It has been a long a hot summer: The markets, the politics, the weather and the senseless violence both here and abroad. Thankfully in the next few weeks the summer will wind down and cooler heads will prevail. We hope. Then there’s the election, the focus of everything and anything for the next months. Fatigue on this subject has not set in and, heck, it’s all anyone is talking about these days. The question is what does this all mean for the hedge fund industry? The answer is I’m not sure. Many investors are concerned about performance and fees, while risk management and ever-changing rules and regulations are causing many managers to reevaluate the way they do business.
The big news in hedge funds was a report a couple of weeks back that small funds perform better then large ones. No surprise there. Funds that are smaller are more nimble, don’t usually run into slippage problems and many are more focused on managing assets rather than just gathering them. Read the article here.
As the hedge fund industry continues to evolve and adapt to new political, market and regulatory environments, it’s important to stay on top of managers. Investors need to ask questions and demand answers. For example, I was talking to a manager recently who told me that his firm puts out an due diligence questionnaire and expects it to be all an investor needs to decide whether to invest. This is, simply put, rubbish. A DDQ, while important, is just the starting point. It’s where one should go to begin the due diligence process – not where it starts and ends. Investors need to look beyond the info contained in a the DDQ and dig in to how the money is managed and how the operation operates. It is difficult and arduous process that when completed correctly allows you to make better investment decisions.
With that, some shameless self-promotion: Operations for Alternatives has an event coming to New York on October 7, focused on compliance. To learn about OFA’s Hedge Fund Compliance and to register click here.
HEDGEAnswers is kicking off its conference call series on October 19. Click here to register.
Things that drive me crazy
I am sick and tired of people who don’t know how to go through airport security. I am not talking about the standard line, I am talking about the TSA Pre-line. It is a great service that I am happy to use whenever possible. Recently, though, the people ahead of me in line seem to not be able to listen or simply don’t understand the benefits of the Pre-check line. They are slow, take their shoes off, remove coats, and forget to remove things from pockets – like pens, cellphones, wallets and all metal objects. I don’t understand how people cannot pay enough attention to get this right – maybe they should stop talking on the phone and pay attention to something that is right in front of their faces.
A sad note
A couple of weeks back, I got an email from a former colleague that my first boss, Brian Tracey, had died unexpectedly of a heart attack. I had not seen or heard from Brian in probably ten years – maybe longer – as the last time we got together I believe was after the Red Sox won the ALCS in 2004. We had a standard 20-buck bet for probably ten years straight on who would finish better, the Sox or the Yanks. I lost my fair share, and he always bought me a beer after I paid him. Anyway, this is the guy who gave me my first job out of college, he is the guy who told me that the first story I wrote for the American Banker needed to be better and who taught me how banks and financial institutions use technology to make their operations more efficient and why that was important. I was saddened to hear of his death and will remember what he did for me always.