Outlook for Alternative Investments

Ed Papier:

Thanks for having me, Elana.

EMS:

Absolutely, ed. So to kick off the conversation, tell us a little about the firm and how you got to where you are today.

EP:

Sure. After managing the New York office of a Boston-based registered investment advisor for a dozen years, I formed Amadeus in 2014. Many years ago, I was considering how best to add value to the traditional advisory firm offerings of stocks and bonds, and decided the best way to accomplish that was by focusing on alternatives. And in case you're wondering, the firm is named a tribute to Mozart since I'm an amateur classical pianist.

EMS:

Very interesting. Ed, love the inspiration for how you named your firm. So moving on, given your focus on investing in alternatives, love to hear your overall outlook for the space

EP:

With the stock market still near historic highs and the bond market poised for further declines, should interest rates continue to rise? The outlook for alternatives continues to be very positive. Their lack of correlation to traditional markets have made them outperformers for family offices who were the early adapters along with institutional investors. Fortunately, we're seeing more paths for high net worth investors to participate in alternatives.

EMS:

And Ed, where do you see some of the greatest specific opportunities and why?

EP:

There are many asset classes we would suggest your listeners consider. These would include private credit, private equity, and real estate on a primary and secondary basis, direct and co-investments, venture investing, direct secondaries, leasing funds like helicopters and aircraft, multi alternative GP or general partner interests, litigation, finance, energy, and other special situations. All of these should be considered as a function of your listener's. Liquidity, tax and income objectives. Certain categories are more illiquid than others while certain target generating income rather than capital gains.

EMS:

Ed, on the other hand, what are some of the greatest challenges you face in your space and why?

EP:

The greatest challenge is always performing due diligence on a smaller fund. Fortunately, there are many services and intermediaries that can help with this objective.

EMS:

Ed Crypto has become a very big investment topic over the last few years and wanted to see, does Amadeus recommend investing in any of the crypto markets like Bitcoin, for example?

EP:

Crypto is a very interesting area. The creation of cryptocurrency markets stemmed from a combination of technological innovation, dissatisfaction with traditional financial systems and the aim to create a decentralized currency. Cryptocurrencies operate on decentralized networks using a technology called blockchain, which allows transactions without the need for intermediaries. This decentralization aims to provide more control to users and reduce the risk of what many believe to be coming down the road, namely the potential manipulation by government entities of citizens' ability to transact through the use of central bank digital currencies. Over time, the crypto market expanded beyond Bitcoin, the first cryptocurrency with thousands of other cryptocurrencies and tokens being developed each with its unique features and purposes, the market's growth attracted investors and speculators leading to a surge in popularity and the creation of a complex and volatile market. It's this volatility that makes investing in cryptocurrencies unattractive to some investors.

At Amadeus, we consider investing in the infrastructure behind the cryptocurrencies. The so-called crypto mining. A Bitcoin miner, for example, is essentially a data server whose sole job is to maintain the transactions on the Bitcoin network and blockchain. The profits associated with mining can be thought of as analogous to the fees earned by credit card companies that take a small spread on every transaction. The reward for processing transactions are a small number of Bitcoins, which are released to the minor every 10 minutes. These bitcoins can be converted to cash and distributed to investors. So in this manner, we think of the investment as a debt like instrument rather than a pseudo currency.

EMS:

Ed, we've covered a lot of ground today and wanted to see what your future plans are for Amadeus.

EP:

Our initiatives now include reaching out to the m and a community. Since sellers of businesses are frequently looking for good income producing investments, we also plan to add a 10 31 exchange service.

EMS:

Ed, I wanted to thank you so much for sharing your perspective with our listeners.

EP:

Well, thanks again for having me, Elana,

EMS:

And thank you for listening to the EisnerAmper podcast series. Visit eisneramper.com for more information on this and a host of other topics. And join us for our next EiserAmper podcast when we get down to business.

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