I refuse, refuse, I say, to write about the popular press’s continued ranting and raving about the death of the hedge fund industry. That being said, if you believe them, well, stop reading.
Over the last few weeks The Wall Street Journal’s coverage of hedge funds has shifted from the the industry to individuals in it. The articles are interesting, to say the least. Still, while I question the motives behind publishing an article or two about a manager who is having trouble performing in the markets due to divorce or poker, at least they are not reporting on the death of the industry as a whole. Give it time; I am sure this will change.
That being said, I think the popular press has it wrong. There is definitely something in the air. In a completely unscientific survey, it would appear that people are once again engaging lawyers, accountants, brokers and administrators to launch funds. The big launches — north of a couple hundred million, or even a billion — are few and far between, but sub-100 million start-ups are in the works. It’s not just funds trading crypto or cannabis. Crypto is still quite active, but the salad days of the cannabis fund seem to have gone up in smoke. The new norm in cannabis is direct investments or co-investments. Using a fund structure for this strategy is hard, and seems to have gone out of favor. As for crypto — well, besides its being the biggest mania since the days of the Tulip — I actually don’t believe this – I really think it is here to stay.Those who don’t believe crypto and blockchain are real are mistaken — new funds are launching but it seems that the managers are having a hard time finding service providers (heads out of the gutter, please). Many of the accounting firms and administrators that just a few months ago were all about crypto have looked for chairs; the music has stopped – read volatility in the market and that they have found that working with crypto funds and in turn assets, isn’t as easy as they once thought.
That leaves the good old long/short equity and fixed-income arbitrage managers. These folks are launching with a real purpose —delivering alpha. There is plenty of room for strategies and funds that work as investors realize they need funds that zig when the markets zag. Simply put, hedge funds and the strategies that managers use to manage them are here to stay. It is time to tune into the hedge fund industry, not drop out of it.
Now I want to take a moment to promote the Investment Management Due Diligence Association. As many of you know, this is the only organization in the world focused on providing pure education to investors on how to manage investment and to perform operational due diligence. The IMDDA just launched a new website with some really cool features, content and tools. It’s worth taking a minute to have a look at www.imdda.org.
Things that drive me crazy
Recently, I had a guy come to fix my garage door opener. The motherboard had shorted and needed to be replaced. When he quoted me the price, I thanked him very much for coming, adding, “No, thank you.” He proceeded to tell me that there was a $40 fee for his coming to the house. I again thanked him, and told him that I was not going to pay to have him come to the house and have him steal from me. Well, he did not like this and told me that he was going to tell his boss and furthermore put me on the bosses’ list. I said, “Make sure my name’s in bold letters and get out my driveway.” People have some nerve.