Anybody invested with Cadman Capital in Toronto? Used to be Venulum?

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Jason Shopra
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Anybody invested with Cadman Capital in Toronto? Used to be Venulum?

#1 Post by Jason Shopra » September 9th, 2019, 7:37 pm

Curious to see if anybody here has dealt with wine investment managers called Cadman Capital or Venulum based in Toronto. They claim to invest in rare wine but I can't find much on them.

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Re: Anybody invested with Cadman Capital in Toronto? Used to be Venulum?

#2 Post by Chris Blum » September 9th, 2019, 8:18 pm

Welcome to the board.

I would avoid investing in any type “wine fund” like the plague. The market is illiquid and the carrying costs are silly.
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Re: Anybody invested with Cadman Capital in Toronto? Used to be Venulum?

#3 Post by Brian Glas » September 9th, 2019, 8:26 pm

Jason Shopra wrote:
September 9th, 2019, 7:37 pm
Curious to see if anybody here has dealt with wine investment managers called Cadman Capital or Venulum based in Toronto. They claim to invest in rare wine but I can't find much on them.
Why not just invest in some boring index 500 fund?

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Re: Anybody invested with Cadman Capital in Toronto? Used to be Venulum?

#4 Post by Jason T » September 10th, 2019, 12:20 am

Chris Blum wrote:
September 9th, 2019, 8:18 pm
Welcome to the board.

I would avoid investing in any type “wine fund” like the plague. The market is illiquid and the carrying costs are silly.
This and the comment below it.

What are you hoping to achieve in investing in wine in this manner, vs some other investment in another asset class? There’s been some threads on this in the past. In short, investing in wine is extremely risky, the fees/carrying costs/transaction costs are usually high, you’re likely to run into liquidity issues, and the investment structures and related performance are often opaque at best.

I suspect the only people making money on wine investment funds are the investment managers, via management and performance fees.
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Re: Anybody invested with Cadman Capital in Toronto? Used to be Venulum?

#5 Post by Victor Hong » September 10th, 2019, 2:45 am

Jason T wrote:
September 10th, 2019, 12:20 am
..........I suspect the only people making money on wine investment funds are the investment managers, via management and performance fees.
Just as with hedge, private-equity, and actively managed mutual funds.
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Re: Anybody invested with Cadman Capital in Toronto? Used to be Venulum?

#6 Post by Jason T » September 10th, 2019, 3:17 am

Victor Hong wrote:
September 10th, 2019, 2:45 am
Jason T wrote:
September 10th, 2019, 12:20 am
..........I suspect the only people making money on wine investment funds are the investment managers, via management and performance fees.
Just as with hedge, private-equity, and actively managed mutual funds.
Let's not forget real estate investment management either (which, I get is a form of PE and actively managed mutual funds, but is big enough that I think warrants being called out separately).
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Re: Anybody invested with Cadman Capital in Toronto? Used to be Venulum?

#7 Post by Jason T » September 10th, 2019, 3:21 am

Jason T wrote:
September 10th, 2019, 3:17 am
Victor Hong wrote:
September 10th, 2019, 2:45 am
Jason T wrote:
September 10th, 2019, 12:20 am
..........I suspect the only people making money on wine investment funds are the investment managers, via management and performance fees.
Just as with hedge, private-equity, and actively managed mutual funds.
Let's not forget real estate investment management either (which, I get is a form of PE and actively managed mutual funds, but is big enough that I think warrants being called out separately).
Hijacking this threat a bit but I have a client who not only charges their investors a fund management fee, and a performance fee, but they are also the property manager and the asset manager, so they are laying on property management and asset management fees. That's not unusual though. What is is that they also charge their investors a fee for the acquisition and disposition of assets.

The best part is though they do not claim to be a 'real estate investment manager', and thus are not doing any real fund/asset management. Assets either perform or they don't.

It's a wonder that they ever actually get into the pref with that, but they do. But how much money are they making that the investors aren't? The answer is, of course, most of it.
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Re: Anybody invested with Cadman Capital in Toronto? Used to be Venulum?

#8 Post by Jason Shopra » September 10th, 2019, 6:20 am

I have the same notion. I don't invest in wine myself, it was more for a conversation I had with some colleagues over a work trip last weekend. One of them said they'd invested X amount ten years ago and still hasn't seen any money/wine back. I've always liked the appeal of having a collection but never considered doing it via investment fund/manager. For that reason, it seems. Thanks for the feedback.

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Re: Anybody invested with Cadman Capital in Toronto? Used to be Venulum?

#9 Post by Rob_S » September 10th, 2019, 3:59 pm

I seem to remember that there was a set of UK funds that had enough liquidity that there were people running derivatives off of it. One of the funds (I think it was one of the Burgundy ones, not DRC but a premiere cru one I think) was also an exceptionally good fit as a leading indicator to the FTSE.

When you look at fund management costs versus the cost of physical holdings and auction costs around the purchase and sale they probably aren't bad. But I also question the actual validity of the holdings (much like gold funds).

As for Jason's example of real estate funds, while somewhat egregious, the property owner would have to pay a 3rd party for property management and asset management if they didn't do it themselves so if they have the ability I don't think it's a bad thing. The days of new funds with acquisition and dispo fees is well and truly over though!
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Re: Anybody invested with Cadman Capital in Toronto? Used to be Venulum?

#10 Post by blarmston » September 10th, 2019, 5:11 pm

Victor Hong wrote:
September 10th, 2019, 2:45 am
Jason T wrote:
September 10th, 2019, 12:20 am
..........I suspect the only people making money on wine investment funds are the investment managers, via management and performance fees.
Just as with hedge, private-equity, and actively managed mutual funds.
Don’t know what type of access you have to the above, but top decile PE and HF managers make lots of people money other than themselves. There’s a ton of shit managers/firms/strategies, but like with most things, the ones who deliver performance do well, and their LP’s benefit as a result
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Re: Anybody invested with Cadman Capital in Toronto? Used to be Venulum?

#11 Post by Jason T » September 10th, 2019, 6:40 pm

Rob_S wrote:
September 10th, 2019, 3:59 pm
The days of new funds with acquisition and dispo fees is well and truly over though!
No it isn’t. While no institutional client I work with charges acquisition/dispo fees, I do have at least one client who still does.

They have just shy of $10bn AUM (which, sure, only makes them a small/mid-sized investment manager). Are nationally and internationally known, raise a new fund every year, and have several thousand active investors despite the ludicrous fee structure, and almost total opacity into how the their investments perform. Those investors rush to get into every latest offering.

It’s...fascinating.
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Re: Anybody invested with Cadman Capital in Toronto? Used to be Venulum?

#12 Post by John Morris » September 10th, 2019, 8:26 pm

Here's a thread on such funds in general:
Are wine investment funds good investments?

The costs are killers -- 7.5% going in, 5% redemption charge, management fee. Uggh. And your money is locked up for five years.

Oh, and the returns have sucked.

What are the costs and fees like for Cadman and Venulum?

The argument the funds make is that they're not correlated with other markets, but even that turns out to be not so true.
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Re: Anybody invested with Cadman Capital in Toronto? Used to be Venulum?

#13 Post by John Morris » September 10th, 2019, 8:36 pm

blarmston wrote:
September 10th, 2019, 5:11 pm
Victor Hong wrote:
September 10th, 2019, 2:45 am
Jason T wrote:
September 10th, 2019, 12:20 am
..........I suspect the only people making money on wine investment funds are the investment managers, via management and performance fees.
Just as with hedge, private-equity, and actively managed mutual funds.
Don’t know what type of access you have to the above, but top decile PE and HF managers make lots of people money other than themselves. There’s a ton of shit managers/firms/strategies, but like with most things, the ones who deliver performance do well, and their LP’s benefit as a result
Yes, you can't lump all of those together. The portion of hedge funds that beat the markets, or which are not correlated (i.e., are in fact hedges) is very small. Most have succeeded in neither.

While most PE firms don't beat the S&P 500, there's a more substantial portion (more like top quartile) that have beat the markets by 5% or so over 30+ years. That's why the best have seen their assets under management swell over the past 25 years (e.g., Blackstone, KKR, Apollo). Their funds came through the financial crisis remarkably well (though there were portfolio company failures) and they continue to draw huge sums from institutional investors. Underfunded public pension funds can't afford not to invest in that top tier given their track records, while the pensions have been scaling back on hedge funds. (Full disclosure: I co-authored a book on Blackstone and the PE industry.)
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Re: Anybody invested with Cadman Capital in Toronto? Used to be Venulum?

#14 Post by Rob_S » September 11th, 2019, 4:55 am

Jason T wrote:
September 10th, 2019, 6:40 pm
Rob_S wrote:
September 10th, 2019, 3:59 pm
The days of new funds with acquisition and dispo fees is well and truly over though!
No it isn’t. While no institutional client I work with charges acquisition/dispo fees, I do have at least one client who still does.

They have just shy of $10bn AUM (which, sure, only makes them a small/mid-sized investment manager). Are nationally and internationally known, raise a new fund every year, and have several thousand active investors despite the ludicrous fee structure, and almost total opacity into how the their investments perform. Those investors rush to get into every latest offering.

It’s...fascinating.
Wow. I haven't been able to get away with structuring something like that in a good long while (I run real estate IB at a boutique). You see legacy but not new. Maybe some of the private REIT vehicles but it's just new rounds of the same thing...

On someone else's note KKR has done very well with their funds. We aggregate our retail investors into a position in one of their funds and everyone has been very happy. There is certainly a place for it.

As for the wine fund, 7.5% going in, 5% exiting plus what, probably 2% management fee? Still less than the buyers premium, selling concession (if buying and selling at auction) and cost of offsite secure storage if you're doing it physically yourself. But obviously you have to factor in liquidity (and not liquidity in the bottle!).
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Re: Anybody invested with Cadman Capital in Toronto? Used to be Venulum?

#15 Post by Russell Faulkner » September 11th, 2019, 5:40 am

I bet those fees are after buyers/sellers premiums and storage costs.

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Re: Anybody invested with Cadman Capital in Toronto? Used to be Venulum?

#16 Post by Jason Shopra » September 12th, 2019, 7:03 am

John Morris wrote:
September 10th, 2019, 8:26 pm
Here's a thread on such funds in general:
Are wine investment funds good investments?

The costs are killers -- 7.5% going in, 5% redemption charge, management fee. Uggh. And your money is locked up for five years.

Oh, and the returns have sucked.

What are the costs and fees like for Cadman and Venulum?

The argument the funds make is that they're not correlated with other markets, but even that turns out to be not so true.

I'm not sure what the costs were with them. He seemed hesitant to tell me (my colleague). It's probably to the costs as what you mentioned above. What he did say was that they got him to transfer his wine contracts into physical wine. I guess they were doing some sort of futures situation?

What were the returns like for you?

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Re: Anybody invested with Cadman Capital in Toronto? Used to be Venulum?

#17 Post by Victor Hong » September 12th, 2019, 8:30 am

Where the investors' yachts?
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Re: Anybody invested with Cadman Capital in Toronto? Used to be Venulum?

#18 Post by Jason T » September 12th, 2019, 9:36 am

John Morris wrote:
September 10th, 2019, 8:36 pm
(Full disclosure: I co-authored a book on Blackstone and the PE industry.)
King of Capital?
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Re: Anybody invested with Cadman Capital in Toronto? Used to be Venulum?

#19 Post by Jason T » September 12th, 2019, 9:45 am

Russell Faulkner wrote:
September 11th, 2019, 5:40 am
I bet those fees are after buyers/sellers premiums and storage costs.
Exactly
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Re: Anybody invested with Cadman Capital in Toronto? Used to be Venulum?

#20 Post by John Morris » September 12th, 2019, 11:57 am

Jason Shopra wrote:
September 12th, 2019, 7:03 am
John Morris wrote:
September 10th, 2019, 8:26 pm
Here's a thread on such funds in general:
Are wine investment funds good investments?

The costs are killers -- 7.5% going in, 5% redemption charge, management fee. Uggh. And your money is locked up for five years.

Oh, and the returns have sucked.

What are the costs and fees like for Cadman and Venulum?

The argument the funds make is that they're not correlated with other markets, but even that turns out to be not so true.

I'm not sure what the costs were with them. He seemed hesitant to tell me (my colleague). It's probably to the costs as what you mentioned above. What he did say was that they got him to transfer his wine contracts into physical wine. I guess they were doing some sort of futures situation?

What were the returns like for you?
Now that (the bolded part) is funny!

What do you mean "they got him to transfer his wine contracts into physical wine"?

I haven't invested.
Last edited by John Morris on September 12th, 2019, 1:25 pm, edited 1 time in total.
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Re: Anybody invested with Cadman Capital in Toronto? Used to be Venulum?

#21 Post by John Morris » September 12th, 2019, 11:57 am

Jason T wrote:
September 12th, 2019, 9:36 am
John Morris wrote:
September 10th, 2019, 8:36 pm
(Full disclosure: I co-authored a book on Blackstone and the PE industry.)
King of Capital?
Yes.
"I'm a Frisbeetarian. We worship frisbees. We believe when you die your soul goes up on the roof and you can't get it down." – Jim Stafford

"The Internet has resulted in an exponential increase in the number of instances in which humor must be explained." - me, 2019

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Re: Anybody invested with Cadman Capital in Toronto? Used to be Venulum?

#22 Post by Jason Shopra » September 12th, 2019, 12:50 pm

John Morris wrote:
September 12th, 2019, 11:57 am
Jason Shopra wrote:
September 12th, 2019, 7:03 am
John Morris wrote:
September 10th, 2019, 8:26 pm
Here's a thread on such funds in general:
Are wine investment funds good investments?

The costs are killers -- 7.5% going in, 5% redemption charge, management fee. Uggh. And your money is locked up for five years.

Oh, and the returns have sucked.

What are the costs and fees like for Cadman and Venulum?

The argument the funds make is that they're not correlated with other markets, but even that turns out to be not so true.

I'm not sure what the costs were with them. He seemed hesitant to tell me (my colleague). It's probably to the costs as what you mentioned above. What he did say was that they got him to transfer his wine contracts into physical wine. I guess they were doing some sort of futures situation?

What were the returns like for you?
Not that (the bolded part) is funny!

What do you mean "they got him to transfer his wine contracts into physical wine"?

I haven't invested.

My thoughts exactly. And I'm not sure. I'm not an expert at all on wine investment (I only like to drink it), but he made it seem like they told him he had two choices: he could transfer his investment into physical wine holdings, or he'd lose all his money. So I guess he "transferred it." And like I said this was ten years ago and he hasn't seen any money since. Which is presumably why he was hesitant to talk about it...

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Re: Anybody invested with Cadman Capital in Toronto? Used to be Venulum?

#23 Post by John Morris » September 12th, 2019, 1:25 pm

I think one of those UK funds allowed you to redeem in wine, though I'm sure they controlled which wines!
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