The popular drama show centered around New York and Connecticut financial centers, “Billions,” was renewed for a 7th season a little after Season 6 premiered in late January 2022.
The show is allegedly not entirely based on a true story but is inspired by real events.
With that being said, how accurate is the portrayal of hedge funds in the show? Let’s take a look at that, as well as how commercial property is utilized in the hedge fund industry.
The Plot of “Billions”
The basic plot of the show centers around a hedge fund manager by the name of Bobby Axelrod as his financial empire grows.
He doesn’t always gain his wealth fairly, though, as he often uses aggressive and illegal tactics to secure his earnings.
A United States attorney named Chuck Rhoades frequently tries to prosecute him for these doings.
And like all shows, there’s a large cast of secondary characters with their own arcs and plotlines.
As previously mentioned, the show does take some inspiration from real events, such as a US attorney’s persecution of a hedge fund manager in 2013.
Does the Show Accurately Portray Hedge Funding?
According to some real-life hedge funders who were asked about the accuracy of the show by MarketWatch, the show does have its accuracies.
Ben Axler, who is the founder and chief investment officer of Spruce Point Capital Management, said that the main character Bobby Axelrod exhibits many of the traits that are necessary for being a successful hedge fund manager.
Axler says that his confident and passionate demeanor is well-written and accurate for this job.
On the other hand, many claim that the show often glamorizes being a hedge funder; the reality of working as a hedge funder means that there are many hours of staring at documents and computer screens.
“Billions” Is Not Free From Excessive Glamor
This style of over-glamorizing jobs for the sake of TV entertainment is pretty common, though, when you consider that police officers, lawyers, and doctors all have dramatic shows of their own as well.
Some have also mentioned that the jargon and financial terms used in the show aren’t always appropriate for every situation, but this could simply be because the writers want the show to be easily understood.
It’s important to note that shady dealings also aren’t necessary for success as a hedge funder.
Disagreements do happen in the industry, but many who have experience in it say that it does not take long to smooth things out with a conversation.
In summary, “Billions” has some pretty accurate depictions of the culture seen in the financial industry, but there are also many aspects that are more dramatic or fast-paced than they would truly be.
How Hedge Fund Managers Actually Operate
Since hedge fund managers are the ones that make all the key decisions for a hedge fund, they need to have solid strategies for many aspects of investment.
For example, they should know how they plan to deal with the competition, how they are going to approach investment, the plan for marketing and sales, and how to deal with risks if they arise.
In most cases, hedge fund managers will have their own specialty when it comes to their investment strategy.
Various strategies are used by hedge fund managers to ensure that their client is getting a maximum return.
Hedge Fund Investment Strategies
One of the more popular strategies is called global macro investing.
With this, investment plans are based on how macroeconomic events are predicted to go on a national, regional, and global scale.
The goal of a global macro hedge fund is to find the best mix of assets to get a successful return as long as everything turns out how it is predicted to.
Another popular investment tactic that hedge fund managers use is event-driven strategy.
With this strategy, managers will look for opportune moments for capital in the corporate environment. They could be looking for mergers and acquisitions or bankruptcies, for example.
Hedge Funds and Commercial Real Estate
Commercial real estate (CRE), and real estate in general, are quickly becoming a more popular investment option. CRE is considered to be a high-risk yet high-reward investment option.
When it comes to commercial real estate investment funds, the hedge fund managers will use their gains to purchase commercial properties.
Typically, investors do not know which properties they will be purchasing, as they put their trust in the managers to make the most beneficial decisions for them.
Commercial real estate funds also give investors a diverse portfolio, as the money in their fund is spread across many different properties.
Another benefit to commercial investment funds is that they tend to have a degree of short-term liquidity. Some funds may be bought and sold similar to stocks.
Benefits and Types of Commercial Real Estate Investment Funds
With that being said, this type of investment is much more accessible compared to other types.
Depending on the fund, it may be accessible to any investor with no minimum investment amount required.
Lastly, commercial investment properties can provide investors with a passive income from the rent that they would receive from the properties.
Typically, CRE investment funds are found in four different types:
- Real Estate Investment Trust (REIT): This type of investment has a high dividend yield and can often be tax-exempt. Rather, taxes are paid by individual unit holders.
- Mutual Funds: The main difference between mutual funds and REITs is that mutual funds don’t invest in properties directly. Therefore, they don’t need to pay out their taxable income as dividends.
- Exchange-Traded Funds (ETF): These funds are like mutual funds, but they rely more on stock exchanges, and they have lower transaction and management fees.
- Private Equity Funds: Private equity funds are privately held and are only accessible to Accredited Investors, as well as being less liquid and requiring more commitments.
Each different type of CRE investment fund has its benefits and risks, and in most cases they are similar.
Typically, they will offer diversification and liquidity but will require fees and longer time commitments.
Ultimately, it is up to the investor’s personal preferences and requirements to determine which works best for them.