I came across a deal (a hedge fund) by someone called Greg Pfeizer, who is soliciting individual accounts of $25k minimum to invest in various instruments, stocks, futures, index shares, currencies, you name it. Nothing unusual so far. He does not charge any fees at all. He only gets 15% of net profits every month from the account. And for the investor’s security and convenience, each investor maintains his/her separate account, which can be viewed on a daily basis. I’m not making any judgement on the guy, but if this is not free money, I don’t know what is.
Free money? Are you kidding? 15% is huge if there are profits which are generally not attributable to him anyway - it’ll be the markets. Also, by not charging base fees he is likely to be focused on a lot of risk and if he is down for the month he has a lot of incentive to go all-in. If you call free money that you’re throwing it into the hands of a speculative dude, then yes, that’s free money.
I think he meant the manager was making free money…
how much AUM does he have?
It’s not about total AUM, he is not going for that. He is going by number of gullibles.
Does he have a hurdle rate prior to recieving the 15%. Maybe you can negotiate that he only gets the 15% of the profits above the return of the S&P 500. This would be totally acceptable assuming similar risk profiles. Believe it or not, there are actually HF managers out there that can constantly beat the market, and they should be paid for it.
25K which is very less to invest in HF. Only Accrediated Investors can invest in HF and they are defined as someone who has the assets of more than 1 mill and last 2 year’s income more than 200K. I don’t think this a HF.
I’m with cfaboston - this guy hasn’t figured out yet that what he is doing here isn’t legal. I also think that collecting incentive fees monthly is pretty aggressive and no real hedge fund investor would go with it (even quarterly is a tough sell). Further, by segregating everything into “managed accounts” (not “funds”) he has lost all the synergies of pooling money. For trading futures contracts, I don’t like managed accounts of less than $5M and I’m not even wild about $5M. Futures contracts are lumpy and to do any decent portfolio/risk work you need to be able to invest in a bunch of them. With $25K in an account, you are just taking a guess at one or two contracts. With $25K in a managed account, you aren’t even remotely close to being able to trade currencies in any way other than at the American Express booth at the airport (or in single futures contracts). Anyway, this guy has a silly idea and is an amateur. Why would anybody invest with him?
I don’t think he’s dumb. This guy is very “smart”, and he has already signed up a lot of people. Ignoring the legal aspect, what’s his risk? Nothing. Zero. This is a 100% guaranteed profit for him…every month.
What would his investment strategy be?
The guys that run Ponzi schemes have free money, too.
is his name Timothy Sykes? This guy can do anything.
> What would his investment strategy be? 1) Thirty or more gullibles. 2) Turn random events into 100% risk-free profit every month.
Dreary Wrote: ------------------------------------------------------- > I don’t think he’s dumb. This guy is very > “smart”, and he has already signed up a lot of > people. Ignoring the legal aspect, what’s his > risk? Nothing. Zero. This is a 100% guaranteed > profit for him…every month. You might be right. That’s why his actions are probably illegal.
How would you report him? To whom specifically?
Dreary Wrote: ------------------------------------------------------- > How would you report him? To whom specifically? I assume SEC. Here is some info about regulation: http://en.wikipedia.org/wiki/Hedge_fund#US_regulation
maratikus Wrote: ------------------------------------------------------- > Dreary Wrote: > -------------------------------------------------- > ----- > > I don’t think he’s dumb. This guy is very > > “smart”, and he has already signed up a lot of > > people. Ignoring the legal aspect, what’s his > > risk? Nothing. Zero. This is a 100% > guaranteed > > profit for him…every month. > > You might be right. That’s why his actions are > probably illegal. Aren’t we assuming that he doesn’t lose money? Or is that what we mean by “he’s very smart,” therefore the chance of losing money is zero?
His chance of losing money is very high…the legal fees alone will kill him.
Say you have 100 accounts. Each account will be invested in a different set of securities, different sectors, some in bonds, some in various commodities, some in yen, some in dollar, some in London, some in Hong Kong, some in various options, long, short, etc. At end of month, go over the winners and shave off 15%. How many winners you think you wil have monthly?
Better yet, what if doesn’t have a high water mark? Then it’s a super scam.