Madison Street Capital is a boutique investment firm that focuses on small and medium size mergers and acquisitions, but the firm also has a very profitable hedge fund. Madison Street Capital is not a typical New York hedge fund. Chicago-based Madison Street closed 42 hedge fund transactions in 2015. That is ten more transactions than the 2014 total. The volume of those 2015 transactions was 27 percent higher than 2014. Anthony Marsala, the award-winning COO of Madison Street, thinks 2016 will be another great year for the firm’s hedge fund investors, even though the hedge fund industry is struggling to produce decent returns.
Marsala said a new report shows that hedge funds are investing more in consumers than they did in the past. That is no surprise. The U.S. economy is driven by the consumer market and consumer spending, especially online spending. But not all consumer spending is up. The high-end of the consumer market is suffering. But according to eVestment, the ten largest long/short equity funds are betting on more consumer spending.
Even though the economy only grew by a meager 1 percent in the third quarter of 2016, the big hedge funds believe the economy is in good shape. Madison Street Capital investors are not expecting the economy to grow in 2016. According to some economists, the U.S. economy is heading into recessionary territory, and it could arrive there at the beginning of 2017.
But according to Credit Suisse, the big hedge funds are betting on consumer services, household and personal products and middle America retailing. Companies like McDonalds, Amazon, Comcast and Alphabet are on the top of the big hedge fund investment list.
The world is changing in 2016, and retail spending in the U.S. is going to slow down according to men like George Soros. The European Union is in bad shape, and the Euro is plagued by EU debt. The migration crisis is turning the Eurozone into a danger zone, and the Middle East is facing a major religious dilemma. The Chinese economic and financial situation continues to impact the world, and when those factors are taken into account, along with the issues facing South American countries as well as Australia, the thought that the United States consumer driven economy will stay strong is wishful thinking, according to some hedge fund managers.
Some of the top hedge fund managers are selling stocks and betting against the Chinese yuan. That bet seems like a bet that will produce a big return considering the fact that the banks in China are carrying far too much bad debt.
No one is sure what will happen next in the hedge fund industry, but one thing is sure. Madison Street Capital will continue to offer investors solid alternatives.
— Madison Street Cap (@MadStCap) August 1, 2016