I recently attended the first annual Tiger 21 North American Members’ Conference at the Breakers resort in Palm Beach. It was a unique opportunity to gain insight into the topics and issues on the minds of about 270 high-net-worth (HNW) members and spouses.
Tiger 21 prides itself in being a peer-to-peer social learning network for HNW investors. And there was some serious HNW learning going on at the conference. Allow me to share some of the key themes and ideas that were in the air.
Most of the speakers presented economic/market data that supported a cautiously optimistic outlook for the U.S. and world economies. There was a general confidence among members, too: a renewal of energy and excitement about opportunities. As the recovery gets stronger, many members have identified some attractive entry points for select investments. But the key word here is gradual. No one I spoke to expected a rapid recovery. So it’s definitely not “business as usual”: the wealthy continue to be cautious about investing, and everyone seems much more engaged with his or her wealth than before the crisis.
Sam Zell presented his “insider view” of the U.S. real estate market. With a net worth north of $3 billion – most of it from real estate – he brings a unique perspective on the topic.
Zell likes to call himself “Grave Dancer” because of his penchant for distressed properties. And he’s been dancing a lot over the past couple of years. That said, while he acknowledged that there is opportunity out there, he has been very selective – not everything he finds in the bargain bin is worth buying. Lately, Zell has been particularly interested in income-oriented properties, and he’s shied away from some beaten-down markets completely. We’ve been interested in U.S. real estate for some time. Zell’s comments reaffirmed our approach: we’ll be taking a closer look at U.S. apartments and other income-generating properties in the months to come, but we’ll be picking our spots.
One of the more interesting sessions was led by Bruce Berkowitz, founder of Fairholme Capital Management, who shared his equity outlook for the year. Berkowitz won Morningstar’s “domestic stock manager of the decade” award in early 2010 and manages more than $22 billion.
Berkowitz confidently declared that he is “all in” on the U.S. financial sector, with significant holdings in AIG, Citigroup and other big names that were front-and-centre during the 2007-08 financial crisis.
We like his way of thinking. We’ve been buying select U.S. financials for some time and will likely continue to do so. The case for “best in breed” banks (Wells Fargo, Goldman Sachs) is compelling. We concur with Berkowitz’s endorsement.
I had the great pleasure to listen to Charles Bronfman, elder statesman of the former Seagram’s empire. His topic: philanthropy. He challenged listeners to think differently about their charitable efforts, asking them 20 questions – some of them quite provocative – in an effort to clarify their purpose when they contribute to a cause. The session generated a spirited discussion among attendees during the lunch that followed.
Bronfman’s discussion is another example of the trend toward a much more active, entrepreneurial-focused philanthropy.
By holding oneself accountable for one’s charitable success (rather than the charity), by insisting on focused, determined action and applying a business-like approach to philanthropy, Bronfman believes we can change the world for the better. I couldn’t agree more.