Hedge Funds
Beware of that hedge fund in the window
May 23, 2013: 3:29 PM ET
When hedge fund managers advertise, performance dips.
FORTUNE -- Hedge funds soon will be allowed to advertise their wares to potential clients, thanks to a provision in last year's JOBS Act (which had no direct relation to actual jobs). As will private equity funds, venture capital funds and other alternative investment vehicles that heretofore were prohibited from general solicitation.
Former SEC Commissioner Mary Shapiro opposed the change, so she basically sat on it (apparently believing her personal opinion trumped the directive of federal legislation). New SEC Commissioner Mary Jo White has suggested that she'll move this and other JOBS Act provisions along shortly.
So in a few months expect the pages of your favorite financial rag and website to contain advertisements for investment opportunities that you probably can't afford (since you'll still need to be an "accredited investor" to actually participate). For the 1%, however, a word of warning: Future performance is likely to be worse than past performance.
That's the finding of a new academic paper that examined the results of mutual fund advertising by companies also manage hedge funds. These advertisements don't specifically mention the hedge funds -- that still would be illegal under current law -- but they do compel wealthy individuals to ring the parent organization, which then does a classic up-sell.
The researchers learned that such advertisements generally follow a lull of hedge fund inflows, and result in a monthly bump of 0.5%. Not too shabby, considering that they were technically advertising for something else.
At the same time, however, the researchers found that monthly hedge fund performance post-advertisement fell by 0.1%. There isn't a specific explanation for the post-advertising performance dip, except perhaps that performance is negatively correlated to inflows (something that venture capital and private equity firms often talk about).
To be sure, a 0.1% decrease is not the end of an investor's world -- particularly if we're talking about a fund that had strong performance to begin with. But it also means that when these opportunities become more widespread, investors should consider that they'll likely be paying full price for items that ultimately will be discounted.
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The 4 hedge funders losing big in the Japan rout
There's one big winner, too.
FORTUNE -- The "Abe Trade" just hit a major bump.
Toward the end of last year, a number of large hedge funds began piling into Japan. Driving the bet was the country's new prime minister Shinzo Abe, who said he favored flooding Japan's markets with cash from its central bank in order to finally pull its economy out of its perpetual slump. And hedge funds, for all MORE
Stephen Gandel, senior editor - May 23, 2013 1:35 PM ETPosted in: dan loeb, Hedge Funds, japan, Kyle Bass, Louis Bacon, Paul Tudor Jones, Stan Druckenmiller -
Goldman pushes hedge funds for your 401(k)
Wall Street is rolling out low-minimum mutual funds that will let you lose money like a high roller.
FORTUNE -- Usually Wall Street waits for a bubble before it pushes an investment on average Joes.
So it's certainly a change that the returns on the investment Wall Street is currently trying to sell to individual investors have stunk lately. Is that any better? Probably not.
Goldman Sachs (GS) recently announced it was launching MORE
Stephen Gandel, senior editor - May 22, 2013 5:00 AM ET -
Mortgages are investment du jour for hedge funds
At a confab of big money managers, the hottest topic was the home loan market. Scared yet?
FORTUNE -- In less than five years, mortgages have gone from toxic to tonic.
It's the same life span as the annual hedge fund conference SALT, where many of the top professional managers met last week to talk investments, hear speeches from luminaries like Al Pacino, and generally have a good time. In all, Las MORE
Stephen Gandel, senior editor - May 13, 2013 7:00 AM ET -
Sam Zell says sell
Legendary investor says stock market is in state of "euphoria," while economy is still in the dumps.
FORTUNE -- At least one notable investor thinks we may be in bubble trouble again.
Sam Zell on Thursday at the SALT hedge fund conference in Las Vegas said stocks are due for a fall. The legendary real estate investor thinks the market is out of touch with what is really going on in the MORE
Stephen Gandel, senior editor - May 10, 2013 9:02 AM ET -
Why Dan Loeb loves Japan
Hedge fund manager Dan Loeb says Japanese stocks are cheap.
FORTUNE -- Dan Loeb, the $11 billion hedge fund titan, says he is betting on a Japanese rebound.
Speaking on Thursday at the annual SALT hedge fund conference, Loeb named Japan as the investment he is most excited about right now.
"We are extremely focused on Japan," says Loeb, who runs the Third Point hedge fund.
In a recent investing letter, Loeb mentioned that MORE
Stephen Gandel, senior editor - May 9, 2013 5:01 PM ET -
A Davos grows in the desert
Anthony Scaramucci has elevated a Vegas hedge fund confab into a conference of big ideas.
FORTUNE -- Hedge fund-of-funds manager Anthony Scaramucci is often referred to by his nickname, "the Mooch." His hair is coiffed, his shirts are pink, and he likes to throw off brow-raising quotes with the recklessness of a man who's living in a powder keg and giving off sparks. Take, for example, what he told New York Magazine last spring: "I MORE
Katie Benner - May 8, 2013 8:00 PM ET -
Roubini: Why I like stocks, for now
New York University economist Nouriel Roubini comes under fire for his bullish market call.
FORTUNE -- Recently the famously gloomy economist Nouriel Roubini has been talking up stocks. He says the Federal Reserve is pumping up the U.S. market and that the weak global economy will require it to do so for the next two years. That's an opportunity for anyone who has money in the market. After that, watch out.
But MORE
Stephen Gandel, senior editor - May 8, 2013 3:37 PM ET -
Cooperman: Bill Ackman is 'foolish'
Famed hedge fund manager Leon Cooperman blasts fellow investor Bill Ackman on his Herbalife bet.
FORTUNE -- The pile on continues.
Yet another legendary investor is calling out Bill Ackman for his controversial bet against Herbalife (HLF). Late last year, Ackman made a public presentation calling the nutritional supplements company a pyramid scheme. He also said he had bet $1 billion against the company.
Leon Cooperman, who runs hedge fund firm Omega Advisors, MORE
Stephen Gandel, senior editor - May 5, 2013 10:47 AM ET -
The lucrative investment trend hedge funds don't want you to know about
Hedge funds are scooping up personal property tax liens from municipalities at a quick pace after big banks decided it was too risky.
By Lynnley Browning
FORTUNE -- Hedge fund executives who descended on Miami last month for a conference on unpaid property taxes were treated to waterfront cruises of estates owned by Madonna, Shaquille O'Neal, and Elizabeth Taylor. But unlike those celebrity residences, the houses the profit-chasing investors were hunting MORE
May 1, 2013 11:47 AM ETPosted in: Alterna Capital, BlackRock, foreclosures, Fortress Investment Group, Hedge Funds, tax liens
