Hedge fund managers (thanks to steep performance fees) tend to be known for zooming around in Ferraris and buying multimillion-dollar paintings. Not for tilling the soil on farms.
But in today’s economy, where the dollar is considered fragile at its best, and worthless at its worst – hedge funders are taking to buying up farmland and doing it the good old fashioned American way. They’re planting crops.
A big time hedge funder told The Observer about his fund’s investments, which he said have made him the fifteenth largest farmer in the country. Hedge fund hotshots are farm-happy, and if they can swing it, they’ll start buying up land and beginning to profit an industry that’s currently hugely dominated by old-fashioned family-run businesses, not high-risk, high-return funds that most people outside of the financial sector don’t really understand.
So why now? Well, according to the Observer, hedge funders “envision a doomsday scenario catalyzed by a weak dollar, higher-than-you-think inflation and an uncertain political climate here and abroad.” And we thought the May 21st believers were the only ones worried about such things.
In the current climate, hedge funders believe money does grow on trees. While the dollar is weak and the population surges, food prices are up globally, which means farmland prices are up. So it’s actually a good investment.
Even off Wall Street (or Greenwich or San Francisco or whatever), the hedge funder interviewed for the article displays that typical confident market neutral hedge fund mentality: “If you farm it like we do, you can generate a yield. We think the farmland will be worth 5 to 10 percent more every year, and on top of that, you get the commodities yield.”
But unlike the financial services industry, you can’t just create what you’re selling out of thin air (oh, just kidding) when you’re growing crops. Farmland, especially good farmland, is, believe it or not, in limited supply.
This, after all, is not Farmville. It’s the real thing.
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