Nationality American Name Daniel Arbess | Organization Pridelands Investments Education Harvard Law School | |
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Born January 23, 1961 (age 63) ( 1961-01-23 ) Alma mater Osgoode Hall Law School
Harvard Law School Title Founder, Chief Investment Officer | ||
Virtualization Means Economic Transformation | Daniel J Arbess Interview
Daniel J. Arbess is an investor and policy analyst recognized for his prescient calls on some of the largest developments of the past 30 years, including the economic transition toward markets from communism in Eastern Europe & China; the U.S. housing/financial crisis and monetary policy-led market recovery; and the accelerating “virtualization” of our physical world, as part of the economic transition from manufacturing/services toward technology-led growth.
Contents
Arbess has been professionally involved in global policy analysis, macro themes, structured finance and event-driven investment opportunities since beginning his professional career at White & Case in 1987. As the youngest partner in that law firm's history, and eventually Head of its Global Privatization Group, he advised European and other emerging market governments on economic transition, industrial reorganization and negotiated privatization sales. He became an investment principal in 1995, launching what became the $3 Billion Xerion Hedge Funds with the backing of Paloma Partners in 2003, merging Xerion into Perella Weinberg Partners and becoming a partner of that firm in 2007. Among other of Xerion's notable investments was in the distressed senior secured bank debt of Chrysler, which was the subject of a high profile negotiation with the White House during the early weeks of the Obama Administration, and ultimately an appeal to the U.S. Supreme Court.
The Xerion Funds targeted transformative corporate events (such as financial restructuring and M & A), pivotal business trends, and changes in government policy affecting the macro environment, generating 12-year net returns of +240% (12.5% annualized) from 2003 through November 2014, including +112% (21% annualized) without a single down year through the four years of financial crisis and early recovery (’07-’10). Arbess' cautious technical and fundamental outlook for the economy and public market opportunities led him to return Xerion investor capital in late 2014, after having materially recovered losses from Xerion's one down year (2011), to focus on private investments.
Arbess is a U.S. citizen, born in Montreal, Quebec, received a Bachelor of Laws from Osgoode Hall Law School in Toronto, and a Master of Laws from the Harvard Law School. He is a lifetime member of the Council on Foreign Relations, a member of the Atlantic Council and a frequent writer and media commentator on macro-economics, investing and global markets. He is also a co-Founder of No Labels, a U.S. political organization promoting collaboration across the political spectrum.
Career
Arbess was born on January 23, 1961 in Montreal, Canada and is a United States citizen. He received an LLB from Osgoode Hall Law School in Toronto, and an LLM from the Harvard Law School. He was an affiliate at the John F. Kennedy School of Government, developing an interest in East-West political and economic relations and the economic transition of the former-communist world. During his law school years, he published on legal, political and moral aspects of nuclear weapons, arms control, and non-provocative defense strategies. Arbess was present in the Parliament of the Supreme Soviet at the Kremlin in Fenruary 1987 with a group of prominent American arms control professionals and cultural figures, sitting near Andrei Sakharov, the Soviet nuclear physicist and dissident who had been released from exile weeks earlier, when Mikhail Gorbachev unveiled Perestroika and Glasnost, the historic economic and political reforms that heralded the end of the Soviet Communist system.
Arbess joined the international law firm White & Case in 1987, spent time in the firm's Stockholm office developing joint ventures in the Soviet Union in 1988-89, and was among the first Western lawyers on the ground in Eastern Europe after the fall of the Berlin Wall, moving to Prague almost immediately following the 1989 Velvet Revolution to advise the Czechoslovak government on its economic transition, principally involving privatization policy and transactions. In 1992, at 31, he became the youngest partner in the history of White & Case and Head of its Global Privatization Group, and was known as one of the leading practitioners of emerging markets restructuring and privatization during the early 1990s. Among his advisory transactions included the restructuring of the Czechoslovak auto industry and sale of Skoda Auto to Volkswagen AG; and the restructuring and sale of the Czech downstream petrochemicals industry to a consortium of European international oil majors.
Arbess has been a principal investor since 1995, first pursuing restructuring-oriented private transactions in Europe. From 1998 through 2002, he co-founded, helped built the investment team, structure and raise $1.6 Billion in funds, and directly managed distressed corporate credit investments, for a New York-based structured credit asset management firm. He launched Xerion Capital Partners in 2003 with the backing of S. Donald Sussman and his Paloma Partners. Arbess merged Xerion with Perella Weinberg Partners and became a partner of that firm in 2007, returning investor capital in late 2014, reflecting his view of public market risks relative to opportunities for the coming period, amicably separating from Perella Weinberg Partners to pursue private interests and investment opportunities through his private investment firm, Pridelands Investments.
Arbess’ investment “edge” has been in recognizing as-yet-unpriced economic, policy, and industrial developments, and using valuation judgment, relationship networks and negotiation skills to capture them in multi-year investments, expressed with a broad range of corporate securities and macro instruments. Xerion’s hallmark thematic successes included capturing China’s economic transition to manufacturing, urbanization and ultimately toward consumption (which his Shake Hands With China strategy expressed for a decade with distressed U.S. credit and long/short global equities); the U.S. housing bubble and financial crisis (short mortgage CDOs and financial institutions’ equity); the post-crisis recovery and monetary policy-led reflation of U.S. credit and stock markets (long credit, equities and gold from 4Q ’08); the U.S. energy and downstream manufacturing renaissance (stressed and bankruptcy credit and equities); the rise of wireless media and online retailing (long/short equities); the decade-long restructuring and evolution of the U.S. airline industry (bankruptcy credit, equities); and the advent of Abenomics in Japan (JPY & equities). Arbess' most recent focus has been making private investments in the accelerating penetration of automated analysis and management of common physical processes.