an investor needs to know who owns the HF manager in order to assure that contracts are being signed with the right ppl. can someone elaborate? i have no idea what that sentence means. i thought the HF manager was the general partner and makes all decisions himself. and who are the “right people”?
No chance that the hedge fund manager is the general partner (a legal term that means that the he would be the guy holding the bag when everything went to s^&t). The HF manager might be the managing partner of an L.P… Anyway, this is contentless. If you have a signed agreement from a HF, it will be signed by people with the authority to sign it.
Hedge funds are typically structred as an limited partnership with the investors being the LPs and the manager of the fund as the GP. But typically the GP is not owned by an individual for the reasons Joey stated. Instead it is owned by an LLC or some other corporate structure to limit the liability of the underlying individual(s).
Gunner is correct.
so its the LP, in rare cases the LLC, that owns the manager?
No. By definition the LP is not the GP.
The LP is a passive investor. No legal or otherwise ability to make any decisions on anything. The LP only provides capital. Because of this, their liability is limited to the capital they put up. This is why the LP is called a “limited partner.” The GP runs the limited partnership. They call all the shots and make all the decisions. They also have unlimited liability for the actions of the entity. Because of this, individuals try to create another “layer” of liabilty protection throught the form of the ownership of the GP. An individual is not the GP. Instead, an LLC or S-Corp is the owner of the GP. Individuals own the LLC or S-corp. This “layer” limits the liabilities of the individual. So of the Limited Partnership is sued and loses everything, the losses do not extend to the personal assets of the underlying individuals. Of course there is no liability protection for fraud.
thanks #1 gunner. so now, who are the “right ppl?”
How am I supposed to know? Don’t you think that is a question more approprately asked of the hedge fund?
OK - Here’s what I did when I organized my fund - Two LLC’s, one (call it A) owns the intellectual property, pays the rent, signs contract with Bloomberg, etc. The other (call it B) exists completely to be the GP of the limited partnership that invests money and to get allocations of fees. Fees are collected by changing the relative % ownership of the limiteed partnership. The scoop is that new partners are partners in B so they can never have ownership of intellectual property. A new investor becomes a limited partner in the partnership of which the GP is LLC B. The partnership agreement is signed between a member of LLC B and the investor.
what about when a bank owns the hedgefund, or at least a majority of the GP equity. I assume the bank would act as the GP (with signing authority in that instance). Not sure.
I guess. No bank tried to buy me out.
just think you could have your fund bought by citigroup, you could have your fund fail, then you could become CEO. its quite simple really.
Gecco Wrote: ------------------------------------------------------- > just think you could have your fund bought by > citigroup, you could have your fund fail, then you > could become CEO. its quite simple really. lol. that was the subtle joke that floated around when i was at Citi