Market Updates

Venture capital firm General Catalyst is acquiring Ohio-based Summa Health. In a move that could have considerable ramifications for the U.S. healthcare system, the firm announced that it will be converting the previously non-profit hospital system into a for-profit health-care provider. This deal is the first of its kind for a VC firm and is expected to close by the end of 2024, though there is still a due diligence period and regulatory hurdles to get through first. General Catalyst stressed that this is not going to mirror a private equity deal, and promised no reduction in workforce or services. Their goal is to bring innovation to the health care system and “prove that a model that’s better for patients can also be good for business and create a blueprint for other systems and communities.” If this proves successful, expect other VC firms to explore similar acquisitions in the future.

In the week after the first Bitcoin ETFs launched, its price fell over 10%. Anticipation for the financial products are one of the big reasons that the price surged in previous months, as many believed broader access to the cryptocurrency would send prices higher. While that may still be true in the long-term, prices fell this week despite nearly $2 billion worth of capital inflows. One reason for the price drop may be that investors into the Grayscale Bitcoin trust were waiting for ETFs to launch and the so-called “Grayscale discount” to disappear before selling. The discount was mostly a result of the lack of liquidity that converting the trust into an ETF solved. After now being open for over a week, it may be the case that the sell-off, and its effect on the price of Bitcoin, is nearly complete.

Real estate investments by top investment funds hit a 12-month high. The Bank of America Global Fund Manager Survey showed that these funds - with a combined $256 billion of assets under management - are anticipating lower interest rates and lower bond yields this year and are acting accordingly by investing in real estate, cash and commodities. Conversely, they are cutting their investments into bonds, banks and insurance companies. A record 91% of the fund managers are expecting a drop in short-term interest rates, which will likely be a boon to the real estate market.

Luxury collectibles like watches, whiskey and wine, struggled in 2023. Indices that measure the health of each asset class all saw double-digit declines last year, with watches falling 13%, wine 14% and whiskey 14%. This comes after all three saw rapid growth in the years following the pandemic, but it seems as if the bubble has burst. According to research firm Altan Insights, a big reason why these markets struggled was that traditional investing markets, like the S&P 500, boomed in 2023. If anything, though, the struggles highlight the lack of correlation many alternative assets have with the stock market, and the need for a diversified portfolio.