Late-stage private companies are overvalued

  • Soros Fund Management CIO Dawn Fitzpatrick preaches patience to investors.
  • Speaking at Robin Hood’s annual conference, Fitzpatrick said Soros was replenishing his cash reserves.
  • She called late-stage private companies overvalued, in part because of the PSPC boom, and said large-cap tech stocks trade low.

The woman who manages the fortune of one of the richest men in the world said she recommends staying away from private early stage companies and believes large-cap tech companies are a solid investment long-term.

Dawn Fitzpatrick – the chief investment officer of Soros Fund Management, which manages the vast fortune of billionaire George Soros – said that while March 2020 is the time for action, June 2021 is the time for patience. Speaking at the Robin Hood anti-poverty charity annual conference in New York on Wednesday, Fitzpatrick said Soros was replenishing his cash reserves after putting money to work in the spring last when the pandemic ended the global economy.

The $ 27 billion manager made 30% last year, according to Bloomberg, thanks to aggressive moves in stock markets last spring.

Insider was briefed on Fitzpatrick’s comments by someone who attended the virtual conference, which attracts some of the biggest names in finance but is closed to the press. Fitzpatrick made the comments during a panel discussion alongside Bridgewater Associates co-chief investment officer Greg Jensen and One River Asset Management CEO and CIO Eric Peters. Billionaire Paul Tudor Jones, a longtime Robin Hood supporter, moderated the session.

Fitzpatrick said some assets have inflated valuations. Late-stage private companies in particular are overvalued, in part because of the

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boom, she said. PSPC’s desperate sponsors, she said, offer attractive terms to investors who buy PIPE funding, which sponsors often need to close mergers. Those investors who buy into PIPE’s fundraising have tremendous leverage, she said.

Fitzpatrick, who is a macro investor, said the Federal Reserve’s decision to continue its low rate policy is worth the possible inflation risks for now. As the yield curve looks healthier, according to Fitzpatrick, there are real short-term economic risks, especially as states pull back from expanded federal unemployment benefits.

Still, building up debt and resorting to low interest rates will eventually have some effect, she said, which could hurt the value of the US dollar. The dollar’s status as the reserve currency of the global financial system is something the Fed and other policymakers take for granted, she said.

When asked by Tudor Jones what she would choose to invest and hold for the next ten years, she chose large-cap tech companies, which she says are currently trading at a low price.

Soros declined to comment on the remarks.

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