Given that there are thousands of hedge funds, is there any evidence that the standout hedge funds outperform beyond statistical significance?

What does your average day at the office look like? Most people know what it looks like for a grunt analyst, but what does a guy with 90% of himself tied up in the firm do all day?

Favorite blogs?

How has your investing style evolved since you started? Can you take us through any of your big decisions that you got right or losers that you were able to cut quickly (of course be as vague as you're comfortable with).

1. What are your views of the market direction over the next 6-18 months?
2. Do you think there is enough freely available educational material for a non-institutional investor to consistently beat the market?
3. What do hedge funds think of Big 4 M&A people as potential employees? I have an opportunity to get on as an analyst, but my understanding is that these are not viewed the same as a BB M&A.

What percentage of poker players win net of the house rake? What percentage of poker pros make money each year?

HSBC has a list of hedge fund returns they publish every week (which sometimes shows up in zerohedge and other places). I would encourage all to take a look. Some years are better than others.

My point is there is actual evidence here...enough so that (again) I think reasonable people who examined the evidence would conclude that some hedge funds are not just lucky "coinflippers" and that a simple screen for those that have been around for awhile with success would likely result in a portfolio of hedge funds that would generate a high return per unit of risk (high information ratio)

I must admit I have not reviewed the CAIA or CFA for a few years now, but at least then I thought the readings for the CAIA were better, more challenging and more valuable knowledge on average than those for the CFA. I am surprised the CAIA exam was easy (maybe I was wrong to assume it would be hard, or maybe you are a genius).

Poker has never been more than an avocation for me. I had a solid (winning) record at sit and gos in the early days of online poker (where my knowledge of game theory--and others lack of knowledge-- helped the most). I would be a losing player online or live play at most tables today--very rusty.

Managed accounts--as I said before it is a matter of maximum control and flexibility for a client versus the burden of extra admin costs (and other costs from being at a smaller scale than a co-mingled fund would be).

yes!

what percentage of idea generation comes from the top/exec rank, and what percentage comes from the analysts?

how do you keep your best analysts from leaving and starting their own shop? (other than paying them **** tons)?

Here's the HSBC report with a brief summary from Zerohedge earlier this year:

http://www.zerohedge.com/news/2014-0...2014-full-list

They point out that this has been a good year for hedge funds because the S&P is only beating about half of them, unlike the past five years where the S&P has beaten about 90%. If the HSBC report also recorded all the funds that have gone bankrupt in the past 10 years or so, wouldn't it make the case for hedge funds look extremely poor?

Do you truly believe managers always act in the client's best interest? If not, what are some of the things you've seen? We don't put it past managers to reduce their risk to protect their MTD or YTD track record if they are outperforming peers.

Because you are a multistrat shop, someone at your firm is managing/selecting PMs, is the PM's recent performance the primary driver of whether you cut them from your stable or increase their risk allocation?

Do you believe funds of funds can be a good proposition in spite of the double dipping of fees?

Although hedge fund investors must by definition be "sophisticated," they are often anything but. Have you been successful in educating clients and prospects that hedge funds are not some magic bullet that will outperform the S&P 500 every year?

PMs and traders can have some weird quirks and crazy egos. Can you share any funny or interesting stories about things you've heard or seen?

Btw, I think having 90% of your net worth in your fund is a bit extreme. I've seen more than one PM trade overly cautious to protect their own wealth.

Thanks again.

Edit: Also, still hoping to get your thoughts on mutual funds that trade hedge fund strats. Obv there are leverage restrictions on securities, but I can pay a fixed 1.5% or so and have my pick of several L/S equity or L/S credit managers(presumably second-tier since they are making a lot less than 2/20).

I'm not as skeptical as my questions sound but is this justified?

How capable are the auditors of correctly assessing the value of the positions?

Liking this HedgeFundGuy
What do you think society does wrong with it's taxation policies ?
Not just with regards to hedge funds but to everything in broad strokes in the US.

I am of the personal opinion that real-estate and inheritance is way under taxed and income and gambling winnings over taxed in my country (Norway).

Are you accepting any interns/volunteers from a poker background? I think some of us wants to ask this question but are too shy.

Would you mind sharing this with us?

Apologies if it's already been asked. I'm still chewing my way through the thread. Thanks for posting.

Are you familiar at all with the studies that have been done on performance persistence in hedge funds? As an example, can we predict which hedge funds will outperform in a given year based on their results in a previous year or years.

I have only glanced at this literature but my understanding was that many (most?) of the studies that have been done have found very little evidence of performance persistence. This kind of suggests to me that there may be a lot of fooled by randomness going on.

In poker, by comparison, there is immense predictive value in knowing the results from a given year. Obviously the sharpe ratios in poker are much higher, but are you surprised by these findings?

Maybe someone with an academic finance background could chime in about this too?

If anyone is interested, you can search Google Scholar for "performance persistence hedge funds"

for those who don't think that anyone can hunt down alpha, I suggest you read about RenTech.

Could you link one (or more) of these studies? Reading academic literature and pointing out why it's wrong is fun sometimes.

Stinky,

I just took a look through the abstracts in Google Scholar for a bunch of the papers on performance persistence and it actually seems that most are claiming to show some degree of performance persistence, so I think I was possibly misinformed.

Here is a link to a bunch of heavily cited papers on the topic:

http://scholar.google.com/scholar?st...=en&as_sdt=0,5

That's what I found when I browsed through them quickly. I didn't see any that claimed no performance persistence.

I was one of the most active online cash game stakers pre-Black Friday (2009-2011). Staking deals at higher stakes (25/50+) are usually one-time deals where a percentage of action is sold at par since the games do not run reliably enough. However there are a good number players looking for a longer term deal (sample size is your friend), the ideal players being overly conservative and looking to mitigate bankroll risk when moving up in stakes rather than Kelly violators.

To me, the main commonality between picking players and HFs to invest in is that it is not a level playing field in terms of access. The best players and funds have their pick of investors and can set the terms.

Back then anyone could recognize a profitable poker player (although this is changing, online results are not as transparent now) so your key to returns as a staker was a differentiated offer, ideally without sacrificing on the profit split. In my case, an offer of coaching was included.

Without transparency or access to historical data, things get a bit more complicated and you need to depend on personal experience (playing in same games) or third party referrals which obviously decrease your degrees of certainty in your projections.

No questions at the moment, but enjoying the thread and the discussion.

The auditors have become much better and put in thoughtful processes to lead to decent price discovery in the vast majority of asset classes.

For certain asset classes (stocks, government bonds, etc.) this is trivial of course. But now, on even the more esoteric stuff, they do a credible job.

I agree...they are all time best.

I am looking for a way to screen potential candidates of various "non-traditional" (ie, not top school) backgrounds. Demonstrated poker skills would certainly be a plus for me, but that alone likely would not be enough.

Upgrade Capital has a contest which I am intrigued by:

http://upgradecapital.com/getinvolved/trading.html

Might be worth exploring.

Thank you for the informative comments. I like your approach of differentiating yourself.

Do you feel hedge funds should be registered with the SEC and required to report results on a regular basis, like mutual funds? If not, why not?

I feel the biggest myth about hedge funds is the myth that they provide above average returns for anyone other than the people running the hedge fund. There may be a few exceptions, but with a 75% mortality rate it is hard to believe investors fared well.

http://assetbuilder.com/andrew_halla...sh_hedge_funds

For distressed/defaulted/modeled stuff, they will tell you a 20 bond isn't worth 80, but they won't push too hard if you have it at H20s.

They will have narrower ranges for IG, par type paper.