Hedge fund conference

Michael Novogratz, president of Fortress Investment Group, says Japan is the most exciting place to invest, with the opportunity for huge profits. Above, a freight terminal in Tokyo.
Michael Novogratz, president of Fortress Investment Group, says Japan is the most exciting place to invest, with the opportunity for huge profits. Above, a freight terminal in Tokyo.

LAS VEGAS — The SALT hedge-fund conference, held over four days at the Bellagio resort, is a lot of things: It’s an ideas conference, a Wall Street bacchanal, a power-networking event.

It is also, with its vaunted lineup of speakers, a place to absorb the musings of senior Wall Street money managers and Washington politicos. On Wednesday and Thursday, panelists weighed in on everything from the risks of the situation in Syria to investment opportunities in the shipping industry.

A keynote speaker was John Paulson, the billionaire manager who has recently absorbed steep losses across a number of his strategies. Paulson urged investors to have a long-term horizon and stick with hedge funds, even through rough patches. ‘‘Don’t focus on weekly or monthly returns,’’ he said.


The speakers, unsurprisingly, did not focus on the mediocre performance of hedge funds. (Hedge fund averages have underperformed the broad stock market indexes over the past four years.) The industry’s hefty fees were also, for the most part, a topic non grata.

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But in a panel on the evolution of hedge funds, Jane Buchan, chief executive of Pacific Alternative Asset Management Co., expressed surprise that hedge-fund fees continued to rise. ‘‘I keep waiting for fees to go down, but they’re only going up,’’ she said.

There was much focus on fixed-income trading strategies, which have been among the hottest hedge-fund sectors. A panel on mortgage securities included Joshua Birnbaum, the former Goldman Sachs trader at the center of the bank’s hugely profitable and controversial negative bet on mortgages during the financial crisis. Birnbaum, now chief investment officer of the hedge fund Tilden Park Capital Management, said the market had gone through a fundamental change in how managers analyze mortgage-backed securities.

After the financial crisis, Birnbaum said, investors were making money by blindly plowing money into deeply distressed mortgage securities.

“People were trading just on price and weren’t even running prepayment or default vectors,’’ he said. ‘‘Today the macro trade is not as good as it was, but on a micro level’’ — meaning selecting individual bonds — ‘‘there is a lot more to gain by things that you can analyze.’’


On Thursday, a panel of stock pickers discussed their best ideas.

Leon Cooperman, chairman of Omega Advisors, plugged Monitise, a British electronic payments company. John Burbank, chief investment officer of Passport Capital, said he liked Chinese Internet companies. Oscar Shafer, chairman of Rivulet Capital, recommended Hertz, citing the consolidation in the rental-car company.

In a session on the global economic environment, Michael Novogratz, president of Fortress Investment Group, said Japan is the world’s most exciting place to invest, with the opportunity to make huge profits. He also joked about the country’s revolving-door leadership.

“I moved to Japan in 1992,’’ Novogratz said. ‘‘I think they have had 25 prime ministers since then, and they all look alike and act alike, and it’s very difficult to tell one from the next.’’

He said his outlook on the troubled eurozone remained grim. ‘‘I am optimistic about many things, but Europe is not one of them,’’ Novogratz said.


On Wednesday night, attendees put concerns about Washington gridlock and Wall Street regulation aside at a Latin-themed poolside fiesta.

Yet the conference center was filled at 8 a.m. the next day for a rollicking session featuring the Republican operative Karl Rove and a former Massachusetts congressman, Barney Frank, debating policy. The panel’s moderator asked whom they would like to see as the Federal Reserve’s next chairman.

‘‘Milton Friedman,’’ Rove quickly responded. ‘‘But he’s dead.’’