Published On

June 9, 2014

Published In


TUESDAY, OCTOBER 22, 2013 ©2013 Dow Jones & Company. All Rights ReservedWhat the Wealthy Are Investing Now

The 220 multimillionaire members of private peer network Tiger 21 prefer to investtheir money in shares of Warren Buffett’s Berkshire Hathaway.

By LIZ MOYERThe 220 multimillionaire members of private peer networkTiger 21 prefer to invest their money in shares of billionaire Warren Buffett’s BerkshireHathaway, according to the group’s annual member survey.

Berkshire, the top stock pick among Tiger members this year, is followed by shares of Apple, the iSharesMSCI EAFE Index Fund, Qualcomm, the SPDR S&P 500 exchange-traded fund, Wells Fargo, AnheuserBusch Inbev and Bank of America.

Interestingly, Berkshire’s top public holding as of the end of the second quarter was Wells Fargo.For investment managers, Tiger members cited as top picks credit-fund manager Golub Capital, hedgefunds Millennium Management and Elliott Management, and firms that run master limited partnerships, including Chicksaw Capital Management and Neuberger Berman’s Rachlin Group.

Public equities were favored by 41% of Tiger members, a group of individuals with at least $10 millioneach who collectively have $20 billion to invest. Finance and technology ranked first and second favorite among stock sectors, followed by broad-market ETFs. Among hedge-fund investments, long-short funds – which can bet both for and against equities– are the most popular among Tiger members (44%), followed by multistrategy funds (22%), event-drivenfunds (15%), relative-value funds (11%), macro funds (7%) and funds of funds (4%).

While the rich have been adding new advisers, they rarely dump any of the old ones, says EnrichettaRavina, an economist at Columbia Business School who helped conduct the study that looked at howultra-wealthy investors behaved between 2000 and 2009.

“There’s a lot of inertia,” she says-perhaps the biggest reason why the rich end up with more advisersstuck to them like barnacles with each passing year.

It’s best, say wealthy investors, to name one adviser as what Lorberbaum calls the “quarterback”-theperson who makes the strategic decisions that your other managers need to follow. Otherwise, each willcompete against all the others to be top dog, increasing the odds of more investment risks.

The most draconian step is, of course, firing an adviser. If fees take a sudden jump, an adviser deviatesfrom an agreed upon strategy or performance tumbles, it’s time for a change. That will be easier, saysTiger 21‚Ä≤s Sonnenfeldt, if you have kept the relationship professional, not personal. He suggests tellingany new adviser at the outset, “I’m only going to give you the money if you understand that there maycome a time when I’ll have to take it away.” If you choose wisely in the first place, that day might nevercome. But if it does, you’ll be glad you planned for it.