Anthony Scaramucci, who has been appointed to head the White House's communications operations, has a long history on Wall Street – and has been a big Trump backer and public advocate.

He previously worked at Goldman Sachs and later founded SkyBridge Capital, a fund of hedge funds firm that caters to America's rich dentists and doctors.

Sean Spicer, the White House's embattled press secretary, announced his resignation on Friday, reportedly after telling President Donald Trump that he strongly disagreed with the selection of Scaramucci.

Scaramucci is a household name on Wall Street, but relatively unknown elsewhere.  Here's a primer.

He was hired, fired and then rehired at Goldman Sachs

Scaramucci worked at Goldman Sachs for some time after graduating from Harvard Law School.

He was even fired before being rehired in a sales role, he recounted to reporters several years ago.  

He later founded SkyBridge Capital, which invests rich people's money in hedge funds

Scaramucci later ran SkyBridge Capital, a fund of hedge funds firm. It basically invests wealthy people's money into hedge funds, private investment vehicles that make bets on the markets.

Scaramucci had heralded SkyBridge as a way for America's dentists and doctors – who might not have enough money to access hedge funds directly – to put their money with hedge fund titans. 

The fund's sales practices drew criticism over the years, and a Main Street mutual fund SkyBridge started also struggled with performance,Reuters reported earlier this year.

Still, the firm grew to billions in assets, much of that from relationships with Wall Street banks which directed their rich clients' money into the fund.

He has a love-hate relationship with the press

Scaramucci loves media attention and courts it like a pro (including from Business Insider). Sometimes, it is to promote books, like one he wrote on entrepreneurship called "Hopping over the Rabbit Hole." He also hosts a TV show called Wall Street Week on Fox Business.

But he was also accused of threatening a columnist after he wrote something Scaramucci didn't like. Felix Salmon, a financial columnist, wrote for Reuters about his experience. 

Here's Salmon back in 2011:

"I’ve seen another side to Scaramucci: my post about his wine tasting was followed by a series of irate phone calls and emails from him, not only to me but also to any and every senior Thomson Reuters executive he could think of. It’s the steely competitor underneath the glad-handing exterior."

Scaramucci said he tried to get Salmon fired twice, though the two eventually made up.

More recently, he reportedly threatened to sue CNN over a story that it later retracted. When it did, and three staffers were let go, he tweeted ".@CNN did the right thing. Classy move. Apology accepted. Everyone makes mistakes. Moving on."

Och-Ziff Capital Management, the 23-year-old hedge fund founded by its namesake Dan Och, is bleeding money.

The firm lost a third of its assets after pleading guilty to conspiracy charges last September. It agreed to pay a $412 million fine after a lengthy government investigation accused managers of paying bribes to government officials in several African countries.

Now, with its stock still less than a fifth of pre-scandal highs, the $32 billion fund is turning to young blood in hopes of a renaissance.

Jimmy Levin, a 34-year-old Harvard alum who joined the firm in 2006, was promoted to co-chief investment officer in February and given a $280 million incentive to turn the firm around.

Now, five months into Levin’s leadership, staff at the firm and other Wall Street players are still questioning Levin’s out-of-nowhere promotion, according to a report from Bloomberg’s Sridhar Natarajan and Katia Porzecanski.

“It’s a bet he’s making, just as he was making on any of his investments,” Adam Kahn, a managing partner at the executive-search firm Odyssey Search Partners, told Bloomberg. “Dan probably likes the risk-reward in the package he’s giving to Jimmy.”

And it’s a steep risk-reward structure, too.

In order to pocket the full $280 million, Levin must stay for three years and Och-Ziff’s stock must return 125%, including dividends.

So far, Levin’s approach seems to be working.

The firm’s master fund reported year-to-date returns of 7.5% last month, and its stock price is slowly climbing out of the doldrums, closing at $3.07 Monday afternoon.

“It’s definitely been a challenging time,” Levin told Bloomberg. “But to move forward we’re just focused on what we can influence, and that’s our investing.”

You can read the full Bloomberg report here. 

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• Anthony Scaramucci is selling his fund of funds business to a Chinese conglomerate with ties to the government.
• The firm, the HNA Group, is facing an increasing number of questions at home and abroad, and the deal is subject to review by the US Treasury.
• The sale reportedly kept Scaramucci out of the White House in January because of the conflicts it raises.

Let's not be naive. If I told you that a firm with ties to a sometimes adversarial foreign power was trying to overpay a Trump administration official for their now struggling business, you might say, "Gee, that seems like a conflict the White House doesn't need right now." But here we are.

New White House communications director Anthony Scaramucci has joined the Trump administration with a $180 million conflict of interest hanging over his head. It's the same conflict that reportedly kept him out of the White House months ago, and it's only gotten stickier since then.

Scaramucci is selling his $5.6 billion financial firm, SkyBridge Capital, to a number of investors. Chief among them is a Chinese financial firm with strong ties to ruling Communist Party, called the HNA Group. Already, Bloomberg outlined that HNA and its fellow investors seem to be paying multiples more for SkyBridge than a firm like this would normally be valued at. But the sale has also been dragging on for months, and as it has we've seen the questions about HNA, its ownership structure, and its financing rise out of the murky world of big Chinese business.

Now, this all sounds pretty strange as is. But it gets even stranger when you understand what SkyBridge is, what HNA is, and what's been holding up the sale and Scaramucci's pay day. (Hint: It's the US government.)

When you understand that, you'll also understand why this sale to the Chinese was the reason why White House Chief of Staff Reince Priebus didn't want Scaramucci too close to the president, according to some close to the administration. It's also why Priebus was cut out of the loop during Scaramucci's lightning fast hiring last week.

Get to know some Wall Street

But first, SkyBridge. Scaramucci's firm is likely best known for the massive bash it throws in Vegas every year, one that attracts world leaders and stars of the world of finance for four days in the desert.

But of course that's not the only business SkyBridge has. It is a fund of funds, which is to say that it is an investment fund that connects people to other investment funds.

Over the last few years, businesses like this have been hurting on Wall Street. When you pay a fund of funds, you pay a fee to them, and a fee to the hedge fund they're connecting you to. The problem with that, of course, is that it's expensive, and when hedge funds aren't performing (as they haven't been for the past couple of years) no one wants to pay high fees.

Scaramucci told me in an interview last year that part of his job was to try to get fund managers to lower their fees so that he could lower fees for his clients. Unfortunately, though, his efforts weren't enough to stop investors from pulling $1.6 billion from SkyBridge's flagship fund last fiscal year.

This is part of what makes it so curious that HNA would want to overpay for SkyBridge. It is a high-fee business in a low-fee world. Scaramucci and SkyBridge have been responding to questions about the sale the same way for months — they say it's a couple of weeks away from closing. He has also said repeatedly that he'd recuse himself from the sale of SkyBridge, and that he thinks HNA is buying it in spite of his ties to Trump, not because of them.

Get to know the 'gray rhinos'

The other thing to know is HNA itself — and all of the massive complications it faces right now. In short, HNA is a massive enterprise that traces its roots to Hainan Airlines, but went on a $50 billion buying spree— backed by big government lenders — and now owns everything from stakes in Hilton Hotels to small aviation companies.

"HNA is looking for influence in an administration that looks like it is positioning itself to be anti-China," Derek Scissors, a China specialist at the American Enterprise Institute, told The New York Times earlier this year.

Therein, of course, lies the conflict. And HNA brings baggage of its own — it is, for example, unclear exactly who owns and backs it. Bank of America won't do business with the company, and the European Central Bank is investigating HNA's stake in Germany's Deutsche Bank.

At home, President Xi Jinping just labeled HNA and other big conglomerates that got huge off debt-fueled acquisitions, "gray rhinos"— companies that seem innocuous until they start moving fast in your direction.

You do not want a catchy label in China. It usually means the government is keeping an eye on you. In this case, the government is interested in reining financial sector debt and keeping money in the country. But SkyBridge is a tiny acquisition for HNA. Even if it overpays for the firm, the $180 million price tag is a rounding error for a firm HNA's size. A few more things about HNA:

• The company claims to be owned by two charities, as well as its founders. Beyond that, the whole thing is murky.
• Chinese billionaire businessman Guo Wengui claims HNA is owned by Chinese government officials. He's doing that from a self-imposed exile in New York City, and HNA is suing him for defamation.
• A bunch of Chinese banks may have just cut off credit to HNA in an attempt to stop it from growing larger. HNA's CEO Adam Tan told Reuters this isn't true, saying, "We've got nothing to hide."
• There are reports here in the US of HNA buying businesses and then not maintaining them. This would support the thesis that the Chinese government is angry at these gray rhinos because it believes some acquisitions were just an attempt to get money out of China.

A final issue may just be that even when the deal closes, financial advisers to high-net-worth clients may have a hard time selling an HNA-owned SkyBridge to the doctors and dentists who invest in the fund of funds.

One financial adviser Business Insider spoke with said he would have trouble explaining to clients why he was doing business with a firm like HNA. Indeed, part of the hold-up in the SkyBridge deal was getting the advisers that sell SkyBridge products at firms like Morgan Stanley on board with the deal.

If Bank of America won't do business with HNA, why should they? That, ultimately, is a question for the Treasury Department.

Get to know CFIUS

Pursuant to section 721 of the Defense Production Act of 1950, the Treasury must review any transactions that would result in control of a US business by a foreign person under the Committee on Foreign Investment in the United States (CFIUS). That means Steve Mnuchin has to sign off on this SkyBridge deal. It has been held up for months and months, according to reports, in part because the Treasury is so understaffed.

"Traditionally, there's been a bipartisan effort to use the CIFIUS process to prevent foreign companies with an affiliation with a hostile foreign government from buying key US resources or assets that could compromise national security," Lee Branstetter, an economist at Carnegie Mellon University and former CFIUS member, told Business Insider. The Trump administration has been especially tough when it comes to businesses that could affect national security, citing that as a reason for potentially levying a 25% tariff on foreign-steel imports.

Indeed, according to Reuters, CIFIUS has been more conservative than usual since the Trump administration took over, rejecting nine deals so far this year.

That said, this Scaramucci case is unique.

"I can't think of another case when a significant White House official who sold their business in its entirety to a single Chinese entity that has been known in the press as one of these 'gray rhinos,'" Branstetter said. "That does appear to be unique. We haven't faced these kinds of circumstances before ... There are questions as to whether this transaction would provide a Chinese conglomerate with influence over Mr. Scaramucci. But I'm not privy to the specifics of the deal."

Specifics are important. Branstetter said that if this is a one-time transaction between Scaramucci and HNA (which is what Scaramucci says it is), maybe this isn't so terrible. It just looks terrible.

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A tech hedge fund that has been crushing it sees a huge opportunity for YouTube, Amazon, Netflix and Google.

It's called OLED – "organic light-emitting diodes"– and it could soon change how people use their smartphones.

David Fiszel's Honeycomb Asset Management, a New York-based investment firm, flagged the technology and its potential for tech giants in its second-quarter letter sent last week to investors. The fund, which launched last summer, has posted 12.2% gains after fees this year.

Here's an excerpt from Honeycomb's letter, a copy of which was reviewed by Business Insider:

"[OLED's] properties enable them to emit crystal clear images without a backlight, which is required by traditional displays, making them more power efficient. This means OLED screens are paper-thin, flexible, foldable and can be applied on any surface from plastic to glass. This goes beyond TVs. Imagine the ability to turn windows, walls, and even car tail lights into a working display... Some of these screens can unfold and double the size of your display allowing you to browse the internet and watch videos more comfortably while keeping your current phone size unchanged."

OLED's also tout longer battery life, and smartphone and appliance manufacturers are already looking to incorporate OLED into their products, Honeycomb notes.

Who is likely to be affected? According to Honeycomb:

• YouTube and Netflix. YouTube "already has 1.5 billion daily active users currently spending 40 minutes per day on the site, streaming a total of 1 billion hours per day. Netflix watchers are currently streaming 1 billion hours per week. Both platforms may see a significant increase in viewing hours in a world with bigger, foldable smartphone screens."
• Google and Facebook because mobile video advertising may drive more ad dollars. "Historically, there was a negative impact on advertising rates and conversion from the desktop to mobile transition when screen sizes got smaller. OLED devices could reverse this trend by allowing more potential surface area to advertise. In this scenario, we believe consensus estimates are dramatically underestimating the potential for advertising revenue growth in the future especially given video advertising rates are much higher than click-through links."

"Goldman Sachs recently estimated that the OLED industry will triple to $46bn from its current size by 2020," Honeycomb added. "The applications for OLED are seemingly endless."

The hedge fund firm sees an opportunity with Applied Materials (ticker: AMAT), which it currently invests in.

According to Honeycomb, AMAT is "a supplier of semiconductor capital equipment and is a leading provider in the OLED space, a fact that is underappreciated by the market because OLED-related sales represent a minority of AMAT’s revenues today."

Before launching Honeycomb last summer, Fiszel worked at Steve Cohen's firm, then SAC Capital Advisors, starting in 2000. He later left to run a hedge fund startup, Rhombus Capital, which closed in 2007, and later moved back to Cohen's firm, according to previous news reports.

SEE ALSO: A $30 billion hedge fund identified a potential trigger for 'the next financial crisis'

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A hedge fund started by a Steve Cohen protégé is up double-digits in 2017. 

David Fiszel's Honeycomb Asset Management is up 12.2% after fees over the past six months in its Class A shares, according to the firm's second-quarter letter released last week. A copy was reviewed by Business Insider.

The fund gained 9.3% after fees in the first quarter and posted a 2.7% net return in the second quarter.

Comparatively, the S&P 500 is up about 9.6% over the same period, per Markets Insider data, while the Absolute Return US Equity Index, which tracks long-short stock funds, returned 3.9% through June. 

Honeycomb had significant positions in the information technology and consumer discretionary sectors during the second quarter, with the bulk of gains coming from the tech positions, the firm's letter said. The fund had a 53% net exposure to the market in the second quarter.

"On the long side, Alibaba was our largest contributor and had been a top 5 position coming into the second quarter," Honeycomb said in its letter. "Formula One Group (ticker: FWONK) also led our gains along with investments in Google and Charter Communications. These gains were offset by the losses in Fox, CBS and Sinclair Broadcasting."

Before launching Honeycomb last summer, Fiszel worked at Steve Cohen's firm, then SAC Capital Advisors, starting in 2000. He later left to run a hedge fund startup, Rhombus Capital, which closed in 2007, and later moved back to Cohen's firm, according to previous news reports.

Honeycomb managed about $330 million as of March 31, according to an investor document previously reviewed by Business Insider. The fund has continued to raise money, according to its latest letter.

Fiszel isn't the only SAC alum posting gains this year. Aaron Cowen's Suvretta is up about 17% for the year, for instance, Business Insider earlier reported.

SEE ALSO: Trump's new communications pick Scaramucci has a long history on Wall Street and a love-hate relationship with the media

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Psst... there's a fortune to be made buying closed-end funds (CEFs). Just don't tell Wall Street.

That was the message delivered in a recent interview by famed credit trader Boaz Weinstein, whose $1.7 billion firm Saba Capital is best known for its winning bet against the JPMorgan trader known as the "London Whale."

CEFs, which raise money through initial public offerings and then trade on public exchanges, just like stocks, total $240 billion in market value right now. But unlike their open-ended counterparts, managers are unable to create new shares to meet investor demand.

To Weinstein, the appeal of CEFs at the moment stems largely from how attractively-priced they are. Following what he describes as some "peculiar dynamics" around the taper tantrum in 2013, investors turned into large sellers, which caused CEFs to trade at a discount over time.

"Although CEF discounts have narrowed in the past year, it’s possible to buy a few dozen of them at an average 10% discount without sacrificing quality," the Saba founder and chief investment officer said in an interview with the Octavian Report, a subscription publication featuring conversations with investment heavyweights. "You go into it hoping the discount will narrow on its own, but one of the nicest points about this investment is that while you wait, you earn an above average yield, given the discounted price."

While Weinstein points out that most institutional fixed-income investors haven't ever owned a CEF, he does highlight some notable fellow bulls. For one, Bill Gross still owns over $140 million of CEFs from Pimco, the giant bond fund he used to run. Weinstein also highlights Jeff Gundlach, who he says has issued CEFs and recommends buying them — but only at a discount, of course.

Weinstein acknowledges that another appealing aspect is how the space feels largely free of Wall Street meddling and influence.

"It’s a rare corner of the market where retail investors can get an edge over institutions," he said in the Octavian interview. "Most institutions don’t realize that it is a large enough market to matter to them."

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• Highfields Capital Management, a $13 billion hedge fund, has raised concerns about quant funds and passive investing in a letter to clients seen by Business Insider.
• Quants use algorithms to make investment bets, while passive funds track market indexes. Both are challenging active managers, the human-backed stock pickers that have traditionally dominated Wall Street.
• Quants, in particular, could worsen the next financial crisis, according to Highfields, an active manager.

A $13 billion hedge fund that flies under the radar is sounding the alarm on one of the biggest investment trends: quants and passive investing.

Highfields Capital Management flagged concerns this week about computer-driven trading in its second-quarter letter to investors, a copy of which was reviewed by Business Insider.

Boston-based Highfields uses a fundamental value-investing strategy, and though it is one of the biggest hedge funds, it doesn't often get much attention.

Quants could worsen the next financial crisis, Jonathon Jacobson, founder of Highfields, wrote in the letter. He highlighted the lead-up to the 1987 financial crisis and partly blamed "portfolio insurance," or "the concept of dynamically hedging an active portfolio with stock index futures."

Portfolio insurance, he wrote, contributed "to the complacency as the market ascended to nosebleed territory and most definitely contributed to the downward spiral of that fateful Friday, Monday, and Tuesday in October 1987."

"The strategies employed by many of today's quant and other systematic investors are essentially the same thing," he wrote. "They weight securities or asset classes based upon their 'risk' as measured by volatility. Much like portfolio insurance, this strategy gives the purveyor the comfort to take more risk than he or she would otherwise take, and 'works' well in benign markets."

A representative for Highfields declined to comment.

Quant strategies have recently pulled in huge amounts of money, becoming some of the biggest players in hedge funds. Renaissance Technologies, a secretive computer-driven fund, increased its assets by about 42% last year, adding $12 billion, and Two Sigma Investments grew by 20%, adding some $5 billion over last year, according to the Hedge Fund Intelligence Billion Dollar Club ranking.

Overall, the end could be near for quant strategies, according to Jacobson:

"The bigger point is that the ability for both passive and quant funds to outperform active, fundamentally oriented managers into perpetuity is improbable at best. In regard to the 'quants,' hundreds of billions of dollars can't exploit the same 'inefficiency' for long. My sense is that we are a lot closer to the end than the beginning of these strategies producing excess returns."

Jacobson also touched on the market's historic low volatility, a common theme in hedge fund managers' recent client letters. Managers usually send letters to their clients in the weeks after the close of each quarter.

Balyasny Asset Management, which manages $12 billion, wrote about quants and passive investors fundamentally changing stock investing, and the $30 billion Baupost Group told clients earlier this month that low volatility could be a harbinger of "the next financial crisis."

Jacobson wrote:

"Common sense would suggest markets should be more fragile, not less. Congress is hopelessly gridlocked. The attempt to reform Obamacare failed miserably. It seems more unlikely every day that either major tax reform and/or some sort of economic stimulus package will be enacted, and these are the twin premises that have underpinned the 'Trump trade.' Central bankers seem determined to end the dual policies of zero interest rates and quantitative easing. And from a geopolitical standpoint, we have a highly inexperienced and impetuous President sitting atop a world that has never seemed more precarious."

He blamed quant funds for the complacency:

"Typically, protracted periods of good market performance are characterized by low volatility and excessive complacency. We can't prove this, but we are convinced that 'quant' funds, which have attracted hundreds of billions of dollars in the last few years and a significant portion of which use leverage, and whose models and various strategies are largely based on price action and correlations extracted from the reasonably recent past when volatility has been low (largely of their own making), have contributed mightily to the illusion that market risk is low. As the money continues to flow into these strategies, this dynamic becomes self-fulfilling."

The Highfields Capital IV LP fund, the firm's biggest fund, with about $5.6 billion under management, returned 1.2% for the first half of the year, according to investor documents. That's compared with a 9.3% gain in the S&P 500 and an 11% gain for the MSCI World index over the same period.

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DON'T MISS: http://www.businessinsider.com/david-fiszels-honeycomb-on-oled-affecting-google-facebook-amazon-2017-7

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A $13 billion hedge fund says there's an aspect to Jeff Bezos' bid for Whole Foods that is "pure genius"– the fact that Amazon is valued so highly by the market.

Highfields Capital Management, a Boston-based hedge fund that flies under the radar, sent a letter to clients this week that lays out the reasoning. A copy of the letter, which is private, was reviewed by Business Insider.

Here's what the founder, Jonathon S. Jacobson, wrote (emphasis added):

"Amazon's strategy will be to slash Whole Foods' margins by cutting prices drastically. This is the bear case for Target, Walmart, Kroger, AutoZone, O'Reilly, HD Supply, Fastenal, W.W. Grainger, Michaels, Dollar General and Dollar Tree – just to name a handful...

Amazon is paying a huge premium to the current market price for a business where its strategy will be to slash its profitability for the foreseeable future in order to grow market share. That's an awful lot of gross margin dollars to make up, particularly if you have to earn a return on your investment. But get this: Amazon doesn't, because its stock trades at almost 100x earnings and there is no market expectation of current profitability. Given this reality, Amazon can invest for the truly long term and earn its cost of capital – because it is close to zero! That is the true genius of this deal and highly illustrative of one of the most valuable competitive advantages that Jeff Bezos enjoys."

A Highfields spokesperson declined to comment.

Jacobson also highlighted his concerns over quants – one of the biggest trends in investing – in his letter to clients.

The Highfields Capital IV LP fund, the firm's biggest fund with about $5.6 billion under management, returned 1.2% for the first half of the year, according to investor documents. That's compared to a 9.3% gain in the S&P 500 and 11% gain for the MSCI World Index over the same period.

SEE ALSO: A $13 billion hedge fund is sounding the alarm on one of the biggest trends in investing

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NOW WATCH: HENRY BLODGET: Tech market is nowhere near the dotcom days

Dan Loeb's Third Point hedge fund is betting big on BlackRock, the world's largest asset manager.

In a client letter dated July 26 explaining its stock investment, Third Point said: "We think BlackRock is a misunderstood franchise that is just beginning to inflect."

Here's an excerpt from the letter (emphasis added):

"We see BlackRock
as far more than an asset manager dependent on market movements. It is increasingly becoming a network or index-like business, with earnings power driven by ETFs (via iShares) and data & analytic services (via Aladdin). These are oligopoly businesses with faster growth and much higher incremental margins than traditional asset management – and thus deserve much higher P/E multiples over time. With shares at less than 15x our 2019 EPS forecast, and an outlook for consistent mid-teens EPS growth, we think BlackRock is a misunderstood franchise that is just beginning to inflect."

"...In the US, iShares had more inflows in 1H17 than the next 10 competitors combined...We think this acceleration in ETFs is just getting started, as regulatory change globally pushes lower-cost, transparent investment products, and institutional investors use ETFs as investment solutions, particularly in fixed income – an area where BlackRock has an even higher global market share for ETF products (~50%)."

That point on ETFs was echoed by BlackRock's CEO Larry Fink earlier this month, Business Insider previously reported. BlackRock has $5.7 trillion in assets.

"Index and ETFs still only represent 10% of the entire equity market global capitalization," Fink said July 17 on his firm's second quarterly call. "With $160-odd trillion global equity market capitalization, we have much more opportunities for ETFs to grow, not just on equities, but in fixed income. And I believe this is just the beginning."

Third Point is up 10.7% for the first half of this year, according to the firm's client letter. That compares to a 9.3% gain in the S&P 500 over the same period.

Third Point's offshore fund gained 4.6% in the second quarter compared to a 3.1% gain in the S&P 500, the letter said.

Here are some more excerpts from Third Point's letter:

• "In our January letter to investors, we shared our view that 2017 would be a year characterized by reflation globally, an end to central bank easing, and a US economy juiced up by the Trump administration’s increased fiscal spending and tax reform. So far, none of these predictions has come to pass."
• "Looking ahead to the second half of the year, we still believe that central banks will be important drivers of action. While it might be too early to say that the key central banks have turned hawkish, their tone is changing and they are well past the point where any hiccup in the market will prompt increased accommodation. In the US, current weak levels of inflation and poor CPI and retail sales reports present a quandary for the Fed. Based on her recent remarks, Janet Yellen does not seem likely to advocate drastic action. However, we do believe that the Fed will begin balance sheet reduction shortly but that the next rate hike will be on hold until growth and inflation accelerate."

SEE ALSO: $13 BILLION HEDGE FUND: Jeff Bezos' deal for Whole Foods is 'true genius'

DON'T MISS: A hedge fund started by a Steve Cohen protégé is crushing it

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Howard Marks, billionaire investor and founder of Oaktree Capital Management, knows these good times can't last forever. 

In his latest ‘Oaktree memo’ to clients on Wednesday, Marks recalled an iconic pre-crisis quote from then-Citigroup CEO Chuck Prince.

“When the music stops, in terms of liquidity, things will be complicated,” Prince said in 2007. “But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.”

Marks says this quote is just as relevant today, 10 years later, as it was then. Investors know there is risk, but until then they have no choice but to keep investing.

“Today I think most investors know the good times will end someday, as Prince did,” writes Marks. “But for now they feel they, too, have no choice but to dance … in other words, there’ll be a time for caution, just not today.”

Oaktree’s 22-page letter echoes what many in the industry have been saying this year, as markets continue to post record high after record high, with volatility at historic lows.

Paul Singer of Elliott Management, which raised $5 billion in less than 24 hours earlier this month, said in his annual letter that now “is a good time to build a significant amount of dry powder” to deploy during future market turmoil. 

Baupost Group, a $30 billion hedge fund, laid out a road map for market chaos in a recent letter to investors. 

"We remain in a market that is broadly expensive and largely indifferent to risk," Baupost Group's head of public investments, Jim Mooney, said in the letter. "No one should be lulled into a false sense of comfort by the illusion of stability which surrounds us."

And Tourbillon Capital's Jason Karp wrote in a recent letter to investor that the stock market's seemingly endless gains don't make much sense. 

"People are just paying significantly more for assets without any fundamental improvement in those assets," he said. 

Still, Marks can't see an obvious catalyst to put an end to the bull market run, even if he is confident it will arrive eventually. 

“We agree things can’t go well forever,” he writes. “But we don’t see anything that’s likely to bring the bull market to a close anytime soon.”

SEE ALSO: 

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Hundreds of Wall Streeters packed a Manhattan venue this week to play poker and raise money for an education nonprofit.

The crowd included a who's-who of financiers, politicians, athletes and show biz folks, including Kase Capital's Whitney Tilson, one of the event's chairs; Greenlight's David Einhorn; Avenue Capital's Marc Lasry; New York Senator Jeff Klein; and Brian Koppelman, executive producer of Showtime's "Billions."

There were also pro poker players, like Vanessa Selbst, the highest earning female poker player of all time.

The July 26 event, called the Take ‘Em to School Poker Tournament & Casino Night, raised money for Education Reform Now. It's an annual event with familiar faces, and we've covered it before.

Different hedge funds sponsored the poker tables, including Mudrick Capital Management.

Take a look inside.

The event was held at Gotham Hall in Manhattan.

You could play blackjack on the side.

There were several tables to choose from.

(Reuters) - Best known as a New York hedge fund industry executive, Anthony Scaramucci, President Donald Trump's incoming communications director, has stakes in a film company, a glitzy Manhattan steakhouse and a nutrition business accused by U.S. regulators of making false claims in 2015, financial disclosures show.

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NOW WATCH: A $16B hedge fund CIO explains what it takes to work at a hedge fund today

• PAAMCO, a $10 billion hedge fund investor, is backing Benn Eifert's QVR Advisors.
• QVR has hired staff from Uber and Wells Fargo.

A $10 billion hedge fund investor is backing a new launch.

PAAMCO, the Irvine, California-based fund of funds firm, is backing QVR Advisors, a new alternative asset management firm, according to a person familiar with the situation.

The amount PAAMCO is investing was not available. PAAMCO managed about $10 billion at the end of last year, per its Form ADV filing.

Benn Eifert, who previously was a co-portfolio manager at relative value fund Mariner Coria, is launching San Francisco-based QVR in mid-August with $75 million, the person said.

Eifert was previously the head of quantitative research at investment firm Overland Advisors.

QVR is not technically a commingled hedge fund, and instead will run several strategy sleeves and build customized separately managed accounts for investors.

A media representative for PAAMCO didn't immediately comment.

QVR has hired:

• Tae Hong as a senior quantitative trader. Hong most recently worked as a data scientist at Uber, and previously worked at the Cutler Group and PEAK6 Investments, per his LinkedIn page.
• Scott Toyama, head of operations,  who most recently worked as a business analyst manager at Wells Fargo Securities and was director of operations at Overland, per his LinkedIn page.

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Fahmi Quadir, a 26-year-old who trained under well-known short seller Marc Cohodes, is setting out to raise $200 million for her own recently-formed hedge fund, Safkhet Capital.

In an interview with Bloomberg’s Simone Foxman, Quadir said she has “seen the tail end of a bull market,” and isn’t phased. She plans to watch for frauds or accounting vulnerabilities that could make a stock tank more than 60%, and bet against it.

Short sellers have had few opportunities for success in the markets recently. Day after day, indices continue to reach record highs, but many fund managers say the good times must eventually come to an end. That’s where Quadir hopes to cash in.

Her rise is remarkable not just because of her age – it is uncommon to start a fund in one's mid-twenties – but also her gender. Men still fill the vast majority of investment positions across Wall Street. Industrywide, only 3% of senior investment roles in hedge funds were held by women in 2012, according to a 2014 article in the trade publication CIO.

After graduating from Harvey Mudd College in 2012, Quadir worked as an equity analyst at Krensavage Asset Management in New York for two years, where she pushed the fund to increase its bet against Valeant Pharmaceuticals.

Valeant would famously go on to lose 90% of it’s market value in two years. This plunge caused Bill Ackman’s Pershing Square Management to lose $2.8 billion, but helped Krensavage finish 2016 up 14%.

“She’s the real deal,” Marc Cohodes told Bloomberg. “I think she’s ruthless, I think she’s cold-blooded, and I think she’s dogged.”

Quadir says Cohodes taught her to exercise patience when it comes to markets. “I prefer to initiate a position so that it won’t run me over if the markets are acting crazy,” she said.

As of August 1, Safkhet Capital had not yet filed paperwork with the SEC, but a website lists the fund’s headquarters in New York. Business Insider has reached to the company for more information, and will update this post if it becomes available.

“There are so few people who can do this, so I hope she does exceptionally well,” Cohodes said.

Rachael Levy contributed to this report.

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• A strategy run by $30 billion Two Sigma, an increasingly popular hedge fund, has made almost no money this year.
• Another of Two Sigma's funds has lost nearly 4%.
• Investors, like public pensions, have poured money into Two Sigma and similar quant firms over the past several years.

A strategy run by $30 billion Two Sigma Investments, one of the hedge fund industry's fastest growing firms, has made almost no money this year, according to a private client letter reviewed by Business Insider.

Two Sigma's Risk Premia strategy returned an estimated 0.06% this year through the end of June, losing almost all the gains it had made in the first quarter over the course of the second, the letter said. 

Figures for July were not available and exactly how much money the fund manages is not clear. A Two Sigma spokesman declined to say.

The strategy is predominantly made up of Two Sigma's Equity Market Neutral Risk Premia strategy (ERPTV) – at 70% – which had its worst quarter in history in the second quarter, according to the letter. Two Sigma's Macro Risk Premia strategy makes up the other 30% of the strategy.

Geoff Duncombe, chief investment officer, and Renaud Verlaque, managing director, said in the letter:

"As in the first quarter, U.S. trading remained challenged by an environment more focused on individual stocks and sectors and less on styles. Unlike in the first quarter, Asia trading was challenged during the period as well. Continued good performance in Europe was not sufficient to offset losses from the U.S. and Asia."

Two Sigma's risk premia strategy isn't the only one struggling. The firm's Compass Cayman fund, which manages about $850 million, is down 3.8% this year through July 28, according to data from HSBC.

Investors have poured money into Two Sigma and other quantitative firms like it over the past several years as traditional managers struggle to make money. Two Sigma's firmwide hedge fund assets rose 22% last year, bringing assets to $30.4 billion at the start of this year, according to the HFI Billion Dollar Club ranking.

Risk premia meanwhile is a hot investment strategy. It's a way to invest that is generally market neutral, multi-asset, and multi-factor, and in all, encompasses about $200 billion, consultant Cliffwater estimated in a recent research paper. 

Public pensions are among the investors buying in. The Pennsylvania Public School Employees' Retirement Board invested $200 million in Two Sigma's Risk Premia Enhanced Fund last year, according to public filings. That fund is managed by Duncombe, Two Sigma's CIO, according to the pension's documents.

And over the past year, Two Sigma raised at least $65.8 million its Risk Premia fund and $666 million in a Cayman Islands-based version of the fund, according to regulatory filings (here and here). 

Two Sigma was founded by billionaires John Overdeck and David Siegel, who previously worked at DE Shaw.

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A legendary oil trader is shutting his main hedge fund after losing about 30% in the first half of the year, according to a Bloomberg report.

Andy Hall is shutting his main hedge fund after the his firm's flagship Astenbeck Master Commodities Fund II lost almost 30 percent in the first half of the year, Bloomberg reported, citing people familiar with the situation.

During the global financial crisis, Hall made $100 million trading oil for Citigroup, and his career previously included stints at BP Plc and Phibro Energy Inc., Bloomberg reported.

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Dallas-based Carlson Capital's Black Diamond Thematic fund has lost 14.2% net this year through July 31, according to a client update reviewed by Business Insider, and bitcoin mania is partly to blame. 

The $1 billion equity long-short fund had been up about 10% after fees around this time last year, Business Insider previously reported. Carlson Capital manages about $9 billion firmwide.

"We are naturally disappointed by the performance of the first half of 2017," the portfolio managers, Richard Maraviglia and Matthew Barkoff, wrote in the fund's second-quarter letter, which was also reviewed by Business Insider. 

In the letter, dated June, Maraviglia and Barkoff said their fund remained short the stock market, notably in the semiconductor space. But the surge in interest in bitcoin and ethereum has pushed shares of semiconductor makers higher. Their chips are used in the computers that solve complex equations to mine for cryptocurrencies.

From the letter (emphasis added):

"Our biggest short theme since the first quarter has been semiconductors where we see high inventories, double ordering, massive capex supply responses and actual pockets of weakening demand in smartphones, autos, and the Chinese optical market. Nonetheless, the sector has turned into something of a bubble characterized best by the surge in GPU stocks, Advanced Micro Devices and Nvidia, driven by a cryptocurrency mania.  Bitcoin and Ethereum have fallen sharply over the past month, and we believe they will fall a lot more. We believe the other side of this incredibly powerful consensus move in technology will be very profitable for us but to date, it has been a significant drag on performance." 

Carlson's flagship fund, Double Black Diamond, LP, is also down for the year, losing -2.1% this year through the end of July. That fund had just over $5 billion in assets as of 2013, founder Clint Carlson told trade publication P&I.

The firm has seven funds in total. Here's Carlson's scorecard for the firm's five other funds, this year through July 31:

• Double Black Diamond, LP: -2.1%
• Black Diamond Partners, LP: -3.7%
• Black Diamond Relative Value Partners, LP:  -3.2%
• Black Diamond Arbitrage Partners, LP:  6.2% 
• Black Diamond Mortgage Opportunity, II:  5.6%
• Black Diamond Energy, LP: -6.8%

SEE ALSO: A hot strategy at Two Sigma, one of the hedge fund industry's fastest-growing funds, has made almost no money this year

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• A strategy run by $30 billion Two Sigma, an increasingly popular hedge fund, has made almost no money this year.
• Another of Two Sigma's funds has lost nearly 4%.
• Investors, like public pensions, have poured money into Two Sigma and similar quant firms over the past several years.

A strategy run by $30 billion Two Sigma Investments, one of the hedge fund industry's fastest growing firms, has made almost no money this year, according to a private client letter reviewed by Business Insider.

Two Sigma's Risk Premia strategy returned an estimated 0.06% this year through the end of June, losing almost all the gains it had made in the first quarter over the course of the second, the letter said. 

Figures for July were not available and exactly how much money the fund manages is not clear. A Two Sigma spokesman declined to say.

The strategy is predominantly made up of Two Sigma's Equity Market Neutral Risk Premia strategy (ERPTV) – at 70% – which had its worst quarter in history in the second quarter, according to the letter. Two Sigma's Macro Risk Premia strategy makes up the other 30% of the strategy.

Geoff Duncombe, chief investment officer, and Renaud Verlaque, managing director, said in the letter:

"As in the first quarter, U.S. trading remained challenged by an environment more focused on individual stocks and sectors and less on styles. Unlike in the first quarter, Asia trading was challenged during the period as well. Continued good performance in Europe was not sufficient to offset losses from the U.S. and Asia."

Two Sigma's risk premia strategy isn't the only one struggling. The firm's Compass Cayman fund, which manages about $850 million, is down 3.8% this year through July 28, according to data from HSBC.

Investors have poured money into Two Sigma and other quantitative firms like it over the past several years as traditional managers struggle to make money. Two Sigma's firmwide hedge fund assets rose 22% last year, bringing assets to $30.4 billion at the start of this year, according to the HFI Billion Dollar Club ranking.

Risk premia meanwhile is a hot investment strategy. It's a way to invest that is generally market neutral, multi-asset, and multi-factor, and in all, encompasses about $200 billion, consultant Cliffwater estimated in a recent research paper. 

Public pensions are among the investors buying in. The Pennsylvania Public School Employees' Retirement Board invested $200 million in Two Sigma's Risk Premia Enhanced Fund last year, according to public filings. That fund is managed by Duncombe, Two Sigma's CIO, according to the pension's documents.

And over the past year, Two Sigma raised at least $65.8 million its Risk Premia fund and $666 million in a Cayman Islands-based version of the fund, according to regulatory filings (here and here). 

Two Sigma was founded by billionaires John Overdeck and David Siegel, who previously worked at DE Shaw.

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• Companies that make the semiconductors for cryptocurrency mining have been a hot-button topic in the investment world, with the fate of their stocks closely tied to the prices of bitcoin and Ethereum
• Hedge fund Carlson Capital has a fund that's lost 14.2% this year due to bad short wagers on Nvidia and Advanced Micro Devices

The meteoric rise of bitcoin is rippling through financial markets, and not everyone is enjoying the ride.

The scorching-hot cryptocurrency has tentacles that stretch into many different parts of the investment landscape, and some traders are finding out the hard way how much influence it can wield.

Just ask the unfortunate souls who have been trying to short chip makers and learning the hard way that their share prices are closely linked to interest in bitcoin. The stocks of companies like Nvidia and Advanced Micro Devices (AMD), which make chips used in the mining of bitcoin — a process that involves heaps of computers solving complex equations — have surged alongside the cryptocurrency, destroying the short positions.

Short sellers betting against those two companies have lost a combined $1.8 billion this year as Nvidia has skyrocketed 57% and AMD has climbed 16%, according to data provided by financial analytics firm S3 Partners.

And the fallout is already beginning.

Dallas-based hedge fund Carlson Capital's $1 billion Black Diamond Thematic fund lost 14.2% this year through July, and blamed bitcoin for the hit, according to a client update reviewed by Business Insider.

The fund chose chipmakers as its top short theme earlier this year, citing "high inventories, double ordering, massive capex supply responses and actual pockets of weakening demand in smartphones, autos, and the Chinese optical market."

Needless to say, that hasn't translated into weak share prices — and now Carlson has an axe to grind with the massively popular cryptocurrencies they see keeping the space afloat to an unsustainable degree.

"The sector has turned into something of a bubble characterized best by the surge in GPU stocks, Advanced Micro Devices and Nvidia, driven by a cryptocurrency mania," portfolio managers Richard Maraviglia and Matthew Barkoff, wrote in the fund's second-quarter investor letter. "We believe the other side of this incredibly powerful consensus move in technology will be very profitable for us but to date, it has been a significant drag on performance."

As for those directly trading bitcoin, the ride has been bumpy, but ultimately quite lucrative. It's up almost 200% in 2017 alone, minting big profits for those traders willing to take a chance on such a speculative entity.

But by no means does the burgeoning cryptocurrency mania start and end with bitcoin. There's also Ethereum, which has been gobbling up market share, surging from 5% of the cryptocurrency market in January to 30% as of June 22. In fact, up until June, Ethereum was on track to surpass bitcoin as the world's largest digital currency.

Regardless of whether bitcoin, Ethereum, or another vehicle strikes your fancy, the process of mining for new blocks requires the same kinds of semiconductors. So as cryptocurrencies go, so do the stock prices of the companies making those chips.

And as Carlson doubles down on its bearish chipmaker stance, other hedge funds are proving happy to chase the runaway performance of cryptocurrencies.

Last Friday, activist investor Elliott Management disclosed a 6% stake in NXP Semiconductors, and said that it's pushing for a higher price in the company's pending $38 billion sale to Qualcomm.

Elliott did not specifically cite the white-hot cryptocurrency industry and its effect on chipmakers in a regulatory filing. After all, semiconductors are also crucial components for smartphones, a familiar stomping ground for the world's biggest company. So any bet on the industry can also be read as a play on Apple.

Ultimately, even if Elliott's investment has nothing to do with cryptocurrencies, there are some market watchers that will interpret it that way.

And that line of thinking represents the new reality facing investors of all types: This is an area of the market that's attracting and churning through billions of dollars, so either adjust to it or risk getting caught off-guard.

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One of the world's largest hedge funds has returned about 4% this year, in part from investing in some of this year's biggest mergers.

Davidson Kempner's International fund, which manages about $8.7 billion, gained 4.08% this year through the end of June, according to a client document reviewed by Business Insider. That's for the fund's Class C Tranches 3 & 4 and Class D Tranches 1 & 2.

That compares to a 3.5% gain in the HFRI Fund Weighted Composite Index over the same period. The fund returned 7.1% last year, compared to a 5.4% gain in the index.

The firm's big strategies include merger arbitrage, which makes up about 30% of the portfolio's long positions and 8.5% of the shorts, and distressed investing, which makes up about 39% of the longs and 0.5% of the shorts.

Here are the fund's top five long positions, which includes several mergers, according to the July-dated note:

• NXP, Qualcomm (merger arbitrage): 6.4% - Qualcomm has bid $110 per share for NXP Semiconductors in a bid valued at $47 billion. However, NXP is currently trading at $113, suggesting investors expect Qualcomm to up its offer. Activist investor Elliott Management has disclosed a 6% stake in NXP.
• Reynolds, BAT (merger arbitrage): 5.1% - British American Tobacco in July completed its acquisition for the remaining 57.8% of Reynolds American it did not already own. 
• Lehman Brothers (distressed): 4.3% - Davidson Kempner has long had positions in distressed Lehman Brothers assets.
• Time Warner/AT&T (merger arbitrage): 2.3% - AT&T announced a deal last year to buy Time Warner in a $85.4 billion deal. 
• Lehman Brothers - LBIE (distressed): 2.3%

Davidson Kempner is the 11th largest American hedge fund firm by assets, one notch ahead of Citadel and two below Baupost Group, according to the HFI Billion Dollar Club ranking from the start of this year. Davidson Kempner managed $27.6 billion firmwide as of July 1, according to the client document. 

Most of the fund's long and short positions are in North America, at 54% and 10% respectively.

A spokesman for the firm declined to comment.

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