Institutional InvestorsSEI recently completed a survey of institutional investors and their perspective on hedge funds. 100 institutions were surveyed and 47 were currently invested in hedge funds. Even the ones who were investing in hedge funds had extra due diligence steps to ensure that each allocation to a hedge fund manager is done in a deliberate and cautious fashion.The problem I have with this is often selecting hedge funds in a "deliberate and cautious fashion" often boils down to a RFP or due diligence checklist where you are basically looking for those 30 hedge funds that can check ... (more)

Prime Broker DefinitionA large bank or securities firm that provides various administrative, back-office and financing services to hedge funds and other professional investors. Prime brokers can provide a wide variety of services, including trade reconciliation (clearing and settlement), custody services, risk management, margin financing, securities lending for the purpose of carrying out short sales, record keeping, and investor reporting. A prime brokerage relationship doesn't preclude hedge funds from carrying out trades with other brokers, or even employing others as prime brokers. To compete for business, some prime brokers act as incubators for funds, providing office space and services to help ... (more)

Ritchie Capital, Founder Pays $40 Million to End Probe ``We are pleased to put this matter behind us, and we will continue our other efforts to maximize value for all of our investors,'' Thane Ritchie said in a statement issued by the firm on Business Wire... "The respondents' attempt to cover their tracks by using falsified order tickets merely underscores the egregiousness of the fraudulent scheme,'' Merri Jo Gillette, who heads the SEC's Chicago regional office, said in its statement. ``Thorough and tenacious investigative work'' uncovered it, she said...Here is the full update from Bloomberg- RichardSubscribe To this Blog via ... (more)

Emerging Market FundsEmerging markets hedge funds drew in over $9B in new assets last year. This is a great deal more than was investing in this area 5 years ago when only $3.3B was put into these types of hedge funds. One reason why this strategy has been receiving so much attention is while the average hedge fund had performance of around 11% last year emerging market hedge funds returned close to 25%.HFR notes that these high performance numbers were fueled by eye-popping returns at funds like the GLG Emerging Markets Fund which surged 50.5%, the Kazimir ... (more)

Hedge Fund Capital RaisingThere are a growing number of firms now that will take equity stakes in hedge funds after investing $15-$50M in a manager. Many times the managers have been operating for 1-4 years before the investment is made but sometimes "brand new" managers with fully operating trading processes are seeded as well. While the "5 Ps" are considered the most emphasis is being put on the pedigree and talent of the hedge fund manager. Here is an article on what some of these seeders are looking for. FinAlternatives Article. Here is an article I ... (more)

Risk Arbitrage StrategyHedge Fund Strategy Explanation: Risk Arbitrage StrategiesRisk arbitrage hedge fund strategies usually involve purchasing stocks of companies that are likely takeover targets, while assuming short positions in the would-be acquiring companies. Risk arbitrage hedge fund managers can employ an event-driven investment strategy or merger arbitrage investment strategy, seeking situations such as hostile takeovers, mergers and leveraged buyouts. Such funds typically experience moderate ... (more)

Alan Greenspan Joins a Hedge FundIn case any of you missed it Alan Greenspan agreed to join a hedge fund that profited handsomely off of the sub prime meltdown. Here is the Climateer's slant on this series of events:Alan Greenspan: Competent Criminal or Criminally Incompetant?- RichardSubscribe To this Blog via Email | Or RSSRelated Articles:1. Book Review: Running Money By Andy Kessler2. ... (