(Bloomberg) — Stefan Qin was just 19 when he claimed to have the secret to cryptocurrency trading.Buoyed with youthful confidence, Qin, a self-proclaimed math prodigy from Australia, dropped out of college in 2016 to start a hedge fund in New York he called Virgil Capital. He told potential clients he had developed an algorithm called Tenjin to monitor cryptocurrency exchanges around the world to seize on price fluctuations. A little more than a year after it started, he bragged the fund had returned 500%, a claim that produced a flurry of new money from investors.He became so flush with cash, Qin signed a lease in September 2019 for a $23,000-a-month apartment in 50 West, a 64-story luxury condo building in the financial district with expansive views of lower Manhattan as well as a pool, sauna, steam room, hot tub and golf simulator.In reality, federal prosecutors said, the operation was a lie, essentially a Ponzi scheme that stole about $90 million from more than 100 investors to help pay for Qin’s lavish lifestyle and personal investments in such high-risk bets as initial coin offerings. At one point, facing client demands for their money, he variously blamed “poor cash flow management” and “loan sharks in China” for his troubles. Last week, Qin, now 24 and expressing remorse, pleaded guilty in federal court in Manhattan to a single count of securities fraud.“I knew that what I was doing was wrong and illegal,” he told U.S. District Judge Valerie E. Caproni, who could sentence him to more than 15 years in prison. “I deeply regret my actions and will spend the rest of my life atoning for what I did. I am profoundly sorry for the harm my selfish behavior has caused to my investors who trusted in me, my employees and my family.”Eager InvestorsThe case echoes similar cryptocurrency frauds, such as that of BitConnect, promising people double-and triple-digit returns and costing investors billions. Ponzi schemes like that show how investors eager to cash in on a hot market can easily be led astray by promises of large returns. Canadian exchange QuadrigaCX collapsed in 2019 as a result of fraud, causing at least $125 million in losses for 76,000 investors.While regulatory oversight of the cryptocurrency industry is tightening, the sector is littered with inexperienced participants. A number of the 800 or so crypto funds worldwide are run by people with no knowledge of Wall Street or finance, including some college students and recent graduates who launched funds a few years ago.Qin’s path started in college, too. He had been a math whiz who planned on becoming a physicist, he told a website, DigFin, in a profile published in December, just a week before regulators closed in on him. He described himself on his LinkedIn page as a “quant with a deep interest and understanding in blockchain technology.”In 2016, he won acceptance into a program for high-potential entrepreneurs at the University of New South Wales in Sydney with a proposal to use blockchain technology to speed up foreign exchange transactions. He also attended the Minerva Schools, a mostly online college based in San Francisco, from August 2016 through December 2017, the school confirmed.Crypto BugHe got the crypto bug after an internship with a firm in China, he told DigFin. His task had been to build a platform between two venues, one in China and the other in the U.S., to allow the firm to arbitrage cryptocurrencies.Convinced he had happened upon a business, Qin moved to New York to found Virgil Capital. His strategy, he told investors, would be to exploit the tendency of cryptocurrencies to trade at different prices at various exchanges. He would be “market-neutral,” meaning that the firm’s funds wouldn’t be exposed to price movements.And unlike other hedge funds, he told DigFin, Virgil wouldn’t charge management fees, taking only fees based on the firm’s performance. “We never try to make easy money,” Qin said.By his telling, Virgil got off to a fast start, claiming 500% returns in 2017, which brought in more investors eager to participate. A marketing brochure boasted of 10% monthly returns — or 2,811% over a three-year period ending in August 2019, legal filings show.His assets got an extra jolt after the Wall Street Journal profiled him in a February 2018 story that touted his skill at arbitraging cryptocurrency. Virgil “experienced substantial growth as new investors flocked to the fund,” prosecutors said.Missing AssetsThe first cracks appeared last summer. Some investors were becoming “increasingly upset” about missing assets and incomplete transfers, the former head of investor relations, Melissa Fox Murphy, said in a court declaration. (She left the firm in December.) The complaints grew.“It is now MID DECEMBER and my MILLION DOLLARS IS NOWHERE TO BE SEEN,” wrote one investor, whose name was blacked out in court documents. “It’s a disgrace the way you guys are treating one of your earliest and largest investors.”Around the same time, nine investors with $3.5 million in funds asked for redemptions from the firm’s flagship Virgil Sigma Fund LP, according to prosecutors. But there was no money to transfer. Qin had drained the Sigma Fund of its assets. The fund’s balances were fabricated.Instead of trading at 39 exchanges around the world, as he had claimed, Qin spent investor money on personal expenses and to invest in other undisclosed high-risk investments, including initial coin offerings, prosecutors said.So Qin tried to stall. He convinced investors instead to transfer their interests into his VQR Multistrategy Fund, another cryptocurrency fund he started in February 2020 that used a variety of trading strategies — and still had assets.‘Loan Sharks’He also sought to withdraw $1.7 million from the VQR fund, but that aroused suspicions from the head trader, Antonio Hallak. In a phone call Hallak recorded in December, Qin said he needed the money to repay “loan sharks in China” that he had borrowed from to start his business, according to court filings in a lawsuit filed by the Securities and Exchange Commission. He said the loan sharks “might do anything to collect on the debt” and that he had a “liquidity issue” that prevented him from repaying them.“I just had such poor cash flow management to be honest with you,” Qin told Hallak. “I don’t have money right now dude. It’s so sad.”When the trader balked at the withdrawal, Qin attempted to take over the reins of VQR’s accounts. But by now the SEC was involved. It got cryptocurrency exchanges to put a hold on VQR’s remaining assets and, a week later, filed suit.Asset RecoveryBy the end, Qin had drained virtually all of the money that was in the Sigma Fund. A court-appointed receiver who is overseeing the fund is looking to recover assets for investors, said Nicholas Biase, a spokesman for Manhattan U.S. Attorney Audrey Strauss. About $24 million in assets in the VQR fund was frozen and should be available to disperse, he said.“Stefan He Qin drained almost all of the assets from the $90 million cryptocurrency fund he owned, stealing investors’ money, spending it on indulgences and speculative personal investments, and lying to investors about the performance of the fund and what he had done with their money,” Strauss said in a statement.In South Korea when he learned of the probe, Qin agreed to fly back to the U.S., prosecutors said. He surrendered to authorities on Feb. 4, pleaded guilty the same day before Caproni, and was freed on a $50,000 bond pending his sentencing, scheduled for May 20. While the maximum statutory penalty calls for 20 years in prison, as part of a plea deal, prosecutors agreed that he should get 151 to 188 months behind bars under federal sentencing guidelines and a fine of up to $350,000.That fate is a far cry from the career his parents had envisioned for him — a physicist, he had told DigFin. “They weren’t too happy when I told them I had quit uni to do this crypto thing. Who knows, maybe someday I’ll complete my degree. But what I really want to do is trade crypto.”The case is U.S. v Qin, 21-cr-75, U.S. District Court, Southern District of New York (Manhattan)(Updates with comment from prosecutor and case caption)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
The truth about Warren Buffett’s investment track record : Morning Brief – Yahoo Canada Finance
Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe
Monday, March 1, 2021
Warren Buffett has had years of underperformance and a lot of bad stock picks
For more than half a century, he’s been responsible for the performance of Berkshire and its legendary stock portfolio, which have long track records of market-beating returns.
But here’s what every serious investor needs to know about Buffett: despite above-average performance, there have been many years Berkshire underperformed the market and there have been many individual stock trades that have lost mountains of money.
Long-term outperformance comes with many years of underperformance
Warren Buffett’s annual letter to Berkshire shareholders was released on Saturday, and as usual the first page compares the annual performance of Berkshire against that of the S&P 500 (^GSPC) since 1965.*
Berkshire shares have seen an average annual return of 20.0% compared to the S&P 500’s 10.2% gain during that period.
But as you can see from the individual data points, there are many years when the S&P outperformed Berkshire.
A good long-term investment strategy will not produce desired returns year in and year out. Rather, it’ll make progress toward some long-term goal over time as fat years more than offset lean years.
“Whatever today’s figures, Charlie Munger, my long-time partner, and I firmly believe that, over time, Berkshire’s capital gains from its investment holdings will be substantial,” Buffett wrote on Saturday.
Furthermore, it’s worth noting that neither Berkshire nor the S&P saw many years where they delivered an average return. Most years either saw massive gains or very disappointing performance. Average almost never happens in markets.
Great stock pickers pick a lot of losers
And just because Buffett may be one of the greatest stock pickers in history doesn’t mean all of his stock picks have been winners over time.
Just a quick glance at Berkshire’s current top 15 stock investments reveals plenty of positions that are held below cost (i.e. they’ve lost money).
To his credit, few people are more vocal about Buffett’s mistakes than Buffett himself.
In 2020, Berkshire booked a $9.8 billion write-down on those assets. One massive “mistake”he discussed in his annual letter was Precision Castparts (PCC), a once publicly-traded company that Berkshire acquired outright in 2016 in a $37 billion deal.
“I paid too much for the company,” Buffett wrote. “I believe I was right in concluding that PCC would, over time, earn good returns on the net tangible assets deployed in its operations. I was wrong, however, in judging the average amount of future earnings and, consequently, wrong in my calculation of the proper price to pay for the business.”
“PCC is far from my first error of that sort,” he added. “But it’s a big one.”
It’s not hard to find times Buffett lost money on a trade or missed out on a big opportunity. Just a year ago, Berkshire dumped airline stocks near their lows just before they roared back along with the other reopening trades.
But a successful investor shouldn’t be judged by his or her mistakes. Rather, they should be judged by the degree to which they are able to achieve their long-term goals.
This goes for all investors who will repeatedly buy too late, sell too early, and miss out on big opportunities that become obvious in hindsight.
So if you’re making a lot of mistakes but have a sound strategy and the discipline to stick to it during periods of underperformance, then maybe you too can be as imperfectly successful as Warren Buffett.
*Since 2019, Buffett has presented Berkshire’s performance as measured by market value. Prior to that, it was book value. Buffett made the change because he felt market value was going to better reflect the performance of the company. For our purposes, all you need to know is that both Berkshire’s book value and market value have smoked the S&P 500 over that half-century.
What to know today
9:45 a.m. ET: Markit US Manufacturing PMI, February final (58.5 expected, 58.5 in prior print)
10:00 a.m. ET: Construction spending month-over-month, January, (0.8% expected, 1.0% in December)
10:00 a.m. ET: ISM Manufacturing index, February (58.6 expected, 58.7 in January)
4:05 p.m. ET: Zoom Video Communications (ZM) is expected to report adjusted earnings of 79 cents per share on revenue of $811.04 million
4:05 p.m. ET: Novavax (NVAX) is expected to report an adjusted loss of $2.24 per share on revenue of $202.60 million
4:05 p.m. ET: Nio (NIO) is expected to report an adjusted loss of $3.77 per share on revenue of $16.38 billion
After market close: Clover Health Investments (CLOV) is expected to report an adjusted loss of 86 cents per share on revenue of $167.00 million
European stocks climb higher as bond markets stabilize [Yahoo Finance UK]
Yahoo Finance Highlights
Anthem Entertainment Attracts New Equity Investment | FYIMusicNews – FYI Music News
The Ontario Teachers’ Pension Plan Board has increased its equity investment in Canadian-based rights company Anthem Entertainment “in order to facilitate the business’s strategy for continued growth.” In addition, the company has announced completion of a new revolving credit facility of $400 million plus a $150 million incremental facility that allows it to expand the maximum amount allowed on its line of credit.
Anthem CEO Helen Murphy stated in a media release that “I am grateful to Ontario Teachers’ for their confidence in our strategy and for their continued support.”
Continuing, she added: “Over the past few years, we have successfully expanded through a strong combination of organic growth and acquisitions, enabling us to further diversify our service offerings and repertoire base, making us more attractive to artists, songwriters, composers, and content producers.
Again, from the announcement: “We believe that with this additional equity investment and our new credit facility we are well positioned to make the most of the opportunities across our music publishing, recorded music, production music, and film and television services businesses. We are also thankful to the banks in our syndicate, many of whom have been long time supporters of Anthem Entertainment throughout our 17-year history.”
In September 2019, Anthem acquired 50% of Nashville based Wrensong led by music row leader Ree Guyer. The deal also included a co-venture with Wrensong Publishing Corp. that includes a catalogue of over twenty #1 country hits, including Old Dominion’s Make It Sweet, No Such Thing As A Broken Heart, Hotel Key, #1 hits by Dierks Bentley, The Band Perry, Blake Shelton, Carrie Underwood, and Jason Aldean.
In October of the same year, Anthem has acquired a catalogue of songs from Boardwalk Music Group, which were co-written by songwriter Eric Frederic (Ricky Reed). The catalogue includes some of the world’s biggest hits by artists such as Halsey, Leon Bridges, Lizzo, and Meghan Trainor. The LA-based publishing and artist development company was founded by songwriter and creative executive Evan “Kidd” Bogart, the son of Neil Bogart of Casablanca Records fame.
Then in November 2019, Anthem acquired a catalogue of songs from songwriter and producer Doc McKinney. Key assets included The Weeknd’s Wicked Games, Starboy, Die For You, and Pray For Me.
In February 2020, Gord Bamford extended his worldwide publishing deal with the Anthem Entertainment. Anthem also acquired Bamford’s masters from Cache Entertainment including all albums from 2001’s God’s Green Earth, to Diamonds In A Whisky Glass (due out later this year). Bamford is the two-time winner of the CMA Global Country Artist Award, with 25 Top 10 singles in Canada including the No. 1 hits When Your Lips Are So Close and Dive Bar.
Founded in 2004 as Ole, the Ontario Teachers Pension Fund has been a key investor in the Canadian rights management company. It expanded its position in acquiring company co-founder Robert Ott’s position in the company in 2018 and now holds a controlling interest in the privately held firm.
In 2015, the company acquired all the rights to the Anthem Entertainment brand, including Anthem Film & Television Productions, and the recorded music catalogue highlighted by recordings by Rush as well as Max Webster, Big Wreck, Ian Thornley, Steven Page, The Tea Party, and Max Webster. The company rebranded itself as Anthem Entertainment in 2019
China's Investment in Australia Hits New Low, ANU Data Suggests – BNN
China’s investment in Australia plunged to a record low of A$1 billion ($775 million) last year, according to data compiled by The Australian National University, as relations between the two countries soured amid the pandemic.
Investment by Chinese companies Down Under fell 61% in 2020, following a 47% fall in the prior year. This was the lowest level of activity in the six-year history of the data that’s part of the ANU’s Chinese Investment in Australia Database. The number of projects recorded was only 20, well down from a peak of 111 in 2016 when investment amounted to A$16.5 billion.
Relations between the two nations deteriorated last year after Prime Minister Scott Morrison led calls for an independent probe into the origins of the coronavirus and saw China hit products from barley to wine to lobsters with tariffs, anti-dumping probes or delays at port. Separately, Australia tightened investment-screening arrangements with foreign powers.
The dip “reflects the effects of Covid but also more scrutiny of foreign investment by the Australian government, particularly that from China,” said Shiro Armstrong, Director of the East Asian Bureau of Economic Research at the ANU in a release Monday.
Laws passed in December give Australia’s foreign minister the power to stop signed agreements between overseas governments and Australia’s eight states and territories, and with local authorities and universities.
Armstrong said that 86% of the investment in 2020 was from Chinese companies already established in Australia and was limited to the real estate, mining and manufacturing sectors.
“In 2020, the year of Covid-19, foreign direct investment fell globally by 42% according to the United Nations,” said Armstrong, noting the UN data are measured differently to the CHIIA dataset. The UN data recorded total foreign direct investment to Australia fell 46% last year.
©2021 Bloomberg L.P.
Nine areas of Ontario move into new tiers of coronavirus framework today; two go into lockdown – CP24 Toronto's Breaking News
Coronavirus: What's happening in Canada and around the world on Monday – CBC.ca
Tiger Woods thanks golfers for red shirt tribute – CP24 Toronto's Breaking News
Silver investment demand jumped 12% in 2019
Iran anticipates renewed protests amid social media shutdown
Galaxy M31 July 2020 security update brings Glance, a content-driven lockscreen wallpaper service
Sports14 hours ago
Auston Matthews, Frederik Andersen return to Toronto Maple Leafs practice on Sunday – TSN
Health14 hours ago
COVID-19 in Sask.: 141 new cases, no deaths reported Sunday – CBC.ca
Science11 hours ago
Perseverance Seen From Space by ESA’s ExoMars Orbiter – Universe Today
News19 hours ago
Health Canada received more Johnson & Johnson data on same day as U.S. approval – CBC.ca
Art21 hours ago
Saskatoon-area painter, sculptor selected to make official Disney artwork — from Moana to Mulan – CBC.ca
Tech18 hours ago
Pokémon Legends Could Be The Start Of A New Game Series – Screen Rant
News20 hours ago
The latest news on COVID-19 developments in Canada – Richmond News
Tech14 hours ago
Joe Rogan Podcast Guest Struggles for 8 Minutes to Send Picture from Samsung to iPhone [VIDEO] – iPhone in Canada