00:00 Speaker A

Tiger 21 is a private invite-only networking group for ultra high net worth individuals and it releases quarterly reports on where its members are holding their assets. According to the third quarter data, members are putting their cash to work, favoring private equity, and they’re also increasing their crypto holdings. Here to talk more about the report, Michael Sonnenfeld, Tiger 21 founder and chairman. Thank you so much for being here.

00:23 Michael Sonnenfeld

Thank you.

00:24 Speaker A

This is a fascinating group of folks and it’s interesting to learn where they’re putting their money. And it sounds like they are taking on risk or at least they didn’t in the third quarter. So, why do you think they’re doing that and and how did it manifest itself?

00:39 Michael Sonnenfeld

Well, first of all, um we have a risk on portfolio across our 1,700 members, 250 billion. Uh 79% is split between private equity, that’s the first at 30%. Uh public equity at 23% and real estate at 26%.

01:03 Speaker A

Mhm.

01:03 Michael Sonnenfeld

So long-term that’s pretty bullish. But one of the things that’s going on is crypto has recently doubled over the last year from about 1 to 2%. That may not seem like a lot, but when you’re talking about 250 billion, that’s $5 billion of crypto. And in every meeting, people are talking about is this a new security asset? Will this be a place a safe haven like gold? And so in our meetings across the globe, people are really comparing notes on it’s not so much crypto, it’s mostly Bitcoin, but not exclusively. Obviously, we have some of the great uh crypto traders and they go into all the other varieties of digital currency, but Bitcoin is is the big Kahuna.

01:52 Speaker A

Have there been any other interesting changes over the past couple several years besides that sort of increase in interest in crypto?

02:02 Michael Sonnenfeld

Sure. The the long-term biggest change is private equity moving from 10% to 30% over a decade. So that’s the biggest systemic change. The other one is that hedge funds used to be about 6, 7%, they’re now 2%. Hedge funds are basically dead as a doornail and that’s mostly because our members have learned that hedge funds on average, particularly those investing in public stocks, have a hard time beating the averages and they cost a lot more. So you’re better off in the index funds. Fixed income, uh quite low and uh as I say, crypto coming up a little. That’s that’s the one that even though it’s only 2%, that’s the most talked about asset right now.

02:54 Speaker A

And do they see those returns as better in private equity because that stuff has high fees as well.

03:00 Michael Sonnenfeld

Well, our members are not going into the mega funds. They’re both going into smaller midcap funds and making direct investments. When you’re some of the world’s greatest entrepreneurs, already they’re one in 10,000 by accomplishment, they can roll up their shirt sleeves, they can look at a building, they can buy a building directly, they can look at a small company. They want to be on the board of a small company where they’re the first to hear about a problem so they can help solve it, not the last when you’re a public stock holder, you’re the last to hear about a problem and then it’s too late.