Must be nice to be cash-heavy right now.
The wealthy investors who constitute Tiger 21, a group with more than 750 members worth in excess of $75 billion, raised their cash positions last year to 12% of their diversified portfolio, a level not seen since 2013. As for the rest of their allocation, 29% was in real estate, 23% in private equity and 21% in public equity, along with smaller stakes in fixed-income investments and hedge funds.
At the time, the Tiger 21 founder Michael Sonnenfeldt told MarketWatch that the stock market was “priced to perfection” and that the superrich were keeping some powder dry.
Obviously, a lot has happened since then.
Now, with the Dow Jones Industrial Average closing down 2,353 points in the latest market plunge, Sonnenfeldt says the deep-pocketed investors of his group aren’t freaking out over the red ink. In fact, they’re even starting to sniff around for bargains.
“Members aren’t panicking and selling. Rather, they are looking for long-term buying opportunities,” he explained, adding that many of them are putting a “Christmas List” together of companies they’ve been waiting to buy at lower prices. No shortage of lower prices in the market at the moment.
Sonnenfeldt gave two examples: Delta Air Lines and private-equity fund Golub, both of which are the kind of plays that Tiger 21 investors believe will ultimately rebound when the trouble passes. But don’t expect any big moves from these people.
“Ultimately, our members are well-set,” said Sonnenfeldt, who described the coronavirus as a “black swan” that the stock market clearly wasn’t prepared for. “They might trade around the margin for a few opportunities, but generally are set on the long-term investments.”
This article originally appeared on MarketWatch.
