Notable & Quotable: Family offices and non-correlated investments; direct deals; Redstone saga

Photo by Ryan McVay/Photodisc / Getty Images
Photo by Ryan McVay/Photodisc / Getty Images

Family offices and a new addition to non-correlated investments...

Investors have always been interested in passion investing. Rare classics cars, rare works of art, and rare musical instruments like guitars played by Jimi Hendrix and Eric Clapton are among some of the favourite collecting themes.

But here’s an interesting new edition to the theme - music catalogs. According to a comment article in Forbes, music catalogs are increasingly been bought by family offices and the very wealthy as a long-term investment. Quoting Rick Flynn, managing partner of FFP Business Management & Family Office, the article said music catalogs are “seen as a non-correlated investment” and that adds to their popularity…

 

...because direct, direct, direct is the name of the game...

It’s hardly surprising that direct investment, whether in companies, or non-correlated investments like music catalogs continues to grow in popularity. This week, the head of the biggest wealth manager in the world in terms of assets under management UBS’s Sergio Ermotti said, with interest rates being negative in Switzerland, the bank may pass on the cost of holding cash to its very wealthy clients and raise charges on borrowings. And with most of the world’s top stock market indices showing very little improvement since the beginning of the year it’s hardly surprising that family offices are looking at investing in things like music catalogs.

 

...and they increasingly want to cut out private equity firms

More evidence that family offices are skipping private equity firms and doing direct deals themselves was provided by a recent article in the Chicago Tribune. Wealthy families, said the piece, are increasingly “embracing their inner Warren Buffett” and going direct. But private equity groups are responding by cutting family offices in on deals through co-investing agreements and charging them less for the privilege.

 

Is there no end to the Redstone sage? Apparently not

Sumner Redstone, one of America’s biggest media moguls through his ownership of National Amusements, CBS Corporation and Viacom, is anything but a boring. A long running saga involving his fortune and control of his businesses took another turn this week. Redstone’s ex-lover Manuela Herzer is now filed a lawsuit against his daughter. But the current saga might just be the warm up for a much bigger battle for control of his assets when Sumner, who is just about to turn 93, eventually dies.