ALTERNATE INVESTMENTS/OPAL

At the Opal Family Office conference, a variety of alternate investments were discussed and sometimes pitched.  It was interesting to see that no “hedge funds” presented, nor were any recommended.  Herewith a checklist of alternatives discussed (without commentary as to the wisdom of any of them):

Cannabis.

Medical office buildings (described as stable tenanted real estate investments with tenants in a growth industry).

Development of fully-integrated residential housing communities with a focus on creating a “quality of life” environment.

Biotech: recommended at a fairly early stage, particularly in the oncology, neuroscience and rare disease spaces; big pharma is losing money as major drugs go off patent protection, big pharma has reduced internal research and therefore is relying on acquiring promising biotechs at early stage.

Facebook’s new “Currency” called Libra: this was described not as a digital currency but as a digital ETF; Facebook was described as “becoming a digital state” where all your information and data will be concentrated there.  (Discussion also of Bitcoin, also to no consensus.)

PE and VC Funds: with volatility of public markets and high expense of going public, growing tech companies are seeking direct investments from the private capital markets.  Additional benefit for family offices is potential pass-through under Section 1202 of the Internal Revenue Code (investments in small businesses held for five years escape Federal tax upon exit; beware AMT and State treatment, however).

Opportunity-zone investments (can be not only real estate but also operating businesses within a zone.

Gold, with an asserted preference for mining and processing companies which were said to have the benefit of being value-added to the underlying commodity; it was claimed that in the “last four quarters” gold has outperformed the S&P).

Investments in companies which emphasize ESG, the current euphemism for “environmental, socially impactful and governance” quality practices.  Today, need not be a code word for poor IRR.  But also perhaps this is not useful advice as, reportedly, 80% of the S&P 500 already purport to be following ESG practices.


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