Core Insights - Hedge funds achieved significant gains in 2025, benefiting from broader stock indexes that ended the year near record highs [1] - The market demonstrated resilience despite volatility caused by uncertainties surrounding U.S. trade policy, as reported by Goldman Sachs [1] Summary by Category Hedge Fund Performance - Hedge funds recorded robust gains in 2025, indicating strong performance in a favorable market environment [1] Market Conditions - Broader stock indexes reached near record highs by the end of 2025, contributing to the positive performance of hedge funds [1] - The market faced volatility due to uncertainties related to U.S. trade policy, yet managed to maintain overall strength [1]

Core Insights - The difficulty of consistently outperforming the market leads to a flood of investors attempting various strategies to achieve this goal [1] - The perspective of financial influencer Humphrey Yang highlights the futility of trying to beat the market and suggests alternative investment strategies [2] Investment Strategies - Average market returns, such as the S&P 500's 12.2% return over the past decade, can significantly grow wealth through consistent investment in index funds and the power of compounding interest [3] - A $10,000 investment can grow to $76,122.55 over 30 years with a conservative 7% return, emphasizing the benefits of long-term investing without additional contributions [4] Psychological Factors - Investors often fall into cognitive biases, such as the belief that they can be exceptions to market performance data, which leads to continued attempts to beat the market [4][5] - The disposition effect trap, overconfidence bias, and emotional influences like joy, fear, and anger significantly impact investment decisions [5][6] - The primary obstacle for investors is often their own psychological barriers, as noted by financial analyst Benjamin Graham [6]

Core Insights - The number of billionaires has increased significantly from 2,000 in 2017 to over 3,000 today, indicating a growing concentration of wealth [1] Group 1: Wealth Protection Strategies - Billionaires employ various legal tactics to protect their wealth, which can also be applicable to individuals with lower net worths [2] - Portfolio diversification is a common strategy to mitigate risk and maximize returns, with suggestions to diversify beyond just financial portfolios into international real estate and investments [3] - Investing internationally helps reduce country-specific risks, as exemplified by investors like Ray Dalio who advocate for global investments and gold holdings to hedge against inflation and political instability [4] Group 2: Trusts and Asset Protection - Trusts, including irrevocable trusts, grantor retained annuity trusts, and dynasty trusts, are utilized by billionaires to safeguard assets from lawsuits and ensure wealth transfer to descendants [5] - The cost of setting up an irrevocable trust is estimated to be around $1,500 or more, while revocable trusts typically start at approximately $1,000, making these strategies accessible to a broader audience [7]

Investment Sentiment - Billionaires show increased optimism for investments in Western Europe and China over the next 12 months, with 40% and 34% of respondents respectively identifying opportunities in these regions, compared to 18% and 11% in 2024 [2] - The Asia Pacific region, excluding China, also saw a rise in interest, with 33% of respondents expressing bullish sentiment, an increase of eight percentage points [2] - North America has seen a significant decline in popularity as an investment destination, with only 63% of respondents favoring the region in 2025, down from 80% in 2024 [2] Risks Impacting Investment Decisions - Tariffs are cited by 66% of respondents as a major factor likely to negatively impact the market environment in the next 12 months, followed closely by concerns over geopolitical conflicts (63%), policy uncertainty (59%), and higher inflation (44%) [3] Investment Preferences - The most favored asset class for billionaire investors over the next 12 months is private equity, with 49% planning to invest in direct private equity investments [5] - Hedge funds and public developed market equities are also popular, with 43% of respondents indicating intentions to invest in these areas [6] - Emerging market public equities (37%) and private equity funds (35%) follow as the next most popular investment choices, while there is a noted intention to withdraw funds from private equity compared to publicly traded stocks [6] Long-term Outlook - Despite changes in short-term investment outlooks, the long-term views for the next five years have remained relatively stable across most regions compared to 2024 [4]

Financial Data and Key Metrics Changes - As of September 30, the company reported Assets Under Management (AUM) of $989.1 million, with Q3 average AUM increasing to $950.7 million from $760.2 million in Q2 and $789 million in Q1, driven by crypto price movements and positive cash flows into ETP products [3][10] - Q3 revenue was $22.5 million, bringing cumulative IFRS revenues for the nine months ended September 30 to $80 million [3][10] - Q3 effective staking and lending income yield was 3.1%, down from 3.6% in Q2, attributed to lower protocol rewards [3][4] - Q3 operating income was $9 million, with a net income after tax of $3.9 million for the quarter and $33.8 million for the nine months [7][10] Business Line Data and Key Metrics Changes - The company staked approximately 58% of its AUM at the end of Q3, with a management fee yield of 1.2%, slightly up from 1.1% in Q2 due to new management fee-bearing products [4][3] - Valour was highlighted as a major driver of performance, achieving net inflows every month year-to-date, with $38.8 million of inflows during Q3 [10][11] - Stillman Digital generated $2.2 million in trading commissions in Q3, continuing to strengthen its position in institutional trading [11] Market Data and Key Metrics Changes - The company noted a bullish outlook for cryptocurrency prices, with Bitcoin holding around $100,000, and increasing institutional and retail participation expected to drive prices higher [7][10] - The company is optimistic about expanding its addressable market in Europe, particularly in France, where institutional participation is beginning to increase [22][45] Company Strategy and Development Direction - The company plans to focus on maximizing AUM and monetization through new product launches and expanding into new capital pools, including debt markets [41][42] - The recent $100 million equity financing will support increased staking and facilitate ETP market making on a larger AUM base [8][9] - The company is actively seeking creative M&A opportunities to strengthen its long-term growth prospects [9][60] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strong balance sheet and ability to capitalize on market opportunities, despite macroeconomic headwinds [10][14] - The incoming CEO, Johan Wattenstrom, emphasized the importance of maintaining a high focus on core strategies while exploring new geographic markets and product offerings [18][41] - Management acknowledged delays in DeFi Alpha opportunities but reiterated the strength and profitability of the underlying business [5][13] Other Important Information - The company repurchased nearly one million shares for $2.44 million during the quarter, indicating a commitment to returning value to shareholders [12] - The venture portfolio includes 12 private investments, with Amina Bank being the largest, representing 83% of the portfolio's fair value [8] Q&A Session Summary Question: Do Alpha trades carry a liquidity or price liability? - Johan Wattenstrom explained that all market risk for core operations is hedged, with some profit retained in tokens, which may fluctuate with market conditions [35][36] Question: What key message do you want to give long-term shareholders? - Johan Wattenstrom stated that the long-term core strategy remains unchanged, focusing on maximizing AUM and expanding into new product offerings [41] Question: Can you provide insight on the investment pipeline? - Johan Wattenstrom mentioned that the company is looking at various opportunities but remains selective, ensuring that any potential acquisition aligns with long-term strategic goals [59][60] Question: What is the outlook for geographic expansion? - Andrew Forson confirmed that the company is working on geographic expansion and has had success in securing new markets, although specific details cannot be disclosed until regulatory approval is obtained [27][28] Question: What is driving the revenue guidance for Q4? - Paul Bozoki clarified that the company expects to achieve $36 million in Q4, contingent on crypto price movements and operational performance [64][65]

Group 1 - David A. Johnson is the founder and principal of Endurance Capital Management, a New Jersey Limited Liability Company, with over 30 years of experience in investing [1] - The investment strategy includes stocks, bonds, options, ETFs, REITs, real estate, closed-end funds, hedge funds, and private credit [1] - David holds a Master of Science (MS) Degree in Finance, a Certificate in Financial Planning, and an MBA from Fordham University [1]