Posts filed under “Hedge Funds”

A Hedge Fund Manager’s Holiday Card

This bloody brilliant card is what a hedgie we know is sending out for Christmas:

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Category: Hedge Funds, Humor

Hedge Fund Due Diligence

There are some people worthy of blind trust with your money. They are the ones who: 1) seem to make money over time; 2) have well-audited books, which prove indeed they have; and 3) seem to have a cogent plan to continue making money in the future. All three must be satisfied and everything else…Read More

Category: BP Cafe, Hedge Funds, Investing

SEC Ignored Detailed 2005 Complaint re: Madoff

What follows is the Harry Markopolos complaint to the SEC, circa November 2005, identifying 29 red flags that Madoff was a fraud. This highly detailed complaint was filed regarding the apparent Fraud at Madoff Securities. It was ignored by the Christopher Cox SEC, which was too busy concocting schemes to dismantle the SEC rather than…Read More

Category: Hedge Funds, Legal, Regulation

Hedge Fund Partners vs Managed Account Investors

Today’s NYT (and Monday’s WSJ) each have articles which compare Madoff investors with those of recent $400 million dollar hedge fund fraud Bayou Group. I believe this misunderstands the applicable law of partnership, fraud, and investing. Hedge fund investors are limited partners, and as such, they have a fiduciary duty to their other partners. Regardless…Read More

Category: Hedge Funds, Legal, Regulation

Vast Under-Investment in Due Diligence

With everyone tsk-tsking the Madoff scandal — the amount lost, the after-the-fact obviousness, the SEC incompetence — I thought now was as  good a time as any to look at the actual research, due diligence and manpower thrown at investigating managers and funds. Not surprisingly, it is tiny — at least, when compared with the…Read More

Category: Bailouts, Hedge Funds, Investing, Legal, Regulation

Why Do Fund of Funds Exist

Here’s a question for you: What is the actual purpose of FoF ? In theory, they are supposed to do the due diligence, the forensic accounting, the deep background checks that ordinary investors cannot. Then once they identify a group of funds they want to allocate capital too, they are supposed to run the asset…Read More

Category: Bailouts, Hedge Funds, Investing, Legal

Be Wary of Serial Correlation

MIT’s Andrew Lo: The key concept here, developed by MIT professor and noted hedge-fund theorist Andrew Lo, is “serial correlation.” Simply put, serial correlation is the degree to which each month’s returns in a fund mirror the results of the month before. A fund that returns the exact same amount every month is perfectly serially…Read More

Category: Hedge Funds, Legal, Markets, Mathematics, Quantitative

Harvard: Not So Smart After All

We interrupt the GM hearings for this brief moment of schadenfreude: Harvard’s endowment has now blown through over $8 Billion, or 22% in the last four months. Correct me if I am wrong, but wasn’t Harvard’s endowment outperforming the broad indices for a long time? And didn’t their Board of Trustees fire/replace/chase awayt hese outperforming…Read More

Category: Hedge Funds, Markets, Really, really bad calls

MODELS & THE RISK OF RUIN

Bill Werner is an Engineer in Missouri City, Texas. The following is his review of this year’s “worst call” and an attempt at drilling down to the ultimate problem. ~~~ > “You will see when you can swallow the world in one gulp.” -Zen Aphorism > My submittal for the worst call is that “housing markets…Read More

Category: Bailouts, BP Cafe, Hedge Funds

Hedge Fund Performance by Strategy

With 6 hedge fund managers — Philip Falcone, Kenneth Griffin, John Paulson, James Simons and George Soros — testifying before the House Committee on Oversight and Government Reform today, it might be a good time to look at how various strategies have been performing. What hedge fund strategy has yielded the best relative performance? Not…Read More

Category: Hedge Funds, Markets, Politics, Trading