The most skilled macro traders are information fiends.
They hire dozens of experts with specialties ranging from geopolitics to behavioral analysis to quantum mechanics. Nobel Prize winners and brand-name economists are not an uncommon sight at top hedge funds. Millions of dollars are spent on research, from expert calls to alternative data to niche industry conferences.
All of this information feeds back into the decision-makers at these firms. These people then take all of these data points and couple them with decades of experience trading different asset classes across geographies to create a portfolio.
They are the competition for Hunterbrook, the media-slash-hedge-fund hybrid that began publishing this month.
While its sister news operation has grabbed most of the attention so far, the hedge fund itself, Hunterbrook Capital, is a $100 million operation that plans to trade equities, currencies, commodities, and more around the world under the sole purview of a 27-year-old who has previously invested only in the biotech and life sciences space professionally.
The startup has been likened to short-sellers who publish their findings, like Nate Anderson’s Hindenburg Research, which has had success with reports on electric truck manufacturer Nikola and Carl Icahn’s eponymous conglomerate. But Hunterbrook Capital plans to invest much more like a macro manager — albeit with a more limited universe of investible options.
Small team, limited scope
The hedge fund makes trades based solely on news from Hunterbrook Media, its media sister company, sometimes getting advanced copies of the articles and placing trades before publication. The CEO of both companies, Nathaniel Horwitz, the former biotech investor and startup founder, decides which positions to take based on the reporting and how large to size them.
Hunterbrook News employs roughly a dozen full-time reporters, analysts, editors, and executives — and counts such journalism bigwigs as former Wall Street Journal editor Matt Murray and ProPublica founder Paul Steiger as advisors. (Bethany McLean, a special correspondent for Business Insider, is also an advisor.)
The hedge fund, however, has just one sole full-time employee. That’s head trader Courtney Dunlevie, who joined the firm after stints at Barclays and Commonstock.
There’s a trading advisory committee that Horwitz speaks to about investment decisions, but ultimately, it’s his portfolio to run. The firm has declined to make the names of the members of the outside committee public.
Before a story is published on Hunterbrook Media, the firm’s general counsel reviews it to make sure there’s not any insider information — such as leaked earning figures — in it. But there’s another step a story must pass in order for it to be passed to the hedge-fund side.
Four executives — including Horwitz and publisher Sam Koppelman, the son of “Billions” showrunner Brian Koppelman and one-time political communications pro — determine if it’s worth sharing the story with the investing side of the operation. Horwitz is the only one of these four with professional investing experience.
If the general counsel and the executives green light the story to be shared, then it goes to the hedge fund — in other words, Dunlevie and Horwitz — prepublication. Once shared, the fund’s investors are responsible for the research costs incurred in compiling the article.
There isn’t a team of analysts and PMs on standby to digest the new information and see how it might impact the financial models they’ve built for different sectors and economies. It’s Horwitz, Dunlevie, and the external advisory committee.
Opportunities few and far between so far
Investigations from Hunterbrook Media so far have less than a 50% hit rate on turning into trades for the hedge fund. The firm’s debut investigation into Phoenix Suns’ owner Matt Ishbia’s mortgage company and a deep dive into energy firm Sable Offshore yielded two short positions, a long bet on Ishbia’s rival, and a derivatives play. Stories on an Italian manufacturer, a Vietnamese carmaker, and a South Korean industrial conglomerate, meanwhile, did not produce any new positions for the portfolio.
Its two foreign dispatches — one a global news round-up, the other a report from a Brazil-based journalist on a legal fight between Amazonians and energy companies — have also failed to generate any trades for the investment arm.
It’s unclear how the early bets have done so far. Since the articles’ publication dates to Monday morning, its one long position has declined more than either of its two shorts, but the trades were initiated and built up before publication. The firm declined to share the sizing of the trades and what it projects its portfolio’s mix of asset classes to be going forward.
“Hunterbrook is founded on the belief that investigative reporting and global news have more value — for the public and for investors — than realized in recent years,” Horwitz said in a statement.
The son of a pair of Pulitzer-winning writers, the late Wall Street Journal correspondent Tony Horwitz and the novelist Geraldine Brooks, Horwitz may eventually add more portfolio managers to work with him. Cash management will also be a key part of the strategy as the firm matures.
Hunterbrook was able to raise seed money from such people as Avenue Capital founder Marc Lasry, General Catalyst founder David Fialkow, and former JPMorgan chief investment officer Matt Cherwin. According to a person close to the firm, there is some overlap between the seed investors and the hedge fund’s LP base, but the fund’s capital is mostly institutional.
“We can’t speak to exact positions, and we’re just getting started, but early signs are that it’s working,” Horwitz said.
