Beware of hidden fund mgt businesses from Big Tech companies

apples

 I will send 10 PLR tokens to any reader of Daily Fintech that knew about Apple`s financial arm – Braeburn Capital.

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Most of us love apples. An apple a day keeps the doctor away.

Braeburn is a kind of apple originating from New Zealand that is firm to the touch with a red/orange vertical streaky appearance on a yellow/green background.

And it is also the name of a wholly-owned subsidiary of Apple. Braeburn Capital was founded in 2005 to better manage the company`s $8+ billion cash pile. By 2012 Braeburn Capital was reported as the world`s largest hedge fund with US$117.2 billion under management. Fast forward to the end of 2018, Braeburn Capital now manages a $244 billion financial portfolio—70% of Apple’s total book assets!

Most of you do know that Apple has a huge cash pile (even though you probably didn’t know about its subsidiary `hedge fund`).

Apple does stand out from the rest of western Big tech companies, even though their AUM is 17% lower than last year.

Cash tech

Isn’t it striking that these top 5 cash-rich companies manage over $600billion AUM! The Moody`s report which is the source of this data, shows that the total cash pile of US non-financial companies was $1.69 trillion (end of 2018)[1].

It makes me question, why such concentrated piles of corporate cash that are managed also in a hedge fund-like fashion, aren’t perceived as potential systemic risk factors. After all, history does remind us that corporate financial arms are risky businesses.

And why not add to these questions, the LIBRA potentiality. Facebook has less than $50billion in its cash pile which of course is a negligible threat in the current monetary conditions. Could LIBRA put Facebook on the top of the league table of corporate cash piles managed by subsidiaries?

And as the US visit to Switzerland for LIBRA, has not changed the US lawmakers doubts about “allowing a large tech company to create a privately controlled, alternative global currency”, there are a few concrete realizations to share about Big tech firms with fund management businesses:

  • Investing in Apple shares, means owning a part of a $1 trillion technology company but also a share of one of the world’s largest investment companies – Braeburn Capital (13yrs old).
  • Investing in Facebook shares, means owning a part of a $0.5 trillion technology company and potentially, a share of the startup LIBRA reserve fund.

The Swiss National Bank has both Apple and Facebook shares in its holdings. SNB has a substantially higher portion of its reserves in equities, compared to other Central Banks.

Top holdings of SNB above 1billion

Screen Shot 2019-09-02 at 10.10.21

Source

SNB holds double the amount of Apple compared to Facebook.

Sources

[1] However, it’s down by 15% from the record $1.99 trillion at the end of 2017.

Efi Pylarinou is the founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer – No.3 influencer in the finance sector by Refinitiv Global Social Media 2019. 

I have a position in PLR tokens. I am not receiving compensation for this post. 

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