The Weekend Edition

2015 was not a very good year for hedge fund managers, but before the sympathy kicks in, remember that those who made Institutional Investor’s Hedge Fund Rich List had a median income of USD 275 mn during the year. “Nearly half of hedge funds lost money, according to Institutional Investor, and some familiar names on the Rich Lists of years past were missing, including John Paulson of Paulson and Co., Leon Cooperman of Omega Advisors, and Daniel Loeb at Third Point,” CNBC reports. Those who made this year’s rich list had an average income of USD 517.6 mn, a “slight uptick” from last year, but down 40% from 2013. “To be considered for inclusion on the list, managers had to make [USD 135 mn], the lowest since 2011.” According the list, compiled by Institutional Investor’s Alpha, Renaissance Capital’s James Simons and Citadel’s Ken Griffin topped the list, racking USD 1.7 bn each. The other three making the top five: Bridgewater’s Ray Dalio, Appaloosa’s David Tepper, and Millennium’s Israel Englander also made over USD 1 bn each. Most significantly, this year shows the strong grip computer strategies are starting to have over the industry: half of the 25 highest earners on the list used computer strategies, including six of the top eight. David Siegel, co-chairman of Two Sigma, who shared seventh place on the list with his other co-chairman John Overdeck (USD 500 mn each), predicted this. Siegel told the Financial Times’s Robin Wigglesworth in January: “The challenge facing the investment world is that the human mind has not become any better than it was 100 years ago, and it’s very hard for someone using traditional methods to juggle all the information of the global economy in their head.”

The naughty-kid list of brokerages in the US: Promarket Blog reported on a study by University of Chicago’s Booth School Gregor Matvos and Amit Seru, and the University of Minnesota’s Mark Egan, that examined the cost of misconduct for financial advisers who have been caught. “The study revealed not only the pervasiveness of misconduct in the financial adviser market but also disclosed for the first time a ‘rating’ of the brokers’ firms according to the percentage of their advisors that are involved in misconduct.” Using data from the Financial Industry Regulatory Authority (FINRA), Promarket shows that the naughty kid-list is topped by Oppenheimer, which a 19.6% misconduct rate. Second in this rating is First Allied Securities, followed by Wells Fargo Advisors Financial Network, UBS Financial Services, and Cetera Advisors. The study finds that financial misconduct is more prevalent among firms that target retail investors and the bigger problem is “that misconduct is targeted at customers who are potentially less financially sophisticated.”

Wealthy families embrace their inner Warren Buffets: Families at the top of America’s rich list are turning their backs on private equity funds and doing acquisitions themselves, Bloomberg reported. An April survey of 80 family offices by the Family Office Exchange found that almost 70% of family offices undertake direct investing, making returns of 15% on average, which is almost double the gains that private equity firms make. There are numerous advantages to this trend, mainly the fact that rich families don’t have to pay the 2% annual management fee to private equity firms and get to keep 20% of the profits. They also wouldn’t be feeling the pressure from investors to sell within 10 years to cash out, avoiding a “force exit.” Private equity firms, on the other hand, are now employing executives “to court wealthy families” so that they don’t lose their source of money, with four trillion from rich families reportedly “up for grabs.”

North Korea has a very peculiar relationship with the press. For the country’s reporters, the hermit state “took care that journalists had hot breakfasts before they started work, and umbrellas to keep them dry when they went out reporting in the rain … and in return they ‘must become propagandists who spread far and wide the voice of [the Workers’ Party]’,” Barbara Demick writes for The New Yorker, who contrasts it with the “mutual antipathy” North Korea has with foreign press. Demick writes about Rupert Wingfield-Hayes, the BBC reporter who, along with his crew, had been following a delegation of Nobel laureates touring the country in advance of its first Workers’ Party Congress in decades, but ended up detained and, later, expelled from the country. The North Koreans did not like that Wingfield-Hayes noted that the hospital his minders took the delegation to had children that looked “healthy” and did not look like it had “real” doctors present (run time 02:48) or that a microbiology student in Kim Il Sung University did not appear to know how to access the internet (run time 03:29). “Everything we see looks like a setup … The level of control and nervousness we’ve experienced betrays the weakness and insecurity that lies beneath,” Wingfield-Hayes commented. Demick acknowledges that the BBC’s observations were “hardly original,” but notes how it underscores the degree to which North Korea is obsessed with the idea of saving face. For more footage from Pyongyang, you can watch Vice’s three-part documentary, Inside North Korea.

“Cool as a hog on ice”: Morley Safer, the Canadian-born combat correspondent who went on to become an iconic television investigative journalist who couldn’t suppress his love of quirk, is retiring from the small screen after a 48-year run on CBS’ 60 Minutes. Expect retrospectives in the U.S. press all week — and that we’ll have a couple of them for you next weekend. Why do we think Morley is the bomb? It started with his coverage of Vietnam: “Joe Stringham, who commanded a Green Beret unit that Mr. Safer accompanied into battle in Vietnam … recalled Mr. Safer as being all business, ‘We looked at eternity right in the face a couple of times and he was as cool as a hog on ice,’” a New York Times piece recalls. Get Financial History Geek Points for reading or watching Safer’s interview with Andrew and Ruth Madoff, the family of Bernie Bernie Madoff, in 2011. Get triple Geek Points for watching “Morley Safer’s favorite New Yorker cartoons: Morley Safer picks some of his favorite cartoons from his 60-odd years as a reader of The New Yorker magazine.” (Run time: 4:57)

Investors worried the online lending industry is could be heading for a rough patch are “shooting first and asking questions later,” says one analyst after a run of bad news at Lending Club, where Google is a shareholder. Peer-to-peer lending (also called marketplace lending) has exploded in recent years, with lenders “freed from the costs of brick-and-mortar branches and federal regulations requiring that they reserve money against their loans,” the New York Times writes. But allegations last week that Lending Club may have mis-sold loans to investors has shaken up the industry, prompting the U.S. Treasury to issue a white paper warning the sector needs to get its act together. The Financial Times has more, or go listen to this March 2016 interview with Lending Club founder (and now-former chief) Renaud Laplanche, a charismatic Frenchman, former corporate lawyer and world-class sailor.

Time magazine finally does something right: Longtime readers of Enterprise know we’re not exactly enamored of the clickbait black-hole that Time magazine has become online, but it’s listicle “The 50 Most Influential Gadgets of All Time” suggests there may be someone left in the building (or eight people, to be exact) with something approaching editorial judgement. It’s vastly too early for #50 to be on the list, but the rest of the choices? Well, you can argue their relative ranking, but for those of us who grew up at the day of the tech age, there’s no denying these are the gadgets that truly have shaped the way we “live, work and play today.”

Speaking of gadgets: If you, like us, think you might be doing more and more “real work” on a iPad Pro in the future, you’ll want to read “My Tablet Has Stickers,” a meditation by former Microsoft president turned Andreessen Horowitz venture capitalist Steven Sinfosky on how the tablet is slowly supplanting the laptop. Or listen to him discuss the issue with the very smart (if very smug) Benedict Evans on the A16Z podcast episode “Finally, a tablet that replaces your laptop” (listening time: 27:28).

“Someone is driving her insane. It is me.” If you’re unfamiliar with the story and enjoy scaring yourself out of your mind, the unbelievable case of the twin Gibbons sisters is both endlessly fascinating and disturbing. “Born in 1963, June and Jennifer [Gibbons] were moved by their Barbadian parents to a small town off the coast of Wales… the two had never spoken to anyone else their entire lives. Instead, they communicated with each other in a strange, birdlike language only they could understand… At age 14, the twins were separated in an attempt to encourage socialization. They responded by slipping into catatonic states.” The birdlike language they spoke would later be revealed to simply be English sped-up, and as incomprehensible as their speaking could be, their written diaries were written in incredibly tiny handwriting. It’s in their diaries their voices come through, and where each revealed her mutual obsession and sometimes murderous hatred of the other twin. “Nobody suffers the way I do, not with a sister… a dark shadow robbing me of sunlight, is my one and only torment… She wants us to be equal. There is a murderous gleam in her eye. Dear lord, I am scared of her. She is not normal … someone is driving her insane. It is me.” The twins would later be committed to a high security psychiatric hospital where one of the sisters died under mysterious circumstances. (Read Silent Twins: The haunting case of the Gibbons Siblings in The Lineup and continue with ‘Have I the strength to kill her?’ by April de Angelis in the Guardian for more background)

Jon Stewart on Hillary, Trump and satire | A one hour interview at U of Chicago: Jon Stewart sat down for an interview by David Axelrod, who previously served as US President Barack Obama’s chief strategist on his presidential campaigns, at the University of Chicago on Monday. On Hillary Clinton, Stewart says “she will be in big trouble if she can’t find a way — and maybe I’m wrong, maybe a real person doesn’t exist underneath there. I don’t know.” (Watch, running time: 1 hour, 16 minutes)

Empire Strikes Back opening title sequence reimagined as a Bond opening: The opening title sequence of The Empire Strikes Back reimagined as a melancholy opening sequence of a James Bond film, scored to Radiohead’s Spectre. (Watch, running time: 3:02, you may want to manually check the resolution and disable autoplay before hitting play, although audio autoplay following the video seems unavoidable)

FX’s show The Americans in real life: What would you do if you discovered your parents were secretly Russian spies? Tim and Alex Foley, both born in Canada but living in Cambridge, Massachusetts, discovered in 2010 they were born to “unlawful agents of a foreign government” when the FBI raided their house. The Guardian’s Shaun Walker, who covers Tim and Alex’s story, write: “the FBI had not made a mistake, and the truth was so outlandish, it defied comprehension. Not only were their parents indeed Russian spies, they were Russians. The man and woman the boys knew as Mom and Dad really were their parents, but their names were not Donald Heathfield and Tracey Foley. Those were Canadians who had died long ago, as children; their identities had been stolen and adopted by the boys’ parents. Their real names were Andrei Bezrukov and Elena Vavilova. They were both born in the Soviet Union, had undergone training in the KGB and been dispatched abroad as part of a Soviet programme of deep-cover secret agents, known in Russia as the ‘illegals’.” Tim and Alex were stripped of their Canadian citizenship as a consequence, something they believe to be “unfair and illegal that they are expected to answer for the sins of their parents” as they have no wish to live in Russia even though they visit their parents in Moscow every few months. Alex told Walker “it is not his place to judge his parents, but that six years ago he spent a long period wrestling with ‘the big question’ of whether he hated them or felt betrayed. In the end, he came to one conclusion: that they were the same people who had raised him lovingly, whatever secrets they hid.”

When should you sell off your accounts receivable? McKinsey & Co’s Corporate Finance practice discussed “factoring” in a podcast episode. Factoring is one way companies can raise immediate capital or mitigate the risk of being able to collect on their accounts receivable is to sell them off to a third party. The team notes that the cost of borrowing from factoring is typically higher than issuing bonds, but they discuss when factoring is a viable and effective solution to attract funds after explaining clearly what factoring is and how does it work. (Run time 21:12)

Yet another way technology is ruining our lives: Apparently GPS is changing the way our brains work, at least according to Pinpoint: How GPS Is Changing Technology, Culture, and Our Minds by Greg Milner. According to Milner, our reliance on GPS technology may be altering the actual structure of our brains, which were once used to navigate open oceans using the stars and currents for guidance, not just to ask Siri to take us to the nearest Pizza Hut. Listen to the Science Friday episode here (runtime, 23:03).

And what would happen if GPS failed? The New Yorker tells us exactly what: “The Pentagon’s Defense Advanced Research Projects Agency recently determined that, within thirty seconds of a catastrophic G.P.S. shutdown, a position reading would have a margin of error the size of Washington, D.C. After an hour, it would be Montana-sized. Drivers might miss their freeway exits, but planes would also be grounded, ships would drift off course, commuter-rail systems would be tied up, and millions of freight-train cars with G.P.S. beacons would disappear from the map.”

A marine invisibility cloak that can now also be used to save lives: Shrimps helped the Allies win WWIl by helping the navy hide their submarines in the beds of snapping shrimps, rendering them undetectable. The snapping shrimp is one of the loudest creatures in the ocean capable of drowning out submarine sonar by its “snap” that uses bubbles. These shrimps are tiny, just 5 cm long, which to Radiolab’s producers is “a mystery, shockingly hot, and vanishingly tiny.” Now, researchers are using the insights from the shrimps’ “snapping” technique to administer chemotherapy drugs intravenously using targeted ultrasound, along with tiny air bubbles generated. “We’ve never had access to the drugs in the brain that way before … it’s like a whole new frontier,” producer Molly Webster says. (Run time 23:34)

Chris Mohney imagines Zuckerberg response to inquiry over allegations Facebook curators suppressed right-wing trending news: Gizmodo’s Michael Nunez reported on Monday on a former unnamed Facebook employee’s allegations that conservative news stories and sources were suppressed by curators working to teach Facebook’s algorithms, even though such stories “were organically trending among the site’s users.” The US Senate Commerce Committee, led by a Republican, launched an inquiry into the allegations on Tuesday. Facebook replied the same day to say it is investigating the matter and will address the Senators’ questions. On Friday, former Tumblr editor-in-chief, Chris Mohney, who we noted last October as the author of what has been called “perhaps the greatest, most poetic exit [redacted]-you in Internet history,” tweeted what he imagines such an inquiry may entail:

INTERVIEWER: So no humans have touched your algorithms?
ZUCKERBERG: [nictitating membranes flick briefly over eyeballs] Correct

Pray this isn’t our future: Zimbabwe now uses USD, GBP, JPY, INR, and the ZWD as national currencies because after hyperinflation of more than 5,000% made the currency essentially worthless, according to CNN. Zimbabwe used to have a ZWD 1 tn note, along with previous hyper-inflated denominations like ZWD 10 tn, but when inflation hit 230,000,000% in 2009, the country battled it by using USD as the national currency. "It was terrible. You’d have to pay for your coffee before you drank it because if you waited the cost would rise within minutes," said businessman Shingi Minyeza, chairman of Vinal Investments. "We changed to a multiple currency system to stabilize, and inflation went down to 0% and it was magic," said the Zimbabwe Reserve Bank Governor, John Mangudya.

A 15-year-old kid from a rural corner of the U.S. state of Maine has made international headlines with news he’s turning his 200-piece collection of vintage Apple hardware into a museum. Alex Jason began building his collection as a 10-year-old and today counts in his collection “a rare Apple I from 1976 that still works and has the original chips. Fewer than 70 of these models are believed to remain, with one selling for more than $900,000 at an auction in 2014. Other prized artifacts include an Apple Lisa 2/5 … the first prototype of a mouse … and a Powerbook 100, which is considered to be the first modern laptop.” Read more in the New York Times.

The most-clicked stories in Enterprise, the Egypt Edition in the past week were:

• Tante Julie may be Israeli, but she’s 100% Masriya at heart (Youtube)
• Search results for “Egypt” on Panama Papers (Offshore Leaks / Panama Papers)
• Download Whatsapp for Macintosh or Windows (Whatsapp)
• Intricate animal and flower tattoos found on Egyptian mummy (Nature)
• Sultan El Qassemi thinks this is Egypt’s 2016 photo of the year (Facebook)

The most-clicked stories in Enterprise, the GCC Edition in the past week were:

• Saudi Arabia’s Great Thirst (National Geographic), and for further reading, see Peter Schwartzstein’s Gulf Countries Look to Farm Abroad as Aquifer Dries Up, also in National Geographic
• Saudi shake-up rolls on with big reshuffle of economic posts (Reuters)
• Documentary: Oil Discovery and Distribution of Wealth in Saudi Arabia and United Arab Emirates, 1968 (Youtube)
• Commentary: Handicapping Saudi Arabia’s audacious plan to save itself (Reuters)
• Saudi prince makes bold challenges to kingdom’s old ways (Reuters)

After UPenn economist Guido Menzio was taken off a plane last week after a very bright fellow passenger thought the differential equations he was working on were some “terrorist code,” The Economist’s Buttonwood blog published a public service announcement on how people can tell if they’re sitting next to an economist. There are ten items on the list including gems like: “He keeps telling you that ‘there is no such thing’ as a ‘complimentary refreshment service’,” “he plonks his elbow on the arm rest because space has a ‘higher marginal utility’ for him than for you,” and, of course, “he avoids prolonged conversation with you because he has a ‘rational expectation’ that you’re an idiot since you chose the middle seat.”

Hyperloop transport system passes its first public test: Technology firm Hyperloop One, owned by Elon Musk of SpaceX, has successfully tested its futuristic transport system for the first time, the Guardian reported on Thursday. The project includes as system of tubes and pods transporting passengers and cargo at very high speeds that would would be able to make the journey from San Francisco to Los Angeles in just 30 minutes. The test, which took place in Nevada, saw a prototype propulsion system accelerate to 187 km/h in 1.1 seconds, “representing a very early proof of concept.” The firm, which changed its name from Hyperloop Technologies on Wednesday, has already closed a USD 80 mn series B funding round and signed partnerships with Deutsche Bahn Engineering & Consulting and British engineering consultancy group Arup, who are currently working on London’s Crossrail. “If railway helped enable the first industrial revolution, Hyperloop has the potential to do the same for the information economy, overcoming distances and creating connections between people, places, ideas and opportunities,” Gregory Hodkinson, chairman of Arup Group. Watch a video of the test here.

A day in the life of a fictional female reporter: Fans of television series House of Cards may or may not feel slightly ashamed of their viewing habits after reading this short satirical piece published last year by Mallory Ortberg.

9:17 am: Sleep with a source.
10:00 am: Sleep with my boss.
10:58 am: Find a powder-blue Oxford shirt that doesn’t quite button up over my [redacted]. Buy eight.

Twin Peaks returns with 217 cast members: We’ve been living under a rock and didn’t hear about the release of the cast list for the upcoming revival of David Lynch’s Twin Peaks television series. Most of the original cast is returning, which itself is a bit of a spoiler, while some other faces won’t be returning, such as the late actors who portrayed the Log Lady and Bob. Lara Flynn Boyle won’t be reprising her role, which may suggest some sort of falling out with Lynch as she wasn’t in the 1992 film either. So who are some of the other names on the list? Some are returning Lynch favorites like Laura Dern and Naomi Watts, while some other choices are a little more surprising, like Trent Reznor and Michael Cera. Nerdwriter put together a video on Wednesday using Lynch’s Mulholland Drive as a case study in: How Lynch Manipulates You, running time: 8:59.