George Soros at the Annual Meeting of the World Economic
Forum in Davos, Switzerland, Jan. 27, 2011 (Image: WEF/Photo by M. Wuertenberg)
Only a handful of well known hedge fund managers are attending Davos this year. As they did in 2010, many of the world’s largest money managers skipped out on the gilded annual meeting of the World Economic Forum in Switzerland, presumably in favor of staying home to make more money.
Those who went made their presence known by speaking on one of the event’s many panels, some of which were closed to the press.
Paul Singer, founder of Elliott Management spoke on the "Managing a ‘Balance Sheet’ Recovery" panel, trying to answer the question "As the strain on government balance sheets grows, how can future fiscal crises be averted?"
George Soros, chairman of Soros Fund Management and a frequent attendee at Davos, talked about global finance on "Redesigning the International Monetary System: A Davos Debate."
"I think it is temporary because once the economy picks up a little momentum, if it picks up a little momentum, then the interest rates are going to go up and choke off the recovery. So we are destined for stop-go, which is better than no go at all," said Soros in a Bloomberg Television on-site interview.
Peter Weinberg, founding partner of Perella Weinberg Partners, was a panelist for "Reshaping the US Economy: The Impact Abroad."
Frank Brosens, co-founder of Taconic Capital Advisors and past attendee, participated in a discussion titled "The International Financial System: Back on Track?"
Other managers reported to be in Davos include Louis Bacon Moore of Moore Capital Management, Bill Browder of Hermitage Capital Management, Chris Cooper-Hohn, co-founder of The Children’s Investment Fund Foundation and Steven Cohen of SAC Capital Advisors.
The hedge fund industry took at least three notably punches during the gathering.
Deutsche Bank chief executive officer Josef Ackermann said hedge funds and other unregulated financial companies may pose a systemic risk to the economy if oversight isn’t increased. "You have an unregulated area which becomes--as a consequence of all the regulatory changes--more and more important," Ackermann said in an interview with Bloomberg. "You may one day wake up and realize that the systemic challenges are so big that you will have to bail out or at least help support the unregulated sector."
Larry Summers, the former Treasury Secretary, was also quoted by Bloomberg as saying that regulators haven’t paid enough attention to problems that could emerge in a "large, less healthy buccaneer sector."
And this from Goldman Sachs President Gary Cohn: "In the next few years, the unregulated sector will grow at an exponential rate," he said, according to the Financial Times (via Forbes’ Working Capital). "Risk is risk. My concern is that...risk will move from the regulated, more transparent banking sector to a less regulated, more opaque sector."
That, of course, wasn’t well received in hedge fund land.
"All the major jurisdictions where hedge fund managers operate--whether in North America, Europe or Asia-Pacific--have rigorous regulation of the industry. And this already rigorous regulation is being increased by new legislation introduced since the crisis--for example the Dodd-Frank Act in the United States, and the Alternative Investment Fund Managers Directive in the European Union," said Andrew Baker, chief executive officer of the Alternative Investment Management Association, in a statement.
"Some recent references to the ‘un-regulated’ financial sector internationally have been interpreted as referring to hedge funds. Given that it would be completely mistaken to call the global hedge fund industry ‘un-regulated’, this interpretation is presumably inaccurate."