Your Evening Briefing: Hedge Funds Can’t Agree How to Value Companies

The pain—and the questions—kept coming as big name hedge funds took turns marking down the value of their stakes in private companies. Every time they wrote down holdings by millions—or even billions—of dollars, investors last year questioned whether they had gone far enough. Now, an exclusive Bloomberg News analysis offers a glimpse into one of the most opaque corners of the investing world, and the findings aren’t reassuring. In many cases, hedge funds and other money managers disagree over just how to value private companies. By the end of 2022, high-flying unicorns lost more than 40% of their value from the year’s peak, a sharper drop than the rout in publicly traded tech stocks and worse than the returns reported by most hedge funds in the space. Disagreements over what companies are now worth have profound implications for the ultimate investors–from wealthy individuals to pension plans. One takeaway is that even after a year of writedowns across the investment industry, more may be in store.

Silvergate Capital shares plunged after the bank said the crypto industry’s meltdown triggered a run on deposits, prompting the company to sell assets at a steep loss and fire 40% of its staff. Customers withdrew about $8.1 billion of digital-asset deposits from the bank during the fourth quarter. Executives said Silvergate may become a takeover target.