August 15, 2022: -The members of Tiger 21, a peer network of ultra-high net worth entrepreneurs and investors, initially put most of their money to work in the stock market.
Tiger 21 consists of 1,200 members with a cumulative $140 billion in assets, and individuals must have almost $20 million in liquid assets to qualify for membership.
On Thursday, its founder and chairman, Michael Sonnenfeldt, said that although real estate had been the most popular destination for members’ money, they saw some “real bargains” in the stock markets.
This has pushed public equities to the No. 1 spot for Tiger 21 for the first time since the network’s inception.
Sonnenfeldt added members are not concentrating on stock picking, for the most part, so much of the equity investment is channeled into ETFs and index trackers, while technology has been among the most popular sectors. Public equities constitute 27% of the membership’s overall asset allocation.
“You have a lot of the FAANGs that came from much higher prices they are thinking there are a lot of benefits there, and one of the big areas is energy, not just on the oil and gas side, but much bigger growing interest in renewables and the way it plays the solar opportunities, the wind opportunities,” Sonnenfeldt
said. They know this is the biggest investment theme in human history, and it gets a lot of their attention.”
After the rejection of the first quarter of the year on the back of increasing inflation, tightening monetary policy, and recession fears, stock markets were staging a relief rally in the latest weeks. They received further improvements on Wednesday, after U.S. inflation was exposed to have relaxed in July on the back of a fall in oil prices.
Many investors have surged their cash holdings to weather a likely recession. Sonnenfeldt added that the cash allocation of Tiger 21 members has held solid at an unexpectedly high 12%.
He added that they are primarily “wealth preservers” selling businesses and live on almost 2% of their net worth and therefore use cash reserves to shore up almost five years of living expenses.
Tiger 21 said that members are using their ample cash to look for deals and inflation hedges in the short term.
“But they want resources to pounce on an opportunity, and they have seen them in increasing numbers, so their cash just ticked down from 12% to 11%. It may sound like a small amount, but it probably suggests that members are quite bullish regarding the long term,” Sonnenfeldt said.