hedge funds
hedge funds questions and answers
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Q: Is There a List of Hedge Funds in New York?
Looking for a list of hedge funds in New York and Connecticut. Are there any hedge fund lists for New York available for free?
A: There really are no free hedge fund lists for New York or anywhere for that matter. Hedge funds go in and out of business so quickly and are often changing locations so it is probably a lot of work for someone to keep an updated hedge fund list for free. The good news is you can buy some lists pretty cheaply.
http://www.BarclayHedge.com has great lists, but quite pricey ($2500+)
http://www.HedgeFundJobList.com has very good and complete lists (<$100)
Q: How do hedge funds use the Japan Carry Trade?
I've heard that Hedge Funds are using the Japan Carry Trade to loan money at almost 0% interest, and invest the money. If you research the Japan Carry Trade, it usually mentions going to a Japanese Bank to borrow the money, but I would bet this is not how the Hedge funds borrow the money.
Is there another way? If there a financial instrument in the U.S. that can be used to borrow money from the Japanese? I suspect that this is what they are doing, but I'm curious as to how.
A: If you don't understand the "carry trade" any better than what your question would indicate...the you better keep your money in your pocket or under the matress.
The way it works is... You BORROW money at a LOW INTEREST RATE... say ZERO PERCENT like the Japs had for years.. and then you take THAT money and CARRY IT to another country by whatever that means... and BUY currency in a coutnry that has HIGH INTEREST rates... borrow low... invest high... and as the interest rates go up.. .your investment grows.
That's fine until you have a lot of money borrowed at zero percent and the country you bought currency has an interest rate that drops to zero... which is the case between JAPAN and the U.S.
Q: Best up to date book to learn about hedge funds?
I need to find an up to date book for a colleague to learn about hedge funds from - any ideas?
A: To most investors the words "hedge fund" sound both glamourous and mysterious. However, they are neither as i prefer the definition given by Warren Buffett who describes them as "the electronic herd" and most likely to cause or exacerbate a market crash. Why? Their use of derivatives, whilst not illegal is a serious concern as the instruments become more and more complicated. The junk investments created out of sub prime mortgages are a prime examples, .
The best book i have come across explaining hedge funds and how they operate is called Simple But Not Easy by Richard Oldfield. Not only is the book easy to read but it demystifies the world of investing and is also "a forensic deconstruction of the returns hedge funds can reasonably be expected to make" Jonathan Davis, Financial Times.
I hope the above helps.
Q: What percentage of Hedge Funds have more than $100,000,000 in assets?
I'd like to be able to cite authority. If anyone has a graphical representation that would be great as I am trying to proffer the idea that when aggregated, the hedge funds with less than $100,000,000 in assets might have a larger sway on the market.
-M
A: I have written about this exact issue through my blog yet I just tried to find the article and couldn't so far - says something about the organization of my site I guess.
The top 5% of hedge funds hold some 30% of the assets the top 20% hold some 50-60% of the assets. The funds with under $1B or under $100M are far more numerous but obviously hold much less power individually.
Hope this helps in some way.
- Richard
Richard Wilson
Hedge Fund Blogger.com
http://richard-wilson.blogspot.com/2008/03/hedge-fund-terms.html
Q: Given that the Fed Rate was cut to save Hedge Funds from bad decisions, can those that short sue the fed?
The Federal Reserve is a private corporation. Those that shorted Hedge Funds were doing so because they saw that these funds were making bad decisions. The Fed cut was an artificial intervention that hurt those that had shorted. Do those investors have grounds to sue the Federal Reserve for damages?
A: no
the Fed was fulfilling its function and thus has immunity.
if you didn't know the Fed might do something like that, you didn't do your due diligence properly.
your error, your loss.
Q: Where can I learn about hedge funds?
Every website about hedge funds seems to want to sell me a fund or tell me how great their company is. Is there a site that explains hedge funds without a sales pitch?
A: http://www.hedgefundtips.org
Q: In Hedge funds, what is the difference: event-driven, special situations, distressed, and high yield?
I need to know the difference between these types of credit hedge funds. Thank you.
A: Event driven means that the fund sees a news event and looks for a bond that will benefit from the news.
Special situations means that the fund looks for a company doing a restructuring or management change that will boost the future of the company and improve the chances that the bonds will be paid off in full.
Distressed means that the fund has done a lot of homework on a company in trouble and believes that the amount that might be recovered is higher than the current market price.
High-yield is a polite term for bonds rated less than investment grade, also called junk bonds. Junk bonds are purchased by someone who wants the higher yield so much that they will accept the higher risk of default.
Q: Why are the top richest people in america involved with hedge funds.?
Forbes magazine richest people had listed hedge funds as reason to their wealth. How ?
A: The real question is: why is a former ENRON exec walking around with money to invest in a hedge fund?
Q: The next generation of Hedge Funds, more speculation?
I recently heard that Hedge Funds have become so common of a financial instrument for institutions that they might not be providing the desired speculation. So the next generation of hedge funds must have to be more speculative, like a spec fund.
Does Americas institutions need more speculative investments?
A: There are tons of hedge funds out there now, over 15,000. This means that average returns will fall a bit and the quality of managers overall will have a lower mean...but I don't think it forces managers to be more speculative, in fact I think it has the opposite effect. There is so much competition now among hedge funds that institutional investors and the ultra-wealthy are becoming more picky wanting to work with hedge fund managers who have 5, 7 or 10 year track records instead of 3-4 year track records. They are also sometimes working with hedge fund products that have lower volatility and small max draw downs. All of these things reward the hedge fund managers that are "long term greedy" instead of "short term greedy." In other words to run a very successful hedge fund with several billion under management you need to take a long-term approach and making speculative investments would ruin your chances of ever making it past the 5-7 year mark and if by some grace of God you make it that far if your investments are very speculative you will probably have a very volatile portfolio with more than a few painful months along the way.
- Richard
http://richard-wilson.blogspot.com/2008/02/richard-wilson.html
Q: what's the best way to go in school if I want to get into hedge funds or private equities??
I am a second year college student and I really planned on going to law school..is this an ok direction if I want to get involved in hedge funds and private equities?? Or should I go into another direction?
A: Start your own fund today. Perform better than anybody else. Sell your fund and strategy to a big broker. Investment bankers could care less what degrees you may have. They want to know if you can perform for the long run or if you will fall like a cheap tent when you make a bad move. And when you make a bad move how fast you get back on your feet. If you want to work for someone else you better start kissing some butts now, be ready to become some jackass' b*tch, and get a sh*t load of degrees.
Good Luck
:o)
Q: When do hedge funds sell their stocks?
When do typical hedge funds sell a stock they own? Is there a typical percentage increase (or decrease) in the stock that occurs before the fund gets out of their position with that stock? I know it's subjective, but is there a rule of thumb?
A: The "rule of thumb" for a hedge fund is.... any time they think it's the prudent time to do so.