercial development, we're enhancing the opportunities for Harvard’s life-changing innovations to reach patients in need," said Isaac Kohlberg, the senior associate provost and chief technology development officer at Harvard.

SEE ALSO: Pharma giant Roche just bought biotech firm Spark, the maker of an $850,000 eye drug

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• Short seller Fahmi Quadir has criticized a regulator for banning shorts of payment processing firm Wirecard, and says she is short the stock.
• Quadir splashed on the scene with bearish bets on Valeant in 2015, taking on Bill Ackman who lost billions.
• Germany's ban came after news reports of financial misconduct at Wirecard, which the company denies.

A star short seller who is one of the youngest female hedge fund managers on Wall Street just penned an explosive critique of German regulators' "bizarre, backwards" ban on short selling and what she says is a blow to free and fair markets.

In an open letter to the financial regulator, Fahmi Quadir, founder of Safkhet Capital Management in New York, made her case in a 15-page, footnoted document. In it, she extolled short selling as a necessary tool for price discovery and rooting out fraud.

Quadir, 28, splashed on the scene with bearish bets on Valeant in 2015, taking on hedge fund manager Bill Ackman who lost billions (yes, billions) on his long position in the pharma stock. Quadir, who was featured in Netflix's acclaimed documentary series "Dirty Money," has also shorted Tesla.

Read more: Germany first? Europe's biggest economy looks more protectionist by the day

Now she has set her sights on Germany. Her letter this week is a response to the story of Wirecard, a Munich-based payments company worth €12.4 billion ($14 billion) that has caught the attention of short sellers and Financial Times journalists for what they say are suspect transactions.

Instead of investigating the claims, Germany's Federal Financial Supervisory Authority, better known as BaFin, took the unprecedented step of banning short selling the stock. The short ban was necessary, BaFin said, because Wirecard's circumstances "constitute a serious threat to market confidence in Germany."

In what is perhaps a markets version of The Streisand Effect, Germany's ban seemed to backfire with Quadir. In her letter, she announced a "significantly" short position on Wirecard.

A snippet of Quadir's criticism:

"Market participants are quickly realizing that German regulators cannot be relied upon to effectively or objectively engage with the markets and are deliberately besmirching their fundamental duties. When such a degree of doubt is introduced as far as regulatory intent, market integrity quickly disintegrates."

Here's another:

"The actions regulators have taken to combat market manipulation without offering proportionate attention to corporate fraud, is incredibly dangerous and perhaps indicative of a cultural complacency towards equal enforcement of domestic entities. Whether this is nationalism or regulatory capture, only you and your colleagues can reflect on; however, if gone unabated, the risk of corporate despotism increases."

And one more:

"BaFin’s decision unfortunately plays directly to the flourishment of a libertine corporate lifecycle where truth is treated as an illicit currency, journalists and whistleblowers are demonized, while executives are given free rein to act without fear of criminal enforcement."

Wirecard, which has denied any wrongdoing, did not immediately respond to a Business Insider request for comment. A BaFin spokesman confirmed receiving the letter but declined to comment further.

SEE ALSO: Germany first? Europe's biggest economy looks more protectionist by the day

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• The US Securities and Exchange Commission has settled with a 21-year-old named Omar Zaki who it says ran a hedge fund that misled investors while attending Yale University, according to an SEC filing.
• The graduate, now living in New York City, claimed his fund relied on an algorithm to manage funds of $3 million. The SEC says none of that was true.
• The filing said Zaki "repeatedly misled investors in the Fund about assets under management, fund performance, and fund management."
• Zaki, who did not admit or deny the SEC's findings, did not immediately reply to a request for comment.

Student days are perhaps usually spent studying hard or partying hard, but US regulators say a 21-year-old former Yale student spent his college days defrauding investors.

The Securities and Exchange Commission has announced a settlement requiring that former student, Omar Zaki, to pay a $25,000 fine in installments over three years.

An SEC filing accuses Zaki of making false claims about performance, trading strategy, and the size of his fund.

The graduate, who the SEC filing says is now unemployed living in New York City, claimed his fund relied on an algorithm to manage funds of $3 million. The SEC says he did not actually use an algorithm and did not manage $3 million.

From January 2017 to February 2018, Zaki raised $1.7 million from 11 investors touting a fund with returns of more than 80% in a biotech portfolio. The fund claimed to have a trading history from December 2016 to April 2017 but in fact did not begin trading until June 2017, the SEC said.

He will be barred from the investment industry for three years as part of the SEC settlement. Zaki did not admit or deny the agency's findings.

Zaki did not immediately reply to a request for comment on LinkedIn. Zaki's lawyer did not respond to emailed requests for comment.

Join the conversation about this story »

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Hello!

Gene therapy, a decades-old technology that targets disease at its genetic root, is coming of age. New startups are pouring into the space and it's become a hot area for M&A.

But as Emma Court reports, manufacturing these new products has presented a challenge for biopharmaceutical companies.

As she reports: "Companies have to make enough of their gene therapies to test them out and get enough evidence that they are safe and work. But they also have to be able to manufacture on a large-enough scale to treat all the patients with the disease who want their treatment."

Emma talked to Brian Kaspar, chief scientific officer at AveXis, which sold to Novartis for nearly $9 billion last year, about the ways in which this manufacturing challenge could influence the future of the emerging industry.

Gene therapy is just one area where big pharma is looking to make big bets. With that in mind, here's some interesting healthcare reporting from the past week:

• 2 drug giants are feuding over a highly successful new migraine drug, and court documents reveal how profitable the $10 billion market could be
• A $23 billion drugmaker and a $2 billion biotech upstart are racing to develop a type of 'silver bullet' drug for aggressive cancers that has eluded their industry for 30 years
• Pharma giant Bayer is making a bet that one day we might be able to use stem cells to prevent cancer

You can subscribe to our weekly healthcare email, Dispensed, right here.

What would you like this email to include? What have we missed? You can reach me at mturner@businessinsider.com.

—Matt

Quote of the week

"If you pick a favorite and you're wrong, you're fired."—Anthony Skipper, the founder and chief technology officer of Galactic Fog, on banks debating how to work with AWS, Microsoft, and Google as they shift to the cloud.

In conversation

• Marley Jay talked to Jeff Erdmann of Merrill Lynch, ranked as the nation's best wealth manager for three years in a row, about the three mistakes every millennial investor should avoid.
• Marley also talked to Darrell Cronk, the chief investment officer of Wells Fargo's $1.9 trillion wealth and investment management unit, about the bold strategy he's recommending to clients.
• Dan DeFrancesco talked to Ben Cukier, a partner at the venture-capital firm Centana Growth Partners, about why fintechs should cater their products to older generations like baby boomers.
• Richard Feloni talked to Oracle co-CEO Mark Hurd about how he turned around the company, even while employees and shareholders doubted him.
• Rosalie Chan talked to Mike Cannon-Brookes and Scott Farquhar, co-founders and co-CEOs of Atlassian, talk about how they're trying to reinvent teamwork for the modern era.
• Troy Wolverton talked to Accenture Interactive CEO Brian Whipple about the company's deal to acquire creative agency Droga5, and to David Droga about why he's giving up his cherished independence and selling.
• Tanya Dua talked to Emily Fink, chief marketing officer at Liberty Mutual, about the company's decision to slash its ad-agency costs 30% by bringing 80% of its creative work in-house.
• Abby Jackson talked to FuboTV CEO David Gandle about its decision to raise prices after "severely" underpricing its service — and its plan to dominate the digital TV industry.
• Shana Lebowitz talked to Harvard Business School dean Nitin Nohria about the personality types he looks for in MBA candidates.

Finance and investing

Inside the Chicago hedge-fund turf war between billionaire Ken Griffin and Dmitry Balyasny

The headquarters of Ken Griffin's Citadel and Dmitry Balyasny's eponymous hedge fund are separated by one mile, the Chicago River, and plenty of bad blood.

A 'hidden asset' at Citigroup has given the bank a dominant position in the fastest-growing business on Wall Street — but challengers are knocking on the door

One morning this January, Jim Cramer, the brash and voluble financial-television personality, hemmed and hawed on CNBC's "Squawk Box" before the markets opened about Citigroup's fourth-quarter earnings, which had been announced shortly before.

This stock picker is crushing 95% of his peers investing mostly in companies you haven't heard of. Here are his secrets for uncovering those hidden gems.

It's not lost on Gerry Frigon that there are roughly half as many public companies now compared with 15 years ago.

Tech, media, telecoms

Healthcare, retail, transportation

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• Though the billionaire Ray Dalio avoids bringing cameras into his hedge fund, Bridgewater Associates, CBS's "60 Minutes" recently got an exclusive look into its day-to-day operations.
• Here's what it's like to work at Bridgewater, where workers are considered "intellectual Navy SEALs" and nearly one-third of new employees quit after a year.
• Visit BusinessInsider.com for more stories.

Many employees fear criticizing their peers and managers to their face — but at Bridgewater Associates, the world's largest hedge fund, you could get fired if you don't.

Bridgewater, run by the billionaire Ray Dalio, has a well-documented culture of "radical transparency," where employees routinely judge one another's performance. The corporate culture isn't for the faint of heart — Dalio says about 30% of new employees leave the firm within 18 months.

Dalio even says the hedge fund, in Westport, Connecticut, has a reputation for being the "intellectual Navy SEALs" for its approach to pushing employees.

While Dalio says he avoids lengthy interviews and bringing cameras into his company, the CBS's "60 Minutes" journalist Bill Whitaker recently got an exclusive view of Bridgewater's day-to-day operations.

Here's an inside look at what it's like to work Bridgewater:

SEE ALSO: Why legendary hedge-fund founder Ray Dalio is choosing to explore the sea instead of space like other billionaires

The billionaire Ray Dalio runs Bridgewater Associates, the top-performing hedge fund of all time based on returns since its inception.

Source: MarketWatch

Dalio said his organization was nicknamed the "intellectual Navy SEALS" and that 30% of new hires leave within 18 months.

Source: CBS

Dalio has avoided public interviews inside Bridgewater, but CBS's "60 Minutes" got an exclusive look into what it's like to work there.

Source: CBS

• For nearly a quarter century, the Sohn Conference has brought together the best and the brightest in the investment world to pitch their ideas in front of thousands of their peers, spring-boarding many into industry-wide name recognition.
• Six years ago, the conference began its "Next Wave" series, which features rising stars in the hedge-fund game.
• We profiled the five-person class — the most diverse yet.

If you want to make a name for yourself in the hedge-fund game, you could start with presenting an investment idea at the Sohn Conference.

The high-profile event has been attended by thousands of investors every year for the past 24 years. This year's headlining speakers include DoubleLine CEO Jeffrey Gundlach, D1 Capital Partners founder Daniel Sundheim, and Glenview Capital founder Larry Robbins.

But for the past six years, the conference has put rising stars on the stage as a part of its "Next Wave" series to pitch their best investment ideas. Past participants include Tourbillon founder Jason Karp and former Blue Mountain Capital portfolio manager David Zorub, who is starting his own fund.

See more: Inside the hellacious hedge-fund money-raising environment, where 'even the big funds have to get creative'

For the first time, a majority of the "Next Wave" presenters will not be white men, in an industry where less fewer than 5% of hedge funds are owned by women and fewer than 10% are owned by minorities, according to a report from Bella Research Group and the John S. and James L. Knight Foundation.

The five speakers are Angela Aldrich, the founder of Bayberry Capital; Todd Westhus, the founder of Olympus Peak Capital; Parvinder Thiara, the founder of Athanor Capital; Lauren Nicole Wolfe, the cofounder of Impactive Capital; and Matthew Smith, the founder of Deep Basin Capital.

Learn more about them before you listen to their pitches.

Angela Aldrich, the founder of Bayberry Capital, is excited about short bets.

Angela Aldrich always wanted to work for a hedge fund. The Duke grad worked in Goldman Sachs' investment-banking division after college, with a focus on making it to a hedge fund, and got her first taste when her boss at Goldman, Byron Trott, started BDT Capital in 2009.

After working two years for Trott, Aldrich enrolled in Stanford Business School but kept her foot in the industry by interning for John Griffin's Blue Ridge Capital.

She ended up working at Blue Ridge for four years after finishing at Stanford, and it was where she "learned how to short," she said in an interview with Business Insider.

See more: Investors are jumping back into hedge funds as they prepare for a stock-market drop

That focus on the short side of the portfolio — Bayberry invests long and short in small- and mid-cap companies — is what Aldrich believes sets her new fund apart. Bayberry, which has more than $150 million in assets and counts Griffin as a backer, launched in April and has four employees at the moment.

She hopes to keep the fund small so that she can continue to "play in the most exciting space" of small- and mid-cap companies and plans to present a short at the conference that is "relatively controversial, definitely on the spicier side of the spectrum."

The headwinds facing the industry, and long-short equity funds in particular, have not dampened Aldrich's dream of working at a hedge fund.

"It's a particularly exciting time to be in long-short equity, especially after such a long bull run," she said.

Todd Westhus, the founder of Olympus Peak Capital, has been involved in some of the biggest global financial moments of the past decade.

Todd Westhus does not think all his ideas are going to work out. The former Perry Capital and Avenue Capital portfolio manager is more focused on placing his bets on ideas that will either win big if his hypothesis is right or have a soft landing if he's wrong.

"I don't care if I'm right or wrong: I care about how much I can make when I'm right and how much I'll lose if I'm wrong," Westhus told Business Insider. The Duke grad forced his way into the hedge-fund world by walking into Avenue Capital's offices in 2002 and asking for an interview. Until that point, Westhus had been in investment-banking programs at JPMorgan and Morgan Stanley.

"How does someone without any experience get a job at a fund?" he said.

After working at Avenue for four years, he joined Perry Capital, where he has been involved in some of the biggest global financial moments of the past decade: Westhus had a multibillion short on the subprime housing market, placed macro bets when the eurozone was in crisis thanks to Greece's economy crumbling, and invested in Argentina while the country was defaulting on its debt.

See more: Investors are hot on hedge funds again, but old-school stock pickers are getting left in the cold

"At any other fund I would have been siloed," he said, adding he was thankful for Perry letting him "roam."

Those experiences, Westhus said, are the guiding principles of his new firm, Olympus Peak Capital, which has $600 million, but expects to be closer to $750 million by the end of the summer thanks to a couple of large institutional investors that have signed on. "Our strategy is just to be flexible," he said.

Part of that flexibility requires the fund to not get too big, and Westhus said he does not want the fund to get bigger than $1 billion. His former billionaire bosses, Marc Lasry of Avenue Capital and Richard Perry of Perry Capital, are both backers of his new firm.

He didn't reveal much about what his presentation at Sohn will be on beyond saying "it will be controversial."

Parvinder Thiara, the founder of Athanor Capital, is building from the ground up.

With about $1 billion in assets and a staff of 20, Parvinder Thiara's Athanor Capital looks to be on steady ground less than two years after beginning trading. What those numbers don't show, Thiara said in an interview with Business Insider, is how tricky it is to get there.

"The hardest thing that people underestimate is attracting top-tier talent, because you're starting out and competing with top funds for these people," he said.

Thiara was at D.E. Shaw before starting Athanor and has several D.E. Shaw alums on his staff, including COO and chief compliance officer Hilario Ramos. The macro relative value fund's main investors so far have been endowments and foundations, sovereign wealth funds and pension funds, according to Gabriela Teodorescu Bockhaus, Athanor's head of marketing.

Despite large investors already jumping into the fund, Thiara said "we don't have grand visions to become a huge hedge fund with dozens of different strategies."

See more: Silicon Valley has made top data-science talent too expensive for many hedge funds, so they're getting creative to compete

"Our main aim is to deliver alpha, and to have fun as a team while we do so."

The having-fun part was admittedly tough for Thiara as he worked to get his fund off the ground. "It's stressful, it's hard, but when it comes together, it's worth it," he said.

Now, he says, he sees the "a unique satisfaction that comes from building something from the ground up."

His Sohn presentation will be a macro pitch, not a stock, which he thinks will make it less controversial than some of the other speeches of the day. Still, he expects it to be "certainly different" than anything else presented.

• Impactive Capital cofounder Lauren Taylor Wolfe told attendees at the Sohn Investment Conference that her firm is going to advocate for changes to Wyndham Hotels' energy use to increase the value of the hotel chains' stock.
• Wyndham, which includes brands like Days Inn and recently bought La Quinta Inns, is protected from new competition like AirBnB because of its low prices, Wolfe said.
• The fund believes improvements to the hotels' air-conditioning systems and lighting systems will both save the company money and help the environment.

An activist hedge fund with its eyes set on helping the world believes it can push for changes at Wyndham Hotels that will save the company money and protect the environment.

Impactive Capital, a young do-good fund, believes that "low-hanging ESG fruit" like installing motion-sensor lighting systems and modern air-conditioning systems will both improve the bottom line of Wyndham and help the environment, fund cofounder Lauren Taylor Wolfe told attendees at Monday's Sohn Investment Conference.

"There's no hotel we'd rather own than Wyndham," Wolfe said. 

See more: Meet the 5 rising stars presenting their investment ideas at the world's highest-profile hedge-fund conference

Wyndham, which owns brands like Days Inn and recently bought La Quinta Inns, is insulated from disruptors like AirBnB because it primarily plays in the economy and mid-scale hotel subsections, Wolfe said. For example, Wolfe said that all rooms of Wyndham available in Boston are cheaper than the average AirBnB.

But its focus on potential savings on energy and water usage is what Impactive believes sets it apart from other activist hedge funds that look for "short-term quick fixes."

The fund is planning to push for a mandatory green program for all the brands owned by Wyndham, which would require hotels and motels to give loyalty points to people that reuse towels and linens. 

Wolfe said it would create a "triple benefit" of increasing engagement in a brand's loyalty points, saving money on water usage, and helping the environment. 

Impactive Capital has been backed by the California State Teachers' Retirement System, which gave the fund $250 million with a private-equity-like commitment of six years. 

Wolfe said in an earlier interview with Business Insider that the strategy Impactive is using requires a longer time horizon as they push companies to diversify their boards, change their emission polices, and promote more underrepresented groups.

See more: The president of Canada Pension Plan Investment Board, one of the world's biggest investors, explains why he's skeptical about private equity's buzzy 'do good' strategy

"This is a conversation that is happening in every boardroom," Wolfe said, referring to ESG. She believes Impactive will be able to grow its boardroom influence by offering long-term ESG solutions and proving that her fund is not planning on selling their investment the moment it goes up.

"We wanted to take a different approach to activism — we have a longer time horizon," she said.

Join the conversation about this story »

NOW WATCH: The legendary economist who predicted the housing crisis says the US will win the trade war

• David Einhorn blasted Tesla CEO Elon Musk at a hedge fund conference in New York on Monday. 
• The billionaire presented a slideshow of Musk's comments as part of a "trains, planes, and automobiles," pitch. 
• After showing examples of Musk's previous comments about Tesla, Reuters reported, Einhorn said that's "a lot of horses---." 

David Einhorn had more blunt criticism of Elon Musk and Tesla on Monday.

At the Sohn Investment Conference in New York, the Greenlight Capital CEO's pitch on the theme of "trains, planes, and automobiles" began with a slide show of Musk's comments about Tesla, according to Reuters, and ended with a remark that Musk's words are "a lot of horse s---."

Read more: Elon Musk loves to make grandiose promises. Here are 8 he failed to deliver on.

Einhorn has been critical of Tesla for some time, thanking the stock's 7% decline in the first quarter for helping his hedge fund achieve an 11% return for the same period, according to a letter to clients seen by Business Insider's Bradley Saacks. By comparison, the S&P 500 benchmark index is up about 14% in the first three months of 2019.

"The signs are everywhere, from the lack of demand, desperate price cutting, layoffs, closing-and-then-not-closing stores, closing service centers, cutting capex, rushed product announcements and a new effort to distract investors from the demand problem with hyperbole over TSLA's autonomous driving capabilities," the letter said.

"TSLA has lost a significant number of senior executives and appears to be having a hard time recruiting replacements. After all, who would want to work in such an environment?"

Short sellers like Einhorn are one of Musk's most hated group of investors. "These guys want us to die so bad they can taste it," Musk tweeted of the investors betting against Tesla's stock price in 2017 to the extent that it's routinely among the most heavily shorted in the US stock market.

His disdain has also spurred an amateur movement of Tesla cynics who have banded together under the tag $tslaq on Twitter, with the appended letter referring to what happens to a company's ticker when it files for bankruptcy.

More from Sohn 2019:

• Meet the 5 rising stars presenting their investment ideas at the world's highest-profile hedge-fund conference
• David Einhorn's Greenlight Capital is bouncing back from a disastrous 2018 thanks to its bet against Tesla, where it says 'the wheels are falling off'
• Some of the world's largest investors are making huge bets on companies tied directly to millennials

SEE ALSO: https://www.businessinsider.com/elon-musk-tesla-promises-that-havent-worked-out-yet-2019-4

Join the conversation about this story »

NOW WATCH: The Qiantu K50 is China's first electric supercar coming to the US

• The activist hedge fund Marcato Capital Management said it would vote against the marijuana retailer Acreage Holdings' landmark sale to Canopy Growth.
• Canopy Growth paid $300 million in April for the right to buy Acreage Holdings pending the federal legalization of marijuana in the US. 
• The shareholder vote is expected to happen in June.

An activist hedge fund that owns a significant number of shares in the US marijuana retailer Acreage Holdings is opposing the company's landmark sale to the Canadian marijuana retailer Canopy Growth.

The San Francisco-based Marcato Capital Management, which owns 2.7% of Acreage's shares, said in a Monday letter it would fight against the deal, calling it "lopsided" in Canopy's favor. The letter was signed by Mick Mcguire, Marcato's founder and managing partner. 

"The structure and consideration offered in this proposed transaction simply does not create value for Acreage shareholders," the letter said. 

Read more: The lawyer who led Canopy Growth's groundbreaking $3.4 billion purchase of the US marijuana cultivator Acreage Holdings says the sale will 'untap the market' for companies hunting similar deals

Marcato said it would vote against the deal in June and preferred Acreage to remain independent. If Acreage's board insists on selling the company or pursuing a strategic tie-up with a major cannabis, alcohol, tobacco, or other consumer company, Marcato said it would prefer to hire an investment bank to run a formal auction.

Specifically, Marcato said the transaction value of $3.4 billion is "substantially lower" than the fair value of Acreage, saying that Acreage's shares have slipped 6% since the day before the deal was announced and Canopy's have increased 15% over the same period. 

"Shareholders of both companies appear to share Marcato's view that this is a great deal for Canopy and a terrible deal for Acreage," the letter said. "Canopy stock for Acreage stock is simply a bad deal for Acreage shareholders."

Marcato also called out the investment bank Canaccord Genuity's fairness opinion on the transaction. Canaccord analysts valued Acreage's stock at $27.48 four months after initiating coverage of the company at $35 per share.

The Acreage spokesperson Howard Schacter told Business Insider that the company is "very confident" this deal will get done. 

Marcato's opposition to the deal is "one shareholder's opinion," Schacter said. "It's inconsistent with the opinions of the majority of shareholders we've spoken to since the deal was announced."

Read more: Top cannabis CEOs say Canopy Growth's $3.4 billion purchase of pot cultivator Acreage 'shakes the foundation of what has been true' and will spur a cannabis M&A boom

Canopy announced in April it had entered into an agreement to purchase Acreage for $3.4 billion conditional on the US federal legalization of marijuana. Acreage shareholders will receive an immediate $300 million payment in cash, pending a shareholder vote in June, with the rest of the balance coming if, or when, marijuana is legalized in the US.

The deal will be terminated in seven years if a federally legal pathway doesn't emerge. It's not clear what would happen to the $300 million that Canopy Growth paid up front if the deal doesn't go through.

The deal's complex structure is because of the shifting regulations around marijuana in the US. While marijuana is legal for adults in some form in 33 states, it remains federally illegal. Acreage CEO Kevin Murphy wrote a letter to shareholders earlier this month in an attempt to clear up what some say is the deal's confusing structure, The Globe and Mail reported.

Acreage plans to release a takeover circular in the next two to three weeks to reveal fresh details of the negotiations between the two companies. 

• Read more:
• Marijuana retailer Curaleaf is snapping up Cura Partners for $949 million in the largest US marijuana merger to date as a wave of consolidation sweeps the industry
• We got an exclusive look at the pitch deck buzzy marijuana tech startup Headset used to raise $12 million and ink deals with Nielsen and Deloitte
• Top cannabis investors reveal where they're placing bets, but say there's 'pain to come' in the crowded CBD space
• The CEO of a cannabis company with a slick new dispensary in Brooklyn talks about expansion plans following the company's $1.4 billion public debut

Join the conversation about this story »

NOW WATCH: The legendary economist who predicted the housing crisis says the US will win the trade war

• Canopy Growth CEO Bruce Linton said the chance of the landmark Acreage Holdings deal not going through is "like 0%" at an exclusive breakfast at Anthony Scaramucci's SALT Conference in Las Vegas.
• Linton was responding to a letter that activist hedge fund Marcato Capital Management wrote announcing its opposition to the deal on Monday, and urging shareholders to vote it down in June.

Canopy Growth's CEO Bruce Linton is confident in the landmark deal that will see the Canadian cannabis producer purchase Acreage Holdings, pending a shareholder vote in June and regulatory approval.

The deal, which Canopy announced in April, would be the largest cross-border marijuana M&A transaction to date. On Monday, activist hedge fund Marcato Capital Management wrote a letter to Acreage shareholders announcing their opposition to the deal – calling it "lopsided" in Canopy's favor — and urged other shareholders to vote it down in June. Marcato owns 2.7% of Acreage's shares.

"Well, we haven't met with them yet," Linton said, of Marcato, during an exclusive breakfast held overlooking the Bellagio fountain at Anthony Scaramucci's SALT Conference in Las Vegas on Thursday morning. "So I think their business model might be more to agitate, but I'm not sure they actually fully see the deal yet either."

Read more: The lawyer who led Canopy Growth's groundbreaking $3.4 billion purchase of the US marijuana cultivator Acreage Holdings says the sale will 'untap the market' for companies hunting similar deals

Linton said that he's heard from a number of Canopy and Acreage shareholders who are "100% in."

"I think anybody who understands the fact that we can lend to this company upon the closing of the vote, and the ability to be really strong and potentially dominant in a very aggressive, hostile operating environment," said Linton. "Like, you're not certain if you're an MSO [multi-state operator] today or a single-state operator, you don't know in two years 'am I big or dead.'"

To Linton, the deal is accretive to Acreage shareholders because it brings the cost of capital "way down," as Canopy Growth is able to list on the New York Stock Exchange and tap deeper-pocketed investors in the US, which in turn should boost Acreage shares over time. The deal also allows Acreage to leverage Canopy's expertise in growing quality marijuana, and with branded products — along with Canopy's export licenses into valuable international markets. 

"It's a complicated deal to get a simple goal," said Linton. Under the terms of the deal, Acreage shareholders will receive a $300 million payment if the vote goes through. The deal will then close if, or when, the US federal government federally legalizes marijuana, or Congress passes a bill that would protect states that legalize marijuana and allow federally-chartered banks to work with the industry. The deal will be terminated in seven-and-a-half years if a federally legal pathway doesn't emerge. 

Linton told Business Insider the chances of the deal being terminated are "like 0%."

Read more: Hedge fund Marcato will fight against Acreage's sale to Canopy Growth, and says the landmark deal is 'lopsided' in Canopy's favor

The deal's complex structure is because of the shifting regulations around marijuana in the US. While marijuana is legal for adults in some form in 33 states, it remains federally illegal, though some marijuana companies that refrain from selling THC-containing products in the US are able to list on US stock exchanges.

A spokesperson for Canopy Growth clarified that the deal price is based on a fixed exchange ratio, which means that Canopy will actually end paying much more than the previously reported $3.4 billion figure. That number will increase as Canopy's share price increases over time.

Apart from the Acreage deal, Linton said he's planning to spend Canopy's money on "applied medical research."

The chance to disrupt the pharmaceutical industry with cannabis-based drugs could turn pharma companies into investors and be the "yin to Constellation's yang," said Linton. Constellation Brands invested $4 billion in a minority stake of Canopy Growth last year.

• Read more:
• Marijuana retailer Curaleaf is snapping up Cura Partners for $949 million in the largest US marijuana merger to date as a wave of consolidation sweeps the industry
• We got an exclusive look at the pitch deck buzzy marijuana tech startup Headset used to raise $12 million and ink deals with Nielsen and Deloitte
• Top cannabis investors reveal where they're placing bets, but say there's 'pain to come' in the crowded CBD space
• The CEO of a cannabis company with a slick new dispensary in Brooklyn talks about expansion plans following the company's $1.4 billion public debut

Join the conversation about this story »

NOW WATCH: The legendary economist who predicted the housing crisis says the US will win the trade war

• $1.2 billion JW Asset Management is quietly raising money for a pure-play cannabis fund.
• The fund is targeting approximately $50 million over the next six months, but will accept money each month, said Jason Klarreich, JW's CFO.
• JW is one of the largest investors in the cannabis industry, with $600 million in assets on a mark-to-market basis, said Jason Wild, JW's president and CIO. 

New York City-based JW Asset Management, a $1.2 billion healthcare and pharmaceutical-focused fund, is quietly raising money from both new investors and its existing investor base for a pure play cannabis fund. Called JW Growth Fund, the fund will target both public and private equity investments in the sector, said Jason Wild, the president and chief investment officer of JW Asset Management.

The cannabis fund will be managed by Wild, and Jason Klarreich, JW's chief financial officer, will be involved as the fund's CFO. While the fund will raise money each month  — it'll be structured like a hybrid between a private equity and hedge fund — the fund is targeting approximately $50 million over the next six months.

"Our goal is to turn it into a billion plus over the next few years," said Wild. 

JW has already quietly become one of the largest investors in the cannabis space, with approximately $600 million in assets across the US and Canada on a mark-to-market basis as of April 30. Wild said the fund has been investing in cannabis since 2014, and it was an early investor in the behemoth cannabis cultivator Canopy Growth. 

Read more: Citigroup is considering working with pot companies as banks figure out ways to chase a $75 billion market

Wild also serves as the chairman of TerrAscend, a cannabis company with operations both in the US and Canada. JW has a sizeable investment in TerrAscend through its main fund. 

The pure-play cannabis fund is seeking a minimum investment of $500,000, with a 1-year lockup and a 2% management fee, according to a deck shared with prospective investors that was reviewed by Business Insider. Bank of America Merrill Lynch will act as the fund's prime broker, according to the deck, and Deloitte will audit its returns. 

A spokesperson for Bank of America said that it acts as a clearing broker, not as a prime broker. Klarreich clarified that Cowen acts as an introducing broker that works with Broadcort, a Bank of America Merril Lynch subsidiary that acts as a custodian for institutional investors. 

JW's cannabis fund will be unique in that it's based within a wider fund with a healthcare and pharmaceutical focus, rather than in a firm set up specifically to target the industry. 

Because JW's investor base is mostly high-net-worth individuals and family offices, they're free to invest in "plant-touching" US cannabis companies — unlike asset managers backed by pension funds or insurance companies who don't allow cannabis investments since marijuana is federally illegal in the US.

But the purpose of the cannabis-specific fund is to provide a platform for investors — including institutions — that will eventually want to get in on the sector. 

"We think that as the cannabis industry matures, you'll see investors gravitate towards investing in funds," said Klarreich. "We wanted to have a vehicle that was focused in the space so that it would be a pure-play for someone looking to make an investment in cannabis rather than having it mixed in with our general healthcare fund." 

While the fund will be focused on US opportunities, Wild said they and won't shy away from investing in Canadian companies. But they'll skip companies "heavily focused on cultivation," which Wild said has less dependable margins than retail and branding. 

Read more: A New York private equity firm founded by JPMorgan and Guggenheim veterans is raising the largest-ever fund dedicated to the booming marijuana industry

"We've seen lots of deal flow with things like dispensaries and brands," said Wild. He mentioned a previous investment TerrAscend made in the California and Nevada-based Apothecarium dispensary chain as the types of deals the fund would seek. 

To both Wild and Klarreich, the fund's edge lies within its management team and its long track record of delivering returns. JW's main healthcare and pharmaceutical fund has posted audited annual returns above 25% for the past two decades, said Wild. 

Cannabis is a "very competitive space," Klarreich said. "We enter things with a longer-range approach and a more open-ended spectrum in terms of what we see as the opportunity."

Wild characterized the fund's approach as "long-term greedy," which means, in other words, "don't be greedy."

This story has been updated. 

• Read more:
• Canopy Growth's CEO is pushing back against activist investors and says there's a 'like 0%' chance the landmark Acreage Holdings deal doesn't go through
• CBD companies were courted hard by a unit of US Bank — but they got ghosted despite having a 100% legal business
• Marijuana retailer Curaleaf is snapping up Cura Partners for $949 million in the largest US marijuana merger to date as a wave of consolidation sweeps the industry
• Top cannabis investors reveal where they're placing bets, but say there's 'pain to come' in the crowded CBD space

Join the conversation about this story »

NOW WATCH: The legendary economist who predicted the housing crisis says the US will win the trade war

• The top billionaire stock investors having been shifting their portfolios amid the recent stock-market volatility, according to a new report.
• Markets Insider details the latest moves and largest positions of 12 billionaire investors.
• Visit MarketsInsider.com for more stories.

Some of the world's top stock pickers are making moves amid the recent and accentuated stock-market volatility, which has been caused by trade tensions and concerns about the Fed's monetary policy stance.

Markets Insider details the latest moves and top holdings of 12 billionaire investors, using data from WalletHub.com. The data represents the investors' positions as of March 31, 2019 and was compiled by John Kiernan, Senior Writer & Editor.

Interestingly, the stock pickers have widely varying views on the market with only one stock, Chipotle (CMG), registering in the top-three holdings of more than one investor. Both Jim Simons of Renaissance and Bill Ackman of Pershing Square own the burrito chain. 

In addition, the investors were often on opposites sides of trades during the first quarter. Simons was buying Starbucks (SBUX) while Ackman was selling. John Paulson bought Celgene (CELG) as Ray Dalio sold his stake. And Carl Icahn bought Caesar's Entertainment (CZR) as George Soros unloaded his shares.

Some investors, however, were making the same moves. Ackman and Loeb both bought United Technologies (UTX) while both Paulson and Robertson were selling NXP Semiconductors (NXPI).

We detail the investors' holdings below, ranked by position among the world's richest people (per WalletHub):

Bill Ackman

Billionaire rank: 1,999

Firm name: Pershing Square

Biggest buy: United Technologies (UTX)

Biggest sell: Starbucks (SBUX)

Top-3 holdings:

Restaurant Brands International (QSR), Chipotle (CMG), Lowes (LOW)

Source: WalletHub

David Einhorn

Billionaire rank: 1,650

Firm name: Greenlight Capital

Biggest buy:CNX Resources (CNX)

Biggest sell: General Motors (GM)

Top-3 holdings: 

General Motors (GM), Green Brick Partners (GRBK), AerCap Holdings (AER)

Source: WalletHub

Julian Robertson

Billionaire rank: 1,399

Firm name: Tiger Management

Biggest buy: Facebook (FB)

Biggest sell:NXP Semiconductors (NXPI)

Top-3 holdings: 

Microsoft (MSFT), Apollo Global Management (APO), Facebook (FB)

Source: WalletHub

Nelson Peltz

Billionaire rank: 1,394

Biggest buy: Trian Partners

Biggest buy: NVT (nVent Electric)

Biggest sell:SYSCO Corporation (SYY)

Top-3 holdings: 

Proctor & Gamble (PG), SYSCO Corporation (SYY), Mondelez International (MDLZ)

Source: WalletHub

Daniel Loeb

Billionaire rank: 729

Firm name: Third Point Capital

Biggest buy: United Technologies (UTX)

Biggest sell: Merck & Co. (MRK)

Top-3 holdings: 

Baxter International (BAX), United Technologies (UTX), Campbell Soup (CPB)

Source: WalletHub

John Paulson

Billionaire rank: 261

Firm name: Paulson & Co.

Biggest buy:Celgene (CELG)

Biggest sell:NXP Semiconductors (NXPI)

Top-3 holdings: 

Bausch Health Companies (BHC), Celgene (CELG), Discovery Inc (DISCK)

Source: WalletHub

George Soros

Billionaire rank: 190

Firm name: Soros Fund Management

Biggest buy:Ceridian (CDAY)

Biggest sell:Caesars Entertainment (CZR)

Top-3 holdings: 

Liberty Broadband (LBRDK), VICI Properties (VICI), Caesars Entertainment (CZR)

Source: WalletHub

David Tepper

Billionaire rank: 138

Firm name: Appaloosa Management

Biggest buy:PG&E Corp. (PCG)

Biggest sell:Allstate (ALL)

Top-3 holdings: 

Micron Technology (MU), PG&E Corp. (PCG), Allergan (ALL)

Source: WalletHub

Carl Icahn

Billionaire rank: 73

Biggest buy:Caesars Entertainment (CZR)

Biggest sell: Dell Computers (DELL)

Top-3 holdings: 

CVR Energy (CVR), Herbalife Nutrition (HLF), Cheniere Energy (LNG)

Source: WalletHub

Ray Dalio

Billionaire rank: 67

Firm name: Bridgewater

Biggest buy:Biogen (BIIB)

Biggest sell:Celgene (CELG)

Top-3 holdings: 

Biogen (BIIB), Bristol-Myers Squibb (BMY), United Rentals (URI)

Source: WalletHub

Jim Simons

Billionaire rank: 52

Firm name: Renaissance

Biggest buy: Starbucks (SBUX)

Biggest sell: Apple (AAPL)

Top-3 holdings: 

Verisign (VRSN), Palo Alto Networks (PANW), Chipotle (CMG)

Source: WalletHub

Warren Buffett

Billionaire rank: 3

Firm name: Berkshire Hathaway

Biggest buy: JPMorgan (JPM)

Biggest sell: Wells Fargo (WFC)

Top-3 holdings: Apple (AAPL), Bank of America (BAC), Coca-Cola (KO)

Source: WalletHub

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