Taste for Booze Is Fine Among Hedge Funders
This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.
Boozing it up is hardly unusual on Wall Street, and the number of boozers there no doubt rose appreciably after the market’s recent bloodbath. Apparently, no one boozes it up in a more extravagant fashion than the $2 trillion hedge fund fraternity.
The general manager of Tse Yang, one of the city’s leading Chinese dining spots, Alan Chan, can attest to that with great authority. A little over a week ago, six hedge fund managers had dinner there and decided to end the evening with an after-dinner drink, which in most city restaurants, I’m told, on average runs between $7 and $15.
Tse Yang, off Madison Avenue on 51st Street near the Helmsley Palace, draws a sizable Wall Street and corporate crowd and includes among its after-dinner drinks a $15 Delamain XO Cognac.
Alas, that wasn’t exciting enough for our six managers. Their choice: an 1863 Hardy Perfection, distilled from grapes harvested just before the phylloxera plague wiped out virtually all of Europe’s native vinestocks. A 1.25-ounce shot of this vintage cognac ran each of the managers $800, making for a $4,800 tab for the round.
Actually, it turned out to be more that. Two of the managers liked the cognac so much they came back for an encore a couple of days later, shelling out $1,600 for two additional shots. That’s a grand total of $6,400 for the two rounds.
If you’re game to try this cognac, don’t dilly-dally. Tse Yang only had three bottles. Two of them have already been consumed, and only about eight or nine shots are left in the final bottle. Because they’re so rare — only 300 bottles were produced — Mr. Chan is uncertain whether they can be reordered. What’s more, I checked five of the city’s top restaurants, such as Le Bernardin, the Four Seasons, Daniel, Jean Georges, and Per Se, and none of them offer this cognac.
The quaff provides a tasty lesson in restaurant economics. The bottle of the 1863 vintage, which contains 14 shots, ran Tse Yang a bit more than $4,000. At $800 a shot, the restaurant realizes total sales on the bottle, before taxes, of $11,200. That’s a grand profit of $7,200 or 180%, a profit of $515 for each drink served.
Aside from its $800-a-shot cognac, Tse Yang, whose average dinner check runs $70, offers a number of other pricey after-dinner drinks, including a $200 shot of Hennessy “Richard” Cognac, a $150 Rémy Martin Louis XIII Cognac, a $500 glass of 1963 Dow Port, and a $100 1987 Glenmorangie single-malt Scotch.
If you’re about to suggest that such sales, given the lofty prices, must happen only once in a blue moon, don’t. A Tse Yang captain, Bredma Jon, tells me that these sales, especially to CEOs and Wall Street types, occur more often than you might imagine.
“It’s an ego trip,” he said. “Thank goodness for us it’s all charged to expense accounts.”
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DOLLAR’S DUDS
In theory, when the greenback is weak vis-à-vis other currencies, as is the case now, American companies with substantial overseas exposure tend to benefit because they collect more dollars on every foreign sale.
That’s good for big American corporate players with hefty overseas operations, but it’s by no means a guaranteed boon for their shares, as indicated in a recent study by a Morgan Stanley technical strategist, Mark Newton, in which he applied technical analysis to companies forced to cope with the plummeting greenback. The study unearthed a number of technical stock weaklings.
As Mr. Newton sees it, one of the biggest technical market developments in recent trading was the dollar’s drop to new yearly lows versus the British pound and the euro. In fact, he believes that with equities showing greater signs of consolidation over the last two months and fewer stocks hitting new highs, the drop in the dollar could provide a tailwind to the stocks of companies with high foreign sales exposure.
In an intriguing investment exercise, the strategist screened a list of stocks to identify which companies with high foreign sales might actually underperform the market — rather than, as expected, outperform it — based on their lack of technical attractiveness and upward progress coincidental with the dollar’s decline. Making the list were a number of America’s best-known companies, some of whose shares were said to be extended technically, while others merely showed poor relative strength to their peers.
The stocks, which Mr. Newton thinks might require initial consolidation and be vulnerable to weakness in the upcoming months, were also viewed as a potential short portfolio (a bet the stocks will decline): Nike Inc., Goodyear Tire & Rubber Co., Wm. Wrigley Jr. Co., Noble Drilling Services Inc., Qualcomm Inc., Eastman Kodak, and Dow Chemical Co.
By the same token, Mr. Newton has compiled a list of what he regards as technically attractive stocks and his top picks among companies with the highest foreign sales exposure. They are Johnson Controls Inc., Coca-Cola Co., Molson Coors Brewing Co., Baxter International Inc., Terex Corp., Avery Dennison Corp., Fluor Corp., Freeport McMoRan Copper & Gold Inc., and NVIDIA Corp.
Meanwhile, in another analysis of the falling dollar, a veteran investment adviser, Richard Moroney, thinks the weakness in the greenback vs. the Canadian dollar — one of the world’s strongest currencies over the past three years — offers American investors a solid opportunity to make money north of the border by capitalizing on Canadian stocks.
His four favorite Canadian stocks — each rated a potential 15% to 20% market gainer over the next 12 months — are Canadian National Railway Co., Manulife Financial, Sun Life Financial, and Teck Cominco Ltd.
