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December 15, 2014

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Apple Inc. most favored equity followed by Berkshire Hathaway; Three ETFs round out top five

New York, NY, December 8, 2014 ‚Äì TIGER 21, North America’s leading peer learning network for high-net-worth investors, released its annual Member Favorites Survey showing that public equities, while still the most favored investment by a wide margin, lost ground to private equity and real estate over the past year.

The survey of TIGER 21’s more than 290 Members, who collectively manage approximately $30 billion in investable assets, is designed to highlight Members’ most preferred investments and managers.

Public Equities were named by 35% of Members as a favorite investment, a decrease of six percentage points from a year ago. The most common public equity investment was individual stock purchases at 43%, a seven percentage point decrease from 2013 and a full 14 points below 2012. ETFs, at 25%, gained four percentage points from last year, followed by mutual funds/long only funds at 17% and hedge funds at 14%.

The most popular equity sectors according to respondents were Financials at 27% followed by Consumer Discretionary and Energy, both at 16%. The next most popular sectors were Technology at 13% and Health Care at 11%.

Apple and Berkshire Hathaway again swapped spots for favorite single stock pick with Apple reclaiming the top position and Berkshire at number two. The next three favorite equity picks were SPDR S&P 500 ETF, Health Care SPDR ETF, and iShares MSCI Emerging Markets ETF.

“Our Members are long-term investors. They are attracted to investments that appear to have long stretches ahead of predictable success. In the case of Apple and Berkshire Hathaway, regardless of which stock comes in on top, their consistent presence on our list shows that our Members have a fundamental belief in those companies for the long-term,” said Michael Sonnenfeldt, Founder and Chairman of TIGER 21.

19% of Members chose Private Equity as a favorite investment strategy this year, continuing the multi-year increase seen for this asset class. For the first time, the survey asked Members how their private equity allocation breaks down. 63% of private equity investment is allocated to direct investments in Members’ own companies, another 17% went to private companies that were not their own, and the remaining 20% was targeted to funds.

“Private equity continues to be a growing focus for our Members and for good reason. Members feel that investing in private equity is something they understand because so many Members created their wealth in private companies. Also, Members like the superior access to information in private companies, so they are often among the first to learn about problems so they can pitch in and help solve them. This is in contrast to public investments, where the shareholder is often the last to know about a problem, long after it is too late to help fix it. Public equity, certainly in the short term, is more subject to the whims of the market, which are great when in your favor, but brutal when they turn,” explains Sonnenfeldt. “The breakdown of private equity investments across private equity funds, direct investments, and owned businesses is evidence that Members are investing in what they know, and using private equity to drive long-term growth in their portfolios.”

Real Estate moved from the fourth favorite investment strategy to number three at 16%, gaining one percentage point from last year. Residential real estate investments were named most often, followed by commercial investments.

Hedge Funds lost two percentage points from a year ago, with 15% of Members selecting a hedge fund investment as their favorite for 2014. The hedge fund category broken down by investment strategy showed a bit of movement. Equity Long/Short remained the most popular (39%), but declined by five percentage points. Relative Value Strategy (24%) moved up two positions to the second most popular strategy. Next was Multi-Strategy (12%) followed by Event Driven (9%), Fund of Funds (9%), and Macro (6%).

“Members’ allocation to hedge funds is at an all-time low. With 40% growth in our membership this year (the strongest year in our 15 year history) it is unclear to what extent the low hedge fund allocations reflect different priorities in new Members’ portfolios or whether it is a further erosion in Members’ attraction to hedge funds,” said Sonnenfeldt. “Hedge funds used to be a primary substitute for public equities, but it is possible that Members now feel they are getting more efficient equity exposure through ETFs and Indexes.”

Fixed Income was the fifth most popular investment category at 9%. For the third consecutive year, municipal bonds were the largest fixed income category Members mentioned with exposure through mutual funds, individual names and managed portfolios from advisors.

Commodities gained three percentage points to move to 4% this year. Energy commodities were the predominate investment listed by Members.

Cash and Cash Equivalents were named by 2% of Members, same as in 2013.

“The Member Favorites Survey shows that Members currently hold about 11% of their assets in cash, which reflects security concerns, and the desire to have cash if an important opportunity arises. But cash is only the ‚ÄòFavorite Investment’ for 2% of our Members. I suspect that cash being a favorite investment for so few Members is a leading indicator of what’s on our Members’ minds and where they are heading,” said Sonnenfeldt.

Favorites Managers

Asked to name their favorite managers across all types of investments, the top five responses included three repeats from last year and two new additions. Golub Capital Inc. (Private Equity), Chickasaw Capital Management, LLC (Equity: MLPs), and Elliott Management Corporation (Hedge Fund: distressed) remain on the top five list. Newcomers include A.L. Stuart & Co. (Equity: MLPs) and Dome Equities (Real Estate).

“The fact that two of the top five managers specialize in MLPs, shows that Members have made a commitment to the sector in reaction to the long-term extra-ordinary trend of energy growth in the United States,” said Sonnenfeldt.

“Overall, our Members are exposed to world class managers on a regular basis, whether through their group meetings or through introductions from fellow Members. These five managers, along with many others that our Members are invested in, have provided enviable results. Many Members consider one of the key benefits from their TIGER 21 membership to be the introduction and exposure to such excellent opportunities,” said Sonnenfeldt.

About TIGER 21:

TIGER 21 (The Investment Group for Enhanced Results in the 21st Century) is North America’s premier peer-to-peer network of learning groups for high-net-worth investors. TIGER 21’s over 290 Members collectively manage approximately $30 billion in personal assets. Members are entrepreneurs, inventors, fund managers, and top executives. TIGER 21 focuses on improving investment acumen as well as exploring common issues of wealth preservation, estate planning and family dynamics beyond finance. Members meet in a facilitated day long meeting each month of 10-15 Members, which is rigorous informative and totally confidential. The membership gathers once a year at an Annual Conference for 3 days to hear some of the world’s leading speakers share current insights. Founded in 1999, TIGER 21 is headquartered in New York City and has groups in Atlanta, Austin, Chicago, Dallas, Los Angeles, Miami, New York, Palm Beach, San Diego, San Francisco, Seattle, Tysons Corner, VA, and Washington, DC as well as Canadian groups in Calgary, Montreal, Toronto, and Vancouver. More information can be found at www.tiger21.com.