Category Archives: hedge funds

The Hedge Fund Money-Go-Round

Bill Ackman explains how hedge funds work, specifically with regard to investors in Pershing Square IV, his fund dedicated (disastrously) to going long Target: Some of these investors, who are for the most part other hedge funds (that comprised approximately … Continue reading

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Hedge Fund Datapoint of the Day

For most of 2007, Target stock was trading in the low 60s. If you’d bought $2 billion of stock at those levels, you’d have about $1 billion today, since the share price now is in the low 30s. That’s the … Continue reading

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The Broken Hedge-Fund Model

It’s becoming increasingly clear that the standard hedge fund incentive model breaks when a fund plunges in value. If the value of a hedge fund is rising, then 2-and-20 works as intended: the fund manager gets paid more the more … Continue reading

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10 Questions to Ask Your Fund-of-Funds Manager

If you were a client of Access International Advisors, which lost a lot of money with Bernie Madoff, then you would have been told that they "conducted thorough due diligence when selecting outsider fund managers". Which might have been reassuring, … Continue reading

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Using Software to Gauge Hedge Fund Risk

I had an interesting chat with Olivier Le Marois, the CEO chairman of Riskdata, a couple of days ago. His company has put out a couple of interesting reports: one on blow-up-prone hedge funds generally, and one on Bernie Madoff … Continue reading

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How Does One Audit a Fund Manager’s Risk Management?

I just got off the phone with Ken Akoundi, a civil engineer turned risk manager who just left fund-of-funds group Optima Fund Management after running its risk-management operations. He agrees with me that some kind of risk auditing function or … Continue reading

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Where are the Risk Auditors?

As Roger Lowenstein says, Ezra Merkin was (is?) "a Wall Street sage, noted philanthropist and professional money manager". And yet for all his protestations that he was risk-conscious and diversified and an expert at due diligence, he still ended up … Continue reading

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John Paulson, Proud Short

Gary Weiss has a profile of John Paulson in the February issue of Portfolio which I misread when I first came across it. He talks a bit about Paulson being "unrepentant" about the money he’s made during the market crash … Continue reading

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Quants: What Are They Doing These Days?

I was talking about quant funds this afternoon, and got to wondering what on earth they’re doing these days, given that their m.o., up until say the summer of 2007, was to find trading ideas, backtest them, try them out … Continue reading

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Madoff Fallout Datapoint of the Day

From Robert Peston: A well-known wealthy entrepreneur told me last night that he’d lost about 1% of his net worth on an investment in Madoff and is setting about getting his money back from every hedge fund that he’s invested … Continue reading

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