But I will say that there is no black box here. We’re like gold on steroids. A 'Black Swan' hedge fund posted a 4,144% return last quarter after the novel coronavirus outbreak tanked markets. How to Disrupt Investment Management. Safe Haven is the first major, comprehensive analysis of this broad asset class, written by one of its top practitioners. After the March payday, its flagship Black Swan fund has produced a mean annual return on invested capital of 76%* since the firm was created in 2008. It prevents bad contingencies from happening. If you’re going to innovate, you can’t run with the sheep. The data is provided quarterly by the Fed. It's why no new “trillionaires” were minted in March. What is it? FREE Background Report. googletag.cmd.push(function() { googletag.display('div-1'); }); googletag.cmd.push(function() { googletag.display('div-3'); }); Spitznagel’s done it before. Universa’s 4,144% payout cost its investors about 1% annually due to Universa’s hefty “2 and 20” hedge fund fees, per Forbes analysis of public filings. Mark Spitznagel, the chief of Universa Investments, saw his fund return 4,144% in the first quarter. The way we structure our risk mitigation strategy, if there’s never a crash again, we will remain the optimal risk mitigation strategy going forward. When you have these middle-of-the-road crashes—sometimes we call them shoulder moves—we tend to do quite well as well. Spitznagel's Idyll Farms in Northport, Michigan, which he manages with his wife Amy, has won nearly 40 cheese awards, including taking home hardware for its fennel pollen flavor in the soft goat's milk cheese category at the 2018 World Cheese Championship Contest. Download "The Dao of Capital Book Summary, by Mark Spitznagel" as PDF. He’s also a proselytizer of compound returns: “The big losses are essentially ALL that matter to your rate of compounding,” says Spitznagel. C. Spitznagel Net Worth C. Spitznagel biography. How do you answer folks who say, OK, but in between the crash of the Great Recession and what’s happening now, the stock market has been on a roll—how does Universa do then? His fund specializes in tail risk hedging and mitigating black swan events like the one we saw yesterday. When a financial panic, or an unexpected event like the coronavirus surfaces, Spitznagel’s firm converts from what once looked like a charity into a financial powerhouse that’s fully stocked with valuable hedges. Mark Spitznagel, the founder of hedge fund Universa Investments, is one of the most interesting figures in the world of hedge funds. This convinced Spitznagel to hone an investing style that would profit from panics. You’re known for having done very well in the Great Recession. “I used to come to Everett with stacks of research on corn crops. His selling of immediate gratification for a massive payday far down the road, after all, is engineered to conjure cash and profit, in crashes. Before becoming a financial scribe, I was a member of the fateful 2008 analyst class at Lehman Brothers. Yes. I don’t know. Mark Spitznagel is the founder and chief investment officer of Universa Investments, a California-based hedge fund. And those caught feeding on Spitznagel’s bait find themselves trapped in a trade that carries almost unfathomable losses. Universa returned 115% in 2008 and Spitznagel used proceeds from his coup to buy a Bel-Air mansion from singer Jennifer Lopez a block from the home of his hero Ronald Reagan. Mark Spitznagel (/ ˈ s p ɪ t s n eɪ ɡ əl /; born March 5, 1971) is an American investor and hedge fund manager.He is the founder, owner, and chief investment officer of Universa Investments, a hedge fund management firm based in Miami, Florida.. To earn these easy gains, traders readily assume “tail risks” or huge but extremely remote potential losses. It’s early April and from his farm perched atop a hill on the edge of Lake Michigan, hedge fund investor Mark Spitznagel is dodging the coronavirus in a setting reminiscent of a Winslow Homer painting–and relishing one of Wall Street’s greatest investing coups. [The Wall Street Journal reported in 2018 that a 3.3 percent allocation in Universa produced a 12.3 percent annual return over the preceding decade.] It’s really about payoffs. Now comes the mother of all black swans, the coronavirus pandemic of 2020, which has seen stock markets plummet globally in a matter of weeks. That is when you see a two or three standard deviation above the norm. Related Spitznagel had bought puts—or the right to sell the index at a specified price—well below the prevailing market price, and the firm had its best month ever. But trust me, there is nobody walking the earth who has that edge. What’s unique about Universa is that we have what I call a very explosive downside payoff. We deliver extreme crash bang for the buck, and that’s what sets us apart from virtually any other risk mitigation strategy. But they shouldn’t. "It should,” he says, “But do I lose any sleep over it? Mark Spitznagel is an unusual man. COVID-19 Is Attacking Your Stocks. But you also work on the theory that the fund will do well even if there are no financial crashes. Take March, a month in which the S&P 500 Index cratered nearly 30% at its lows, shedding trillions in market value. Mark Spitznagel, the founder of hedge fund Universa Investments, is one of the most interesting figures in the world of hedge funds.After starting his career as a futures trader in Chicago, Spitznagel would go on to partner with Nassim Taleb, of Black Swan fame, to start a fund called Empirica Capital in 1999. Mr. Spitznagel owns over 7,500 units of MacroGenics stock worth over $194,925 and over the last 4 years he sold MGNX stock worth over $0. But you’re still seen as something of a rebel, it seems to me. That’s how Mark Spitznagel, the founder of Universa Investments, described his approach to navigating market risk in an interview with Vanity Fair that published Thursday. Unlike most bears who try to time bubbles, Spitznagel’s playbook is different. Spitznagel has built a career feasting on traders’ greed—prioritizing quick gains over prudent risk taking. The fine print of Universa’s public filings shows it protects portfolios worth $4.3 billion, but on any given day its actual capital at work is as little as 2%-or-3% of that figure. Mark Spitznagel is Founder and Chief Investment Officer of Universa Investments. Until one day–maybe only every five or ten years–a black swan appears, terrorists ram jets into skyscrapers or a global pandemic freezes the global economy. But I highly recommend the book so you can learn the rest. Follow me on Twitter at @antoinegara, © 2020 Forbes Media LLC. Will coronavirus lead the world into its next global recession? Whereas at Universa, we’re talking 100 to 1. market as the numerator, and the net worth (total assets – total liabilities) of the total U.S. public stock market as the denominator. But it’s not a binary thing. Having said that, I would never want some retail investor or even a professional to try these [strategies]—they will rue the day that they did that. I’m in the contingency planning business. It’s really a mistake for investors to think about what I do as a tactical allocation. Q: What’s the premise of Universa’s investment strategy? A year after Detroit's bankruptcy in 2013, Spitznagel brought 18 goats to graze in empty lots of the city as part of a campaign to promote urban farming. 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