The garrison investment group is a private equity firm that acquired a 1,300-hectare California ranch in the financial crisis when the original developer went bankrupt. Despite a difficult year for hedge funds in public markets, private equity investments like those of the garrison investment group helped hedge funds offset losses and boost returns. The article explores how soaring private market valuations and a hot IPO market have buoyed these private bets, making garrison’s purchase of the ranch a profitable investment as it tries to sell it for $156 million.
Ranch was half-developed luxury project that garrison acquired
The 1,300-hectare California ranch was originally a luxury project that was half-finished when the financial crisis hit in 2007. The developer went bankrupt and garrison investment group acquired it under a deed in lieu of foreclosure agreement. Garrison now owns the ranch and is trying to sell it for $156 million, far below the original $600 million asking price in 2009.
Private equity bets have eased hedge fund losses in public markets
Hedge funds focused on stock-picking in public markets have struggled this year after a good 2020 performance. Meme stock volatility and tech stock declines have led to losses. But private equity funds and hedge funds with private investments have seen gains of over 70% in some cases. These private market profits have softened the blow of losses on public stocks.
Surging private valuations and hot IPO market aid investments
Two key factors have boosted private investment returns in 2021 – rapidly rising private valuations and a red-hot IPO market. As investors pour money into late-stage startups, their values have skyrocketed ahead of eventual IPOs. When they debut publicly, investor demand has led to big first-day pops. This dynamic explains why garrison and hedge funds see value in private deals.
Hybrid hedge funds balance public and private exposures
Some hedge funds take a hybrid approach, investing in both public and private assets. Clients can select their balance of public vs private exposure, with more private exposure leading to higher returns. This model provides the benefits of public market liquidity and upside capture from high-flying private deals – explaining the appeal to clients.
Despite a tough year in public markets, private equity bets – like garrison’s ranch purchase – have delivered outsized returns for hedge funds in 2021. Surging private valuations and red-hot IPO demand have boosted these investments, softening hedge funds’ public market losses.