Family Offices Purchase Commercial Real Estate, Students Get Skeptical Over Tuition and AI is the New Buzzword in this Week's Edition...
Take a Lap Around the Industry
The Boring Company CEO Expected to Assume Twitter CEO Position (Insider)
Musk Unveils "Master Plan" to Deliver Next Phase of Growth for Tesla (Bloomberg)
EV-Truck Maker Rivian Announces $6.4B Cash Burn in 2022 (WSJ)
Corporate Earnings Quality Drops to a Three Decade Low (Bloomberg)
Data Reveals Family Offices Fancied Commercial Real Estate in 2022
Spain's wealthiest person, Amancio Ortega, the founder of Zara, invested more than $2B in acquiring 10 commercial properties across the U.K. and North America in 2022 according to Knight Frank’s 2023 Wealth Report. The report found that wealthy individuals, family offices, and closely held companies took advantage of their smaller debt profiles and longer investment horizons to spend a combined $455B on commercial real estate in 2022. This marked the first time private buyers were the most active in the sector annually. By contrast, institutional investors pared their share of the $1.1T market for offices, logistics sites, and rental housing as higher interest rates increased the likelihood of defaults. Total private capital allocation declined 8% from the previous 12 months, reflecting a drop in pent-up demand that was originally generated over the course of the Covid-19 pandemic.
"You often find there’s a sort of skin-in-the-game element if you’ve got private investors buying...For an office building in London, the majority of that will be an investment play, but it may also be driven by the fact that actually the family office needs an office of its own."
Liam Bailey, Knight Frank
Private Funding Pulse Check
Peterson Partners has recently participated in a Series A funding round worth $17M for Rebuy Engine, an AI-powered personalization tool for Shopify and other retail sites
DigiFT Tech, a platform seeking to be the first regulated decentralized security token trading platform, has received a $10.5M Seed funding round investment in part from Shanda Group
Graham Partners has announced the acquisition of Taoglas, a provider of antennas, IoT components and custom IoT design services
Horizons Ventures took part in a $10M Series A deal with Doctorly, a digital healthcare company providing digital technology, tools, and support via a single system
Students Begin to Weigh the Rising Costs of Tuitions
A growing number of students in the U.S. are beginning to question the value of a college degree, seeking alternative routes to careers. While for decades college education has been seen as a key step to economic success, college costs have remained high while the labor force has expanded, creating opportunities for those with and without degrees. An increasing number of companies are dropping degree requirements for mid- and high-skilled roles, while some studies suggest the value of a college degree is fading. In response, more students are questioning whether the economic benefits outweigh the costs of higher education. When asked if students would be open to an alternative path without a degree, more than half (53%) said they would be open to the idea. However, some experts warn that students need to find some path to higher education, whether through community college or employer-sponsored tuition reimbursement, to secure middle-class jobs.
"Students from underserved communities are looking at education through a practical lens...They want to know what the cost is, how they’re going to pay, how they will get through everyday life and whether there’s a job at the end of the road."
Dan Fisher, ECMC Group
Artificial Intelligence Has Become the Latest Tech Buzzword
Over the last few months, investors are driving up shares in companies with links to artificial intelligence (AI), however some firms that are referencing the technology are simply taking advantage of the hype according to a Bloomberg report. AI references during earnings calls with investors are up 77% YoY. The power of AI algorithms is already transforming every facet of corporations, encompassing the use of chatbots, managing inventories and recruiting. Companies such as BigBear.ai and C3.ai have seen their shares rocket, although some have no real links to AI. The true impact of artificial intelligence will be difficult to quantify, however it is clear that it will have an extensive reach. Outside of technology, professionals expect large changes to the Healthcare, Cybersecurity, Customer Service and Research industries.
"It is impossible to quantify what the impact of AI could be and equally possible that a wave of enthusiasm carries stocks with expertise in or exposure to AI, no matter how tenuous, higher and higher...All investors can do is stick to their disciplines and focus on competitive position, management, and valuation, while making sure that they truly understand the business, before they put any capital at risk."
Russ Mould, AJ Bell Plc
Ray Dalio Concedes Battle for Bridgewater Control
Ray Dalio, founder of Bridgewater Associates, has relinquished control of the world’s largest hedge fund, worth $150B, to younger executives. Dalio, 73, will keep a seat on the board with a new title of founder and chief investment officer mentor, admitting that it had taken longer than he anticipated to prepare a succession plan. Additionally, he has been replaced as co-chief investment officer and has given up voting rights on the board. The appointment of a new leadership team over the past year has helped to enable the transition. Returns have been strong so far this year, with the flagship Pure Alpha strategy fund advancing by 34.6%. The Westport, CT-based hedge fund became famously known for its secrecy, with some attaching cult-like characteristics to the firm. However Dalio's strategy was built on what he deemed as "radical truthfulness and transparency", creating an environment of open disagreement and debate.
"It was a challenge along the way because Ray had strong views on how things should go."
Pathstone has agreed to acquire Rex Capital Advisors, a Providence, RI-based investment advisor that managed $1.5B in assets (Cision)
Integrated Partners, a Waltham, MA-based RIA has made its first acquisition, buying Laurel Wealth Advisors, a California firm with $2.5B in assets (Barron's)
Clearstead Advisors announces that it has purchased Avalon Trust, a high-net-worth wealth management firm based in New Mexico (Cision)
Written by:
Andrew Popp | Sr. Research Associate
FINTRX delivers an industry-leading suite of private wealth data and research solutions to the alternative investment space and private capital markets. Engineered to help clients identify and access family office and RIA capital intuitively, the FINTRX platform ensures accurate and updated data and research on 850,000+ private wealth records globally. To subscribe to our newsletter and see previous versions click below.
