Albert Friedberg, old-school macro trader
Albert Friedberg of Friedberg Mercantile was the first person I thought of when I thought about who could do well in this situation. He is an experienced macro figure, and I knew that he had been bearish recently, like people who think that the Fed’s actions caused the bull market of the last 11 years. In 1971, Friedberg began selling futures from a suite at the King Edward Hotel.
Albert made a lot of money during the 1970s commodities boom because he bought and sold at the right time. Over time, the company grew and began to manage investments. It has been there for a long time at Brookfield Place. Albert is 74 years old, so he has been through a lot of bad markets. In 2007, his Global Macro fund gained 25%, in 2008 it gained 41%, and in 2009 it gained 26%. Plus, I think he’s a billionaire for the reasons I explain below.
When I read the Q4 letter for his Global Macro fund, I saw that he wasn’t too optimistic about the stock market. He wrote: “Easy money helped fund a lot of companies that were losing money and wouldn’t have survived otherwise. There are now more zombie companies than there have ever been as a percentage of all public companies.
The next financial crisis will hurt just as much as the last one, if not more.” In 2019, which was a very good year for stocks, the fund lost 20.17 percent because of its negative outlook. But that was in the past. Now, let’s see how well the macro fund has done in 2020. As of March 17th, it’s down 58% YTD. Weep, weep.
Albert may have lost money this year because he is set up for inflation to go crazy. That could still happen. The performance of a fund manager is often a sign of the opposite. Maybe the trade on rising prices will finally pay off.
Albert also makes long-term bets with his own money, so don’t think he’s just a one-trick pony who always wins. For example, he has helped biotech company Vaccinex for a long time. I had seen that he kept buying shares of the company over the past few months, including $5 million worth in January alone. I was wondering what he saw in it that no one else did.
Then, when the coronavirus got a lot of attention, I finally knew what to do: probably nothing. The stock went down by 40%. Womp womp womp.
To be fair, there is also the Friedberg Asset Allocation fund, which is doing better. It’s about 34% lower. Don’t worry, I’ll only make fun of people who are at least billionaires here, because otherwise it wouldn’t be sporty. Almost every strategy has its time in the sun, but macro is very hard to count on. I don’t understand why you would put your faith in a macro clairvoyant.
The Friedberg funds manage pretty small amounts of money now, but Al used to be a lot bigger. Forbes ranked him as the 34th highest-earning hedge fund manager in 2011 after his Global Macro fund made a 41% profit by betting on Treasury inflation-protected securities and selling short on emerging markets.
He was in charge of more than $2 billion at the time and made $60 million that year. But that was pretty much the best thing he ever did. Since then, the fund has lost money every year except two. Investing in January 2012 would have cost you about 84% of what you put in. (For good measure, the fund has also lost money since it began.)
Albert said in 2011 that Europe is going to have a huge credit collapse, which will lead to a worldwide depression. Let’s see if that turns out to be true in the end. In the meantime, don’t give all of your money to whoever is this year’s macro manager of the century. Check out John Paulson if you want to know if macro is the way to go.
I always try to be fair, so I should point out that Al’s record of managing investments, in the form of managed accounts, probably goes back a long time before his funds. I can only guess that his record from back then is more interesting. I think I read somewhere that he took part in the same short British pound trade that made Soros famous.
Friedberg used to have many more strategies, ranging from stocks and bonds to currencies and outside managers.
Friedberg can do anything he sets his mind to.
I think that only the two best funds, whatever they are, made it.
If you thought from my last post that I didn’t want to go after the really rich, throw that idea out the window. Albert is in charge of an empire that includes real estate, mining, forestry, and other businesses. He probably has a billion dollars.
In addition to rumors, here are some clues: When Barrick Gold bought Arizona Star Resources in 2007, he owned more than $100 million worth of it. He also did well with Seabridge Gold, which went from being a new company to being worth a billion dollars. In 2018, he bought 9% of the Orlando City Soccer Club for $42 million.
He owns a building in Barbados that used to be a private bank (which has a favorable tax treaty with Canada). Friedberg also has traders who work for him on his own behalf.
I will keep trying to figure out who is making money in this market. If you know anything, please let me know. I really thought that Friedberg’s long-term pessimism would finally pay off. But the numbers tell me where to go. Al might really believe what he says, and his website does say that the Friedberg family is the main investor in all of their products. I hope that will help the clients feel better.
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