Hedge Fund Street

And Now, The Plunge

Is this the end of the hedge fund world as we know it – is it Apocalypse now? Sorry for being so dramatic, but then what is a person to do if people heaving theatrical sighs and moaning surround her. Once again, it comes to light that the hedge fund industry is at its roads end and has no option but to dissipate and vanish into the thin air that its dealings are made of.

Oh and before I forget, here are the tell tale signs that so-called experts have been flaunting. The first one of course is the IPO of hedge fund Fortress – the first ever US hedge fund to go public. Priced at $18.5, it closed its first day at $31 – a nearly 68 percent hike. So, how can this be bad news?

Well, you see hedge funds by their very nature, are supposed to be exclusive. Only the investors and the managers knew what really went on behind those closed doors – they really had no obligation to tell anybody what they did. Well, all that is going to change, for FIG at least. They are going to be, hold your breath, accountable to the investors that bought their shares!

The next sign is the heavy influx of both investors and so-called managers. As one expert succinctly put it, just about everybody with access to resources now wants a share of this supposedly huge pie. But you know what, here I must agree. Just because you have access to a huge cache of funds doesn’t automatically qualify you for this job.

Oh, and the final sign is of course Hollywood. Experts have it that if you ever find Hollywood exploring a topic or industry for a movie/ TV series, it is a sure sign that the lemmings are all ready to jump.

That completes this list. Don’t say you weren’t forewarned.

The Idiot’s Guide To Starting A Hedge Fund

This is one article that just begs to be repeated. If you are in need of big money – say something like $140 million, what do you do? Start a hedge fund of course. Nowadays there are two kinds of people in the financial world - those who want to run a hedge fund, and those who want to invest in one. Dailyreckoning.com.au reports:

Oh, if only we had had this helpful information two years ago. We could have begun a hedge fund based on our Anti-Liquidity Variable Evolutionary Model Portfolio Theory. Which is to say, we could have taken in $1 billion…made a single call to place the money in gold bullion…and then taken a two-year vacation in the tropics.

Read more: Need $135 Million? Just Start a Hedge Fund

Whose Money Is It Anyway?

Let me be honest here. I’ve always liked the idea of hedge funds – investing a truckload of money in the hope of getting multiple truckloads back. That’s what I call being rich. Only problem is… it’s a bit difficult to determine who actually gets rich. Is it the investors or their hedge fund managers? While I’d like to believe that both parties profit from this arrangement, the truth lies elsewhere.

Hedge funds are popular not only for the huge sums of money they make. They have been known to be extremely good spenders as well. That is to say hedge fund managers know how to show the money they earn. Rather too well, if you ask me.

Now, they seem to have found a way to curb the excessive spending. The latest in-thing for hedge fund managers are "hedge fund hotels". These posh plug-and-play suites are situated in posh places like Boston's financial district, or downtown London. In Singapore, these suites are even said to come complete with executive secretaries! There's a problem, though: banks back these luxury suites.

This means the hotels are often used as enticements to get hedge fund managers to invest in these banks. This means our ‘hard working’ hedge fund managers are using shareholder money to pad their heavy bottoms in luxurious suites. That’s not to say all hedge funds are in the same boat as these greedy few. But still it makes one wonder if regulation is not a bad thing after all. Regulation will make these guys accountable for every penny they spend, so they’ll think twice before stepping into that ultra-luxurious suite. What sezs?

Living It Up In London

Hedge funds are not all about making money. It’s also about showing money… lots of it. This is true especially if you are working out of London. Today, quite a few hedge fund firms are paying record rents for offices in London's Mayfair district, the world's most expensive business location. And they are definitely not complaining.

According to the managers, they need to impress their clients and also the price they pay is only a small part of their management fees. They feel that the going rate of $250 per square foot or $2750 per square meter is a small amount to pay as rent for this prime property. The area has now become London's hedge fund alley as money managers look for offices here.

Hedge Fund Mythbusters

Every time something drastic happens in the hedge fund world and just about everybody hits the panic button of regulation. Why does regulation have to be such a thorn in the side? Why can we just not get done with it and move on with life? Well, if things were that simple in life, we wouldn’t have any hedge funds at all to begin with. So, let’s cut out all this loose talk and try to find out why there is so much opposition to hedge funds.

Fine, I will not go into the exact whys because we’ve done that quite a few times. But what about the reasons cited by opponents of regulation? One of the most cited reasons is that hedge funds are already being indirectly supervised. Don’t get it? Well, look at it this way: Banks are not independent entities and are governed by a stringent set of rules. So the argument goes that since hedge funds have to deal with banks, which are regulated, it means the hedge funds are also regulated… partially. Well, I know it’s a bit of a stretch, but there you have it, the magic word: regulated.

The logic goes that the bank will guard against excesses by their hedge fund clients. They will not be doing this out of the goodness of their hearts (when were banks ever known to be GOOD?). Banks basically need to protect themselves from losses and regulatory problems, SO they will ensure that all dealings with hedge funds are propah.

One problem here though. This reason can be entertained only if bankers are free of conflicts that might impair their judgment. But be honest, can anybody actually sit there and look at a huge honeypot on his desk and not feel the urge to dip a teeny-weeny finger into it? And no, I’m not talking about banks cheating but about them being that wee bit reckless.

In the past few years, the hedge fund market has exploded. There’s just too much money going around and banks have benefited through increasingly larger commissions, fees and trading profits from them. Don’t you think that all this could induce some bankers to err on the side of recklessness? So, where are the naysayers now?

Beware! The End’s Near

Here’s one more opponent to hedge funds, and an influential one at that. Canadian money manager Eric Sprott believes that the entire financial system could collapse thanks to hedge funds. Sprott’s firm Sprott Asset Management Inc., runs assets of about $4-billion, of which $1.5-billion is in the form of hedge funds.

Getting back to the financial system collapse scenario, Sprott argues that banks are today offering massive leverage to hedge funds in the form of loans. Hedge funds usually borrow around three or four times their invested capital as this helps them earn bigger returns on investments.

Well, there is no problem with borrowing huge amounts of money. The problem lies with the nature of business of some of the more unscrupulous hedge funds. For instance, there is now a fast growing market for credit default swaps. So, hedge funds are now betting on the likelihood of companies defaulting on bonds. And the worrying aspect here is that most of the betting takes place on borrowed money – money that we regular guys put into our banks.

Sprott’s doomsday theory has it that if the market collapses, banks will suffer huge loan losses. Agreed, this can be quite a dangerous scenario. So what is the solution to this problem – one that allows hedge funds to grown and yet doesn’t put the entire economy in danger? Well, Sprott believes there is only one way out – regulation.

He believes that regulation will control the leverage offered to hedge funds. And, here is where he differs from other regulation theorists; it’s not the funds that need to come under scrutiny. Banks already have a set of rules in place that govern the amount of money that can be lent to managers. All Sprott wants is strict enforcement of these rules.

Hedge Funds Grow By Leaps & Bounds In Kangaroo Land

Now these are the kind of guys I just love. Here we have a certain group called the SEC, which just cannot help but breathe down the necks of hedge fund managers. Just about every time somebody makes some money, they are out there checking for frauds. And if there is a hefty loss as in the case of Amaranth, they have the ‘I-told-you-so’ smug look. Now they should learn from the Australians.

They are not only happy about the growth of the hedge fund industry, they are thinking in terms of hedge fund exports! Way to go boys! As of June 2005, the Australian hedge fund industry was valued at $35 billion, with $22 billion invested directly with hedge funds, and a further $13 billion invested in funds of hedge funds.

Film Fever Hits UK Hedge Fund Industry

What’s it about movies and hedge funds? The trend began in Hollywood and has now spread to the UK film industry. Recently, Simon Fawcett, chief executive of Aramid Capital Partners, announced that they are spearheading the launch of a hedge fund to provide finance for independent British films. Timesonline.co.uk reports:

Aramid works by offering “bridge finance” to UK producers. Under a new tax scheme to encourage film-making in Britain, producers can gain tax credits depending on how much of a film is produced in the UK, but they may have to wait some time to receive the money.

Read more: Fawcett spearheads hedge fund launch

Volatile! Who Us?

There is a common belief or should I say misconception that hedge funds are volatile by nature. People who don’t know much about these funds believe that hedge funds use global macro strategies and use lots of leverage to place large directional bets on stocks, currencies, bonds, commodities or gold. Sadly, reality is not so romantic. Less than 5 percent of hedge funds can claim to be global macro funds. Most hedge funds use derivatives only for hedging or don’t use derivatives at all. And most importantly, many funds use no leverage.

Most hedge funds primarily aim to reduce volatility and risk while at the same time preserving capital. And irrespective of the market conditions, they want to consistently deliver positive returns. This is quite a tall order and hence it makes it doubly interesting to know how you can manage the volatile with the stable to ensure consistent returns.

Hedge Funds To Monitor Blogs, Gossip

They take even gossip seriously, these hedge funds. It now transpires that market gossip is going to take on a more high-tech form thanks to a new automated system that will trawl through more than 40m Internet sources – from blogs (that’s us, guys!) to regulatory filings. Called Monitor110, the platform, which is being run by a former Deutsche bank executive, is due for an official launch in the first half of 2007. At present, ten hedge funds are trying out the system.

The platform’s main duty is to act as an aggregator and a filter for hedge funds. This will help the funds keep up with the information overkill on the Internet. And they will go through blogs as well.

Hedge Fund Wants To Make Market Foray

First they cornered the market and ensured that they got the lion’s share of revenues. Now that they’ve crossed the million, billion and trillion markets, some of them have decided that it is time to share their wealth. Well, don’t worry, your hedge fund is not indulging in any charity. For the first time, a hedge fund business wants to enter the market with an initial public offering (IPO).

While the news is yet to be confirmed, it is believed that Fortress Investment Group, a $24 billion private investment firm, is considering an initial share sale. Several investment banks are supposed to have approached the firm about an offering. However, the final decision is yet to be made and no IPO underwriters have been hired as yet. Marketwatch.com reports:

If Fortress went ahead with a public share sale, it would be the first IPO by a hedge fund business in the U.S. An offering could value the firm at $5 billion to $7 billion, the New York Times reported, citing unnamed people who had been briefed on the plans.

Read more: Fortress mulls going public, but hasn't hired banks

To D.C., To D.C. Ahoy!

Why are hedge fund managers pumping in millions into the political game in Washington? The reason’s not far to seek – one thing you must admit about hedge fund managers is that subtlety is not a priority with these guys. So when there was a hustle and bustle in the power circles and a few powerful guys (Securities and Exchange Commission) cleared their throats and delivered what they thought was a solution to combat the ‘Big Issue’, hedge fund managers decided to show their might in the only way they knew.

The biggest problem is that they’ve become too visible. Hedge fund managers have emerged as players on this scene due to their rapid growth -- assets under management have doubled in the past five years. Worried, SEC adopted a rule forcing many hedge fund advisers to register with the investor protection agency and submit to occasional inspections. Only to be beaten by a federal appeals court. But this was enough for the hedge funds, which are now trudging the beaten path to power circles. Guess it’s time to sit back and enjoy what promises to be a long drawn battle of equals (?)

Hedge Funds On Mission Hollywood

You would imagine that hedge funds, which deal in billions of dollars, take innumerous risks and are at best, involved in a fun game, would have no need for glamour. At least I did. But I guess it is not easy to remain unfazed when faced with Hollywood dazzle. So what do you have now? Hedge funds that are pouring their billions into the film industry, hoping to find block-buster returns in the film business.

One reason could be that plain corporate investments are not providing the spectacular returns that a Hollywood blockbuster can. Anyway, whatever the reason, in the past three years more than $4 billion of hedge fund money has been invested in Hollywood movies, with the lion’s share going to mainstream studios looking for new sources of finance. Another reason for this growing interest in Tinseltown is that after all, even these guys – the hedge fund managers – are humans after all and cannot be immune to the stars.

Hedge Fund Drama, Hollywood Style

And you thought film stars had it all. Well, in a way they do – common folks don’t invest in hedge funds so they don’t have to face the kind of problems Sylvester Stallone is going through. But when you come to think of it, he and a few others like John Cusack are not suffering because of losses. The ghost of a failed hedge fund has come back to haunt them – and this is quite peculiar even in the quirky world of hedge funds.

So, let me get down to details: In 1997, the actor invested $2.5 million in a private investment partnership called Lipper Convertibles. Four years later, with his statements showing the investment had swelled to about $3.8 million, he cashed out. Fellow actor John Cusack also walked away with big gains, as did former New York City Mayor Ed Koch and a trust fund for the children of investor Henry Kravis. Now, they are all being sued to give money back. Post-gazette.com reports:

What none realized, according to their lawyers, was that Lipper never made all that money. A portfolio manager had inflated profits by at least 40 percent, Lipper discovered in 2002. "We want all the money to be put back in the pool, so we can divvy it up equitably among all the partners," says Thomas Dubbs, an attorney representing the federal trustee overseeing Lipper.

Read more: Failed hedge fund haunts celebrities

Why Beta Aims To Be Alpha

What are these terms doing in hedge funds? If you are new to the world of hedge funds, here are a few more terms you need to be introduced to. Firstly, let’s take a look at the beta because that’s what ordinary investors usually make do with. Beta means basic market returns as embodied by the Standard & Poor's 500 composite index of stocks. So what’s alpha. Well, there’s no hard and fast definition but they represent the outsized returns that come from more exotic investments. These usually come from tempting emerging markets in China and India, say, or commodities.

Now, there’s a new alpha in town – the portable alpha. This is the term investment managers have given to the notion that by moving out of the S&P 500 universe, they can match the performance of George Soros. And why is there such a rush to move to the alpha playground? One reason could be the wildly outsize reward for alpha performance. For the top 26 hedge fund managers, the average pay last year was a whopping $363 million!

Dip, Dip Fund of Funds

I know I’ve been going on and on about fund of funds and about how they are good and a safer investment. But now as I research more about fund of funds, I find that I may have been misguided by the sheen. I mean it may not be as good as it sounds. As the cliché goes, I probably made the mistake of judging the book by its cover. And well there are quite a few out there who probably make the same mistake. When you invest in a fund of funds, you probably believe that your fund of funds manager is doing the best he or she can for your investment. You better think again! At the end of the day, the hedge fund market also plays the fee game. Everybody is in it for the money and the investor is the golden honey pot. Yes, this may sound ridiculous, but look at it this way – hedge fund managers are human too and greed is a typically human trait, isn’t it? Well, I digress again.

It seems the hedge fund community engages in a practice called ‘double dipping’. This means, they may not always be seeking the best manager for their multi-strategy funds. They may be seeking the best marketing deals in each strategy they can get within each strategy. Sounds confusing? Let me explain. These managers glib talk you, the investor, into investing in their fund of fund vehicles. And on the hedge fund side, they offer contract marketing agreements. So, they essentially make money from both ends – the investors and a marketing fee for putting their fund of funds investment with a manager in any given particular strategy.

The problem with this strategy is that while the fund of funds manager makes his/her money, you may be getting a raw deal. I mean this fund of fund manager is probably passing up a good manager in a given strategy to get a better deal with a lesser quality manager. Are you game for such a risk?

Hedge Funds Don’t Want Extra Returns

The fact that most hedge fund strategies are market neutral is a fact I really don’t need to reiterate. And now, clients of hedge funds have become more careful and want their hedge fund managers to ensure assured returns on their investments. So pray tell me does the alpha—the extra return that active fund managers claim to earn above the market rate – really exist?

For many trading strategies, there is a limit to the amount of money that can be moved around cheaply and briskly. While punting large amounts on the highly liquid foreign-exchange or government-bond markets is easy, betting on illiquid corporate bonds or shares is far harder. And the larger the amounts, the more expensive the bets are. For this very reason, many of the oldest and best-known hedge funds do not accept any new money. Some have even been handing capital back to investors.

Oil Prices and Hedge Funds

With rumors being rife that hedge fund managers were responsible for the spike in the price of oil, there is widespread speculation if there is a proportional link between the trading activities in hedge funds and the crude oil and natural gas futures markets. Hedge funds, which are private investment pools that allow rich individual and institutional investors to trade in various assets, including commodity futures, have been seen to increase their trading of oil futures, according to data from the New York Mercantile Exchange on the trading volume of crude oil futures contracts and natural gas contracts. A futures contract is an agreement to buy or sell a commodity or financial instrument at some future time. Money CNN reports:

"On any given day, the speculatives can make the price move higher or lower than it probably ought to, and I'm sure you could say hedge fund buying has helped push the prices higher," said Peter Beutel, president of energy risk management firm CameronHanover. But he added that not all hedge funds are holding long positions, and in the natural gas futures markets, hedge funds are actually holding more short positions - when investments are sold before they are bought in a bet that prices will fall - than long.

Cool hedge funds

Here’s something that will instill a bit of fun into the straitjacketed world of hedge funds. Something that’ll make you rock ‘n’ roll! Sounds intriguing doesn’t it? Hedge funds are being jazzed up to make them more interesting and fun. And guess who’s behind this move – British companies. Yes, you heard me right – probably they thought the industry could do with a bit of loosening up.

One is tempted to ask the motive behind this move. Is the industry, which has always been associated with the uber-rich, attempting to remodel itself into a fun thing? It seems the hedge fund industry is no longer satisfied with hobnobbing with billionaire financiers and wants to move out into the world. And it has done this in style. So, you have Hedgestock 2006, a rollicking fun event that will kick off the metamorphosis of the industry. Sponsors hope to make the event, which will be held soon, the premier hedge-fund-industry trade show of Europe. Guess it won’t be long before we have our own cool hedge fund event.

Great Literature for Hedge Fund Investors

Of late, some of the 'letters' that Hedge Fund investors are receiving have a language that is so eloquent and full of poetry that they deserve to be placed along side other popular literary works. Deviating from the dry and lack luster style that most finance write ups adopt, Fund managers are beginning to rely more on prose, poetry and interesting analogies to make their fund 'read' better to prospective as well as existing clients.

The point remains whether sounding off investors with impressive flowery words actually make any effect. Hedge Fund investors are generally looking for big profits and think in terms of numbers, will the use of rhyming couplets and sonnets in investment letters have any impression on them. Putting up parallels that explain strategies is fine or even inspirational real stories may make a difference, but to think investors have the time or the interest to read pages of literature on the performance of their funds is too much to expect.

Hedge funds dislike the idea of being charged 50 pounds for FSA breakfast

Here is a story of how someone playing in millions can kick a fuss over someone asking for small change. Financial Services Authority (FSA) organized a meeting with the hedge fund managers to apprise them of what it expects the members to do and how it feels that they should conduct themselves. Regulation has recently become a hot topic of discussion across the globe. This is stemming from the basic need of putting some checks in the industry so as to safeguard the interests of investors. The situation is attracting a lot of attention because the alternative investment vehicles that were available to only the institutional investors or the ultra rich is now percolating down to the masses as well.

Coming back to the FSAs meeting: The organizers of the meeting have asked all the attendees to pay for the breakfast that is going to be served at the meeting. The price is pegged at 50 pounds. A petty amount one may feel for the managers some of whom form the top earners in the financial markets. Despite this reality, there is uproar about why the amount is being charged.

The argument being presented is that when the funds are paying the authority almost 50,000 pounds per year for being allowed to trade, why are they asking to be paid for the breakfast. The registration invite sent out to the industry included the details of what to expect at the meeting and mentions very clearly that the registrations will not be entertained without the mentioned ‘breakfast’ fee.

The fund managers feel that this could have been acceptable if the organizers were imparting a training of some sorts. But to pay for a breakfast where they are being invited to listen to the representatives of FSA on how they will be imposing regulations on the invitees is absurd. The FSA however maintains that a fee of this kind has always been charged when ever an event like this is being organized and went on to specify that the breakfast will include croissants, pastries and coffee. Reuters reports:

“The audience with Andrew Shrimpton, the head of the FSA's new hedge fund supervisory unit, is in early December and the regulator said it will give hedge fund managers a chance to talk over industry issues.”

Moscow based hedge fund will contest Refco bankruptcy

Refco, the largest independent U.S. futures brokerage filed for bankruptcy in October. It’s crash really started off on 10th October when Philip Bennett, the company’s Chief Executive was suspended by the company. He was subsequently arrested and charged with securities fraud amounting to $430 million. He had allegedly hidden away the mentioned amount debt to the company.

This initiated a cascade effect which got in a lot of people in it’s fold. Refco's bankruptcy filing has included Moscow-based hedge fund VR Group as its major creditor. Its total exposure is currently valued at $472 million. The other creditors named in the list include Austrian bank BAWAG and U.S. Wells Fargo. This information was revealed at the New York Southern District bankruptcy court show.

Further to the filing, VR Group has taken strong objection to their name being included in the creditors list. The group claims that the money was being held in custody by Refco on VR's behalf and therefore should not be included in the bankruptcy process. Though no figures have been shared by the company, financial sources in Moscow indicate that close to $600 million of the groups assets were at risk.

Founder and president of distressed debt specialist VR Group, Richard Deitz, stated that they would fight tooth and nail on the case. He informed the press that they will do every thing within their means to protect their assets and as such none of the funds under the group are in any sort of ‘jeopardy’. 
    
Deitz has gone a step ahead and assured its investors and clients that the company will go all out to contain the crisis. Its client list includes the who’s who in Moscow, London, Geneva and New York. The Washington Post reports:

“The sources said VR's mainly-Russian team had regularly scored well in hedge fund performance surveys, while the outfit was shortlisted for an award this year by industry journal Hedge Funds Review”

Is the brain drain from Mutual Funds to Hedge Funds for real?

Why will someone knowingly bargain for more work and less compensation? It is possibly because he is unable to get a job where he gets a vice versa deal. This very much seems to be the scenario as far as fund managers are concerned. The good traditional Money Managers operating in the Mutual Fund category are being poached by Hedge Funds. They are continuously being pulled into Hedge funds by offers of higher remuneration with additional performance pay thrown in.

The managers are also provided with enough freedom to employ various strategies to generate returns. Unlike in Mutual Funds, the managers can make money when the market is only on an upswing; Hedge fund managers can do it any market scenario. This implies that at any time the Hedge Fund manager can in-fact generate returns and add to his performance bonus. Hedge Funds also have lower regulatory barriers for new managers as compared to Mutual Fund. Deep pockets enable hedge funds to get the right talent when ever they want. Mutual Funds on the other hand are not so rich and therefore loose their star performers to Hedge Funds more often than not. So what the hedge funds have is the smartest brains in the investment arena. They are also able to attract right talent straight from B-schools. The new managers understand that they have to work hard whether they are managing Mutual Funds or Hedge Funds.

Therefore it comes as no surprise that these young managers aim to be part of Hedge Fund team rather than Mutual Funds or any other traditional investment tools. These were very much the points highlighted on the issue of brain drain by Mario Gabelli, Chairman of GAMCO Investors Inc at the Reuters Hedge Fund Summit in New York recently. Hedgeco.net reports:

“Gabelli told conference attendees at the Reuters Hedge Fund Summit, “A Hedge Fund manager in theory has the smartest people. They are very focused, highly incentivised, by and large”

Read More: Traditional Money Managers face challenges from brain drain to Hedge Funds

GM Bond Hedge Fund Rumor

The Dow Jones Industrial Average and Standard & Poor's 500 index both dropped 1 percent today on rumors regarding allegedly large hedge fund losses. The U.S.-listed stock of Deutsche Bank fell 3.3 percent today on speculation that it suffered investment banking losses in connection with a hedge fund. The rumor on Wall Street is that many hedge funds were overinvested in General Motors bonds, which were downgraded to "junk" status by S&P last week. According to Reuters:

"Regardless of what the (hedge fund) rumors are, today highlights the risks inherent in this market where a lot of money was made because of the easy money the Federal Reserve provided," said Peter Boockvar, equity strategist at Miller Tabak & Co.

Read more: Stocks sink on hedge fund rumors

Hedge Fund Research Firm Launches Website

Asia's oldest hedge fund research consulting firm, GFIA, has launched www.fundhub.com. The new website enables hedge fund allocators to purchase objective research reports on Asian and Latin American hedge funds. This new service that is being offered by GFIA is the first of its kind in Asia and is a response to the ever increasing demand for hedge fund based research. Singapore based GFIA, says that fundhub will appeal to a large audience because of the top notch research that is being offered. Currently, there are 12 research reports on the site with more to come. According to Financeasia.com:

"We expect the service to appeal most to medium sized fund of funds, family offices," he says. "However, we've also sold packages to asset management and hedge fund services units of banks."

Read more: GFIA launches hedge fund research report website

Hedge Funds and the Proverbial Bubble

Matthew Lynn, columnist for Bloomberg News, declares that there is still much money to be made in the hedge fund industry. However, Lynn does warn that investors must take a smarter approach as opposed to last year. Many fund managers are making the switch to hedge funds because of the potential to make money, despite that they are already some of the most successful mutual fund managers.

And yet, comparisons are still being made to all the failed dot com business that emerged in 2000. Many are wondering if the new hedge fund managers that left their secure jobs as other fund managers will experience a fate similar to those involved in the dot com era. Both sides of the argument are widely debated. According to Bloomberg.com:

Some analysts reckon so many funds have been launched, the market has reached saturation point. Others say there is still plenty of scope for growth and much demand for skilled operators.

Read more: Is There Still Time to Catch the Hedge-Fund Bus?

Los Angeles Fire and Police Pension System Moves to Hedge Funds

Later this year, the Los Angeles Fire and Police Pension System is preparing to invest in hedge funds. The $12.5 billion system will begin to look for a manger to oversee $150 million in REITs this month. The size of the hedge fund has yet to be determined, but it is thought that the initial investment will be less than 1%. The idea is to yield 10% to real estate and an additional 10% to alternatives. The board began entertaining the thought of hedge funds due to the fact that numerous funds have moved into the asset class. For the past couple of years, the board has sought out much information about hedge funds and now they are utilizing their knowledge to finally institute their plan.

The plan will hire a fund-of-funds manager to gain access to a diversified portfolio and delegate the hedge fund selection decisions.

Read more: L.A. Fund To Invest In Hedge Funds, REITs

Did a West Palm Beach Fund Manager Skip to Korea?

A hedge fund manager from West Palm Beach who was recently sued by the SEC over accusations that he and his partners defrauded investors may have fled to South Korea. According To Bloomberg:

Won Sok Lee, 34, is one of three owners of KL Group LLC, which was sued by the SEC on March 2. Lee used frequent-flier miles to buy a one-way ticket to Seoul on Feb. 23, said Gary Klein, a Boca Raton lawyer who's representing KL employees and more than 30 investors.

"One of my clients saw the paperwork for the ticket and the itinerary" on Lee's desk, Klein said.

Read more: West Palm Beach Hedge Fund Manager May Have Fled U.S. for Korea