Did you know some of the most profitable investments today aren’t on Wall Street? Private equity is becoming mainstream.

In today’s edition:

→ Millennium invests in top traders

→ BlackRock’s all-stock acquisition

→ $39 Billion pension fund merger

HEADLINES

Millennium invests $3.3 billion in top traders

Millennium invests $3.3 billion in top traders

Millennium Management makes a $3.3 billion allocation to two new trading teams. Hong Kong-based Robert Tau will manage $1.5 billion exclusively for Millennium, while Daniel Engel-Hall will get $1.75 billion under the Andora Partners brand. Millennium has doubled its assets in the last 6 years and employs 330 investment teams globally. With tight risk limits and steady 12.5% returns in the past 11 months, the hedge fund giant remains a powerhouse in the industry.

BlackRock buys HPS in $12 billion deal

BlackRock acquires HPS Investment Partners in an all-stock deal worth $12 billion. The move positions BlackRock as a top-five private credit firm with $220 billion in assets. HPS’s founders will lead a new private financing unit, expanding BlackRock’s alternative assets to nearly $600 billion. This deal, along with recent acquisitions like Global Infrastructure Partners, signals BlackRock’s aggressive push into private markets.

CHART

China’s trade surplus keeps growing

China’s trade surplus has soared to unprecedented levels, reaching $785 billion in the first 10 months of 2024—a 16% increase from 2023 and the highest on record for this period. This surge highlights the export-driven nature of China’s economy, bolstered by manufacturers ramping up shipments ahead of peak season and potential tariff threats following Trump’s re-election. Exports in October exceeded expectations, while imports fell by 2.3%, reflecting weak domestic demand, slowing economic growth, and a shift among Chinese consumers toward domestic products.

This imbalance raises concerns of escalating trade tensions, as the U.S. considers tariffs of up to 60% on Chinese goods. A likely response from Beijing could include increased fiscal stimulus and further devaluation of the renminbi, which hit its lowest exchange rate against the dollar in a year.

BRIEFS

Private Equity

→TotalEnergies nears €2 billion VSB deal: TotalEnergies is close to acquiring VSB Group, a renewable energy project developer, for €2 billion ($2.1 billion). The German firm, owned by Partners Group, specializes in solar, wind, and hydro projects across Europe. This deal aligns with TotalEnergies’ strategy to expand in renewables, including offshore wind investments in Germany. This acquisition solidifies TotalEnergies’ commitment to the sector, following its €1.5 billion buyout of Total Eren last year.

→Carlyle-backed Abingworth launches $1.5 billion fund: Abingworth, supported by Carlyle, seeks to raise $1.5 billion for a fund targeting late-stage clinical trials. The fund aims to partner with major pharmaceutical companies in exchange for royalties from future drugs. Earlier this year, Abingworth struck deals with Gilead Sciences for cancer drug Trodelvy and Teva for asthma treatments, showcasing its focus on innovative healthcare solutions.

Hedge Funds

→Hedge fund founder joins Millennium in Asia: Ramesh Karthigesu, founder of Kaizen Capital, is shutting down his hedge fund to join Millennium Management as a senior portfolio manager. Known for Kaizen’s 15% annualized returns since 2020, Karthigesu will bring his team to the $70 billion hedge fund giant.

→Andurand hedge fund surges 23% in November: Pierre Andurand’s flagship fund soared 23% in November, erasing earlier losses and bringing its 2024 return to 13.8%. The Andurand Commodities Discretionary Enhanced Fund thrives on bold bets, such as cocoa and oil. Andurand’s cocoa bullishness paid off as prices hit record highs due to poor harvests in West Africa.

→Hedge funds shift from utilities to materials: Hedge funds are ditching utility stocks in favor of U.S. materials. According to Goldman Sachs, materials became the most net-bought sector last week, driven by chemicals, metals, and mining. Utilities, despite strong 2024 performance, are losing appeal as investors embrace growth-oriented sectors tied to industrial demand. With materials stocks gaining 9% year-to-date, the sector offers attractive opportunities amid evolving market dynamics.

Venture Capital

→Scope Labs launches venture capital arm: Scope Labs has launched Scope Labs Capital, a venture capital fund focusing on early-stage startups. Industry veteran Dave Sukoff, with decades of tech and finance expertise, joins as Chief Strategy Officer to lead this new initiative. Scope Labs has partnered with 20 early-stage companies and has tripled its engineering team since 2023.

Others

→Australian pension funds announce a $39B merger: Australia’s Equip Super and TelstraSuper are merging to form a $39 billion pension fund under the Equip Super brand. Equip Super manages $35 billion in funds and has 140,000 members in sectors including mining, automotive, energy, teaching, and healthcare.

→Investec raises €200 million for debt fund: Investec Alternative Investment Management has raised €200 million for its second private debt fund, PDF II. PDF II focuses on senior secured and subordinated debt to mid-sized corporates across Europe.

FOUNDATIONS

How does the Federal Reserve control the economy?

How does the Federal Reserve control the economy?

The Federal Reserve (Fed) controls the economy primarily through its monetary policy tools, which aim to maintain price stability, foster maximum employment, and promote moderate long-term interest rates. One key tool is adjusting the federal funds rate, which is the interest rate banks lend to each other overnight. The Fed makes borrowing more expensive by raising rates and slowing down consumer spending and business investment to cool inflation. Conversely, lowering rates stimulates borrowing and spending, promoting economic growth.

The Fed also uses open market operations, such as buying or selling government securities, to influence money supply and liquidity. Additionally, it can change reserve requirements—the amount banks must hold in reserve—directly affecting lending capacity. During economic crises, the Fed employs unconventional measures like quantitative easing to inject liquidity and stabilize financial markets. These actions help guide the economy, balancing growth and inflation while maintaining economic stability.

what is

Enterprise Value

Enterprise value (EV) is the total value of a company, including its equity (market value) and debt, minus its cash. It’s like the price you’d pay to buy the whole company, as it considers both what the company owns and what it owes. For example, if a company is worth $1 billion in stock value, has $500 million in debt, and $100 million in cash, its EV would be $1.4 billion.

"The stock market is filled with individuals who know the price of everything, but the value of nothing." — Phillip Fisher

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