WSJ says they parked half their 14B into cash - do they typically reduce fees at a time like this. Obviously, if they are down, they are only collecting that 2% if AUM fee this year, right? I thought the point of hedge fund was absolute rtns irrespective of any market circumstances…this seems weird to me, or maybe it is my naivete
no they won’t reduce fees, they are “actively” manging the money. They will still get their 2% mgmt fee, but I don’t know if they are positive YTD to get their Perf fee…some funds even have a modified Perf fee where they get say 10% perf fee even if the fund is negative.
Are they facing huge redemptions? Wouldn’t customers say well my mattress is yielding 0% versus SAC yielding -2%?
Depends on what their performance is, what locks they have, investor types…many different factors here.
Food for thought. Who says that IM’s always have to fully invested? Are you implying that if the IM thinks the market is over-valued and cannot find opportunities its prudent to a.) relax investment standards thereby investing in securities of inferior quality or rather b.) park it in cash and wait until there are ample ideas that meet a strict investment criteria I choose B anyday. A reduction in fees would only occur if the fund is facing massive redemptions and wishes to restructure the fund (allowing those who want out to convert into seperate liquidating shares / and allowing those who wish to stay in the fund to have more lenient terms - most likely fee reductions)
ValueAddict Wrote: ------------------------------------------------------- > Food for thought. > > Who says that IM’s always have to fully invested? > > Are you implying that if the IM thinks the market > is over-valued and cannot find opportunities its > prudent to > > a.) relax investment standards thereby investing > in securities of inferior quality or rather > > b.) park it in cash and wait until there are > ample ideas that meet a strict investment > criteria > > I choose B anyday. HF managers are paid to invest, period. If they think market is over valued, then short it. If they “can’t find opportinities”, they should return my money and let me decide if I want to park in MM.
Yeah they are paid to invest, and guess what most are 50% cash b/c A) they have to pay out redemptions, b) pay out year-end fees, c) cash ready for unanticipated redemptions for say 60, 45, and 30 day managers, and D) cash is king! Shorting is not as easy as people think thats teh funny part! Shorting and making money is hard. Also, a lot of managers are building up cash to dump into the markets once we find this stupid bottom…
>HF managers are paid to invest, period. If they think market is over valued, then short it. >If they “can’t find opportinities”, they should return my money and let me decide if I want >to park in MM. If you called up investor relations at SAC and gave them that speech, you would get your money back and probably wouldn’t have to worry about gates or redemption periods. You would probably also not get to put your money back in. You would probably not get to go to Cohen’s Christmas party and see his beautiful (but weird) art collection. BTW - Most investors hate strategies that are either long or short. It sometimes takes real discipline to say that you have no opinion and your strategy does not work well in the current environment
As JoeyD put it, sometimes it takes b@lls to pull out and wait for the right moment. BOOM goes the DYNOMITE!
JoeyDVivre Wrote: ------------------------------------------------------- > >HF managers are paid to invest, period. If they > think market is over valued, then short it. >If > they “can’t find opportinities”, they should > return my money and let me decide if I want >to > park in MM. > > If you called up investor relations at SAC and > gave them that speech, you would get your money > back and probably wouldn’t have to worry about > gates or redemption periods. You would probably > also not get to put your money back in. You would > probably not get to go to Cohen’s Christmas party > and see his beautiful (but weird) art collection > BTW - Most investors hate strategies that are > either long or short. It sometimes takes real > discipline to say that you have no opinion and > your strategy does not work well in the current > environment I’ve actually heard people will mail checks to SAC in the hopes they get put in the fund by mistake. Like a lot of premier firms, the only thing tougher than getting money out of them is getting money in.
Me personally, I wouldn’t put money in SAC, but that’s just me… They might make me wear a dress 
ustcer Wrote: ------------------------------------------------------- > ValueAddict Wrote: > -------------------------------------------------- > ----- > > Food for thought. > > > > Who says that IM’s always have to fully > invested? > > > > Are you implying that if the IM thinks the > market > > is over-valued and cannot find opportunities > its > > prudent to > > > > a.) relax investment standards thereby > investing > > in securities of inferior quality or rather > > > > b.) park it in cash and wait until there are > > ample ideas that meet a strict investment > > criteria > > > > I choose B anyday. > > HF managers are paid to invest, period. If they > think market is over valued, then short it. If > they “can’t find opportinities”, they should > return my money and let me decide if I want to > park in MM. So then you wouldn’t be interested in investing in Cerberus or Baupost? Part of investing is preservation of capital
Berkowitz’s fund is usually ~10% cash or more
Doesn’t SAC take a ridiculous performance fee? Like 35-40%?