July 2009
"... bolster our capabilities as we will be able to perform some functions in house, such as Operational Due Diligence, which were previously run through an outsourced service provider."
This simply underscores the inefficiencies of the Hedge Fund of Funds industry pre-Madoff and the apparent lack of operational due diligence for many firms. The good news is that the industry has upgraded this area since 2009.
Monday, February 20, 2012
Thursday, February 9, 2012
HedgeSpeak: Side Pockets Anyone?
December 2005
"These adjustments are designed to provide additional comfort to investors. First, we are committing that no side pocket investment will have a duration of greater than 10 years."
No comment.
"These adjustments are designed to provide additional comfort to investors. First, we are committing that no side pocket investment will have a duration of greater than 10 years."
No comment.
Thursday, June 10, 2010
Fund of Fund-Speak
"Yes, I’m a buyer, but I am a parasite on other people’s genius"
David Smith, GAM
One of my favorite quotes that best describes the Hedge Fund of Fund industry.
David Smith, GAM
One of my favorite quotes that best describes the Hedge Fund of Fund industry.
Friday, May 28, 2010
More Footnote-Speak
March 31st 2010
“(1) 1. ...Performance data pertaining to periods after 12/31/06 relates to investors that are charged a 2% management fee and a 20% performance fee. Performance data pertaining to periods prior 12/31/06 relates to investors that are charged a 1.5% management fee and a 20% performance fee Fees applicable to certain investors may be different."
It is always worth the time to peruse the footnotes which is why I am posting another footnote comment.
Clearly the relevant fund manager increased their management fees when business was booming (consistent with the rest of the industry), but I remain curious how long before we see reversion to pre-2006 fee levels.
Anyone? Separately, in case you were wondering... the typo is from the managers letter.
“(1) 1. ...Performance data pertaining to periods after 12/31/06 relates to investors that are charged a 2% management fee and a 20% performance fee. Performance data pertaining to periods prior 12/31/06 relates to investors that are charged a 1.5% management fee and a 20% performance fee Fees applicable to certain investors may be different."
It is always worth the time to peruse the footnotes which is why I am posting another footnote comment.
Clearly the relevant fund manager increased their management fees when business was booming (consistent with the rest of the industry), but I remain curious how long before we see reversion to pre-2006 fee levels.
Anyone? Separately, in case you were wondering... the typo is from the managers letter.
Thursday, May 20, 2010
Footnote-Speak Mr. Mauldin?
May 18th, 2010
"...I will focus on another issue close to my heart – commodities.
In last month's Absolute Return Letter I raised a yellow flag concerning the short term outlook for commodities[1]."
"Footnotes:[1] There is no denying that the long term outlook for commodities continues to be bullish, mainly driven by the strong growth in emerging market economies."
Source John Mauldin JohnMauldin@InvestorsInsight.com
For those that have received Mr. Mauldins recent (relevant) letter discussing a a yellow flag relating to Commodities, I urge everyone to absorb its contents and possible importance. He is often 6 to 12 months premature, but he has clearly flushed out (no pun intended) issues relating to the evolution of commodities within our modern financial markets. Buyers beware.
That said, his careful phrasing and protective footnote illustrate how investors may choose to carefully read all documents from start to end.
"...I will focus on another issue close to my heart – commodities.
In last month's Absolute Return Letter I raised a yellow flag concerning the short term outlook for commodities[1]."
"Footnotes:[1] There is no denying that the long term outlook for commodities continues to be bullish, mainly driven by the strong growth in emerging market economies."
Source John Mauldin JohnMauldin@InvestorsInsight.com
For those that have received Mr. Mauldins recent (relevant) letter discussing a a yellow flag relating to Commodities, I urge everyone to absorb its contents and possible importance. He is often 6 to 12 months premature, but he has clearly flushed out (no pun intended) issues relating to the evolution of commodities within our modern financial markets. Buyers beware.
That said, his careful phrasing and protective footnote illustrate how investors may choose to carefully read all documents from start to end.
Monday, April 19, 2010
FedSpeak
April 2010
"I Saw the Crisis Coming. Why Didn’t the Fed?
By MICHAEL J. BURRY
Cupertino, Calif.
ALAN GREENSPAN, the former chairman of the Federal Reserve, proclaimed last month that no one could have predicted the housing bubble. "Everybody missed it," he said, "academia, the Federal Reserve, all regulators."
But that is not how I remember it. Back in 2005 and 2006, I argued as forcefully as I could, in letters to clients of my investment firm, Scion Capital, that the mortgage market would melt down in the second half of 2007, causing substantial damage to the economy. My prediction was based on my research into the residential mortgage market and mortgage-backed securities."
This appeared as an Op Ed in the New York Times earlier this month and the author calls out former Fed Chairman Greenspan for being asleep at the wheel. He along with several other hedge fund firms (and broker dealers) were actively informing the world of their "contrarian" views. One of these views even emanating from one of Deutsche Banks own traders who was ridiculed with the nickname "chicken little (as in the sky is falling)."
As an investor, one should be listening to the herd (as in sheep), but more importantly, pay constant attention to the "nay sayers" in order to better understand the risk of what could go wrong. It is odd that Mr. Greenspan did not have an entourage that employed similar strategies.
Has anyone asked whether there have been changes to the process within the Fed?
"I Saw the Crisis Coming. Why Didn’t the Fed?
By MICHAEL J. BURRY
Cupertino, Calif.
ALAN GREENSPAN, the former chairman of the Federal Reserve, proclaimed last month that no one could have predicted the housing bubble. "Everybody missed it," he said, "academia, the Federal Reserve, all regulators."
But that is not how I remember it. Back in 2005 and 2006, I argued as forcefully as I could, in letters to clients of my investment firm, Scion Capital, that the mortgage market would melt down in the second half of 2007, causing substantial damage to the economy. My prediction was based on my research into the residential mortgage market and mortgage-backed securities."
This appeared as an Op Ed in the New York Times earlier this month and the author calls out former Fed Chairman Greenspan for being asleep at the wheel. He along with several other hedge fund firms (and broker dealers) were actively informing the world of their "contrarian" views. One of these views even emanating from one of Deutsche Banks own traders who was ridiculed with the nickname "chicken little (as in the sky is falling)."
As an investor, one should be listening to the herd (as in sheep), but more importantly, pay constant attention to the "nay sayers" in order to better understand the risk of what could go wrong. It is odd that Mr. Greenspan did not have an entourage that employed similar strategies.
Has anyone asked whether there have been changes to the process within the Fed?
Monday, February 22, 2010
Mr. Soros speaks Greek
February 21st 2010
"The situation is aggravated by the market in credit default swaps, which is biased in favour of those who speculate on failure. Being long CDS, the risk automatically declines if they are wrong. This is the opposite of selling short stocks, where being wrong the risk automatically increases. Speculation in CDS may drive the risk premium higher."
"So makeshift assistance should be enough for Greece, but that leaves Spain, Italy, Portugal and Ireland. Together they constitute too large a portion of euroland to be helped in this way. The survival of Greece would still leave the future of the euro in question. Even if it handles the current crisis, what about the next one?"
Channeling an old TV commercial:"When Soros speaks, people listen."
Most managers have been positioned on the PIIGS for the past 2 years and simply waiting for events to unfold. Was Europe not listening?
"The situation is aggravated by the market in credit default swaps, which is biased in favour of those who speculate on failure. Being long CDS, the risk automatically declines if they are wrong. This is the opposite of selling short stocks, where being wrong the risk automatically increases. Speculation in CDS may drive the risk premium higher."
"So makeshift assistance should be enough for Greece, but that leaves Spain, Italy, Portugal and Ireland. Together they constitute too large a portion of euroland to be helped in this way. The survival of Greece would still leave the future of the euro in question. Even if it handles the current crisis, what about the next one?"
Channeling an old TV commercial:"When Soros speaks, people listen."
Most managers have been positioned on the PIIGS for the past 2 years and simply waiting for events to unfold. Was Europe not listening?
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