Michael Sonnenfeldt, Tiger 21
Scott Mlyn | CNBC
Members of TIGER 21 – a network of high-net-worth entrepreneurial and investor peers – are putting most of their money on the stock market for the first time.
TIGER 21 consists of 1,200 members with combined assets of $140 billion, and individuals must have at least $20 million in liquid assets to be eligible for membership.
Its founder and chairman, Michael Sonnenfeldt, told CNBC on Thursday that while real estate has always been the most popular destination for members’ money, they are now seeing “real bargains” in the stock markets.
This, in part, propelled public stocks to the top spot in TIGER 21 for the first time since the network’s inception.
Sonnenfeldt said members weren’t focused on stock picking for the most part, with much of the equity investment funneled into ETFs (exchange-traded funds) and index trackers, while technology was among the most popular areas. Public equities now constitute 27% of members’ overall asset allocation.
“You have a lot of FAANGs who have come in from much higher prices – they think there’s a lot of upside there, and obviously one of the big areas is energy, not just on the oil side and gas, but much bigger the growing interest in renewables and how to take advantage of solar opportunities, wind opportunities,” Sonnenfeldt told CNBC’s “Street Signs Europe.”
“They know this is perhaps the greatest investing theme in human history, and it gets their attention a lot.”
After a dismal first half due to runaway inflation, monetary policy tightening and recession fears, stock markets have staged a relief rally in recent weeks and received another boost on Wednesday after US inflation cooled considerably in July due to lower oil prices.
Many investors have increased their cash to weather a likely recession. Sonnenfeldt said TIGER 21 members’ cash allocation has historically remained strong at an unusually high 12%.
Indeed, they are mostly “wealth custodians” who have sold businesses and live on about 2% of their net worth, and therefore use cash reserves to shore up about five years of living expenses, he said. Explain.
In the short term, TIGER 21 noted that members are using their wide money to search for deals and inflation hedges.
“But they also want resources to jump on an opportunity and they see them growing in number, so their money actually just went down 12-11%. That might seem like a small amount, but it probably suggests members are pretty long-term bullish,” Sonnenfeldt said.
“They have recession fears – a majority of our members think we’re going into a recession – and still between real estate, private equity and private equity, it’s a 76% allocation, so that’s pretty confident in the long run.”