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How do you evaluate YOUR hedge funds?

I’m sorry, but what’s up with the first person possessive on Reading #53??

“Evaluating the Performance of Your Hedge Funds”

Is this supposed to be the general form of “your” – like you’ve got your mutual funds, your futures contracts, your ETFs, your run-of-the-mill stocks, and your hedge funds!

Otherwise, I think for me, like most of you, I personally evaluate the performance of my hedge funds using the following tried and true formula:

Beginning Balance of My Hedge Funds: $0
Ending Balance of My Hedge Funds: $0
Performance of My Hedge Funds: n/a

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LOL. Same here.

I evaluate mine based upon a homegrown metric I devised. Fuel coverage ratio:

Returns of my hedge fund investments / Yearly cost of premium diesel for my private yacht

#FreeCVM #FreeTurd #2007-2017

Well if you happened to be dumb enough to put your money with JWM Partners (John Merriwether), Endeavour (just for ****s and giggles), or Platinum Grove (also ex LTCM alum) your personal RoR for 2008 would approximate -30%.

Quite frankly putting your money in any fixed income relative value fund is one the most counter-intuitive ideas. 9-12% per annum with (with capped upside) with the use of substantial leverage with the “slight chance” that one year could wipe out 5 years worth of performance. I thought that the asymetry was supposed to be reversed? Ehhh????

I suppose I’m just not smart enough to understand why one would invest without a margin of safety. Good old picking up pennies in front of the steam roller…classic

ValueAddict, CFA

> I suppose I’m just not smart enough to understand
> why one would invest without a margin of safety.
>

greed, I’m on the buy side, I can assure you it’s greed….which goes to show, you not smart enough…you are smarter than they are *^-^*

I only invest in hedge funds that have total assets under management that are less than my own net worth. Unfortunately, I have yet to find one.

Once I do, then I can evaluate them.

plyon Wrote:
——————————————————-
> I’m sorry, but what’s up with the first person
> possessive on Reading #53??
>
> “Evaluating the Performance of Your Hedge Funds”
>
> Is this supposed to be the general form of “your”
> – like you’ve got your mutual funds, your futures
> contracts, your ETFs, your run-of-the-mill stocks,
> and your hedge funds!
>
> Otherwise, I think for me, like most of you, I
> personally evaluate the performance of my hedge
> funds using the following tried and true formula:
>
> Beginning Balance of My Hedge Funds: $0
> Ending Balance of My Hedge Funds: $0
> Performance of My Hedge Funds: n/a

I’ve evaluated the performance of my hedge funds before.

I’m with ValueAddicton on this one - you need to be pretty suspicious of funds like that. It’s amazing when you listen to John Bogle talk about mutual fund investing (I don’t come close to agreeing with all he says but he is pretty smart) and say people shouldn’t spend more than 50 bp and then people sign up for managing mutual fund products at 200/2000? Nuts.

I’m Da Church of the faithful, I’m Liao Fengyi, clergywoman mother should have to introduce you to me, I have seen you twice, in which time you are more impressed with everyone I guess in the back of the church at noon to eat noodle face!

maile Wrote:
——————————————————-
> > I suppose I’m just not smart enough to
> understand
> > why one would invest without a margin of safety.
>
> >
>
> greed, I’m on the buy side, I can assure you it’s
> greed….which goes to show, you not smart
> enough…you are smarter than they are *^-^*

Yes yes…I realize that. I was being saracastic. I think it was Gordon Gecko who proclaimed the mantra of Wall Street when he stated “Greed is good.” I swear…I didn’t get left back in kindergarten…I mean, really, it should have been the lines that conformed to my crayons - NOT the other way around!

I know why the principals of these firms run their business. What I was questioning was the rationale for the investor to invest in the hedge fund.

ValueAddict, CFA

There are excellent reasons to invest in hedge funds. Primarily because they provide access to risks you ca’t get in any other way.

I’m Da Church of the faithful, I’m Liao Fengyi, clergywoman mother should have to introduce you to me, I have seen you twice, in which time you are more impressed with everyone I guess in the back of the church at noon to eat noodle face!

I definitely agree Joey. The difficulty lies in identifying the appropriate manager on the individual investor level. Individuals are at a disadvantage unless one invest’s in a relatively small shop (or one has connections).

Most established hedge fund’s set high minimum’s for high net worth individuals and are closed to outside investors. Typically FoHF’s, Penion Funds, Endowment Funds, etc dominant the arena. Even at that level one can get locked out. Disclosure at that level is still discretionary on a manager by manager basis.

What one is doing is expressing confidence in the PM and the soundness of the underlying investment philosophy. I am interested in how individuals go about searching for HF’s. I work on the other side of the table.

ValueAddict, CFA

ValueAddict, my advice, for what its worth, is to search for hedge funds where the managers have the majority of their investible net worth in their own fund. Then look for a nice long track record. Then take a look at how long the employees have worked at the fund, and how often investors pull their dough out. That is, aside from the obvious investment style. And these days looking at counterparty risk isn’t such a bad idea.

And as Joey pointed out, 2 and 20 is ridiculous and you should see a lot of those types disappearing from the landscape as this credit crisis plays out over the next year or two. Then you will find the cream still standing and thats when you invest with a manager.