Over the last week, the questions about how to get started in hedge funds have come from all over the world, Europe, the United States and even Peru! Most get right to the point and deal with picking service providers and the like. Still, it seems that the tone and nature of the questions indicate an underlying fear of failure.
Just so you can say you have been warned, there is indeed a real and credible threat of failure for people venturing out on their own. Nevertheless, your response should be, “So what!”
You will never know what you are capable of unless you try. If you do fail, you’ll learn some very valuable lessons that otherwise would be lost on you as you continue working for the man! That being said, be prepared for the worst, expect the best and settle for success. It may take a couple of tries, but eventually you’ll get it right. If it doesn’t work out for you, start practicing the following line: “Would you like to see that in a pump or a sling back?”
Think of it this way: Work is work because it is work. Therefore plan on work being tough, plan on it being hard and plan on work having a wacky and wild effect on your life, both inside and outside the office. If you get it right, there is the potential for quite a reward!
Once again, there have been a number of questions about why it is important to use a lawyer who is well known in the hedge fund community, a prime broker who is well known in the hedge fund community and any other service provide, for that matter, who is well known in the hedge fund community. The reason is simple: By doing so, you are relieving yourself of one of the many objections that potential investors are going to give you when you ask them for money. It makes it easier for an investor to say no to a new fund when the manager is using a provider who is not widely known as having experience and expertise in the hedge fund community.
It sounds silly and it probably is but that’s just the way it is.
© DASP 2007 – All Rights Reserved
Monday, September 17, 2007
Wednesday, September 12, 2007
Blame the hedge funds - everyone else does!
It is the worst of times in much of the hedge fund industry right now.
Once again, hedge fund managers are being blamed for the evils that have caused economic havoc from Wall Street to Main Street. On a daily basis, the popular press is littered with articles about why these so-called “swashbucklers” of the securities markets are the main reason for all that is wrong with the economy and the financial world. My only comment is don’t believe all that you read, see or hear. Think for yourself and do your own due diligence. You will find out rather quickly how truly uneducated and ill-informed most of the press is about the workings of the hedge fund industry.
The theme of the questions that have been coming in to the blog seems to be about getting started and budgets for year one of operation. I also received a number of questions asking how long it takes to get a fund up and running. I think that it is safe to say that you should plan to spend between $45,000 and $75,000 depending on which law firm you use to complete the fund documents and then have them reviewed by an accountant and administrator. As for ongoing year one operating budgets, think about the $100,000 number. This amount of course will vary depending on your physical location and technical requirements but it is probably a fair number. You should also plan to have funds for living expenses to cover life as you like it. This is an amount that only you will be able to come up with but it cannot be overlooked as you put your business plan together. In terms of time frames, I believe the right answer is ninety days – some firms can get it done sooner others will take longer. You need to get a commitment from your service providers at the outset of the engagement so you have a reasonable expectation of when things will be complete.
HedgeAnswers closed out the 2007 season with our event last week in Chicago. The end of the tour went up in smoke, literally, as a few of the panelists, some participants and yours truly, indulged in a nice cigar at the bar at the Peninsula hotel. It seems that of the three places we hit in the 2007 tour, Chi-town is the only one where you can still smoke indoors. (This too will come to an end when a city-wide smoking ban goes into the effect on January 1, 2008.) I guess that all good things must come to an end!
The Chicago event focused on providing answers to participants interested in setting up a hedge fund or expanding their existing business. The HedgeAnswers conference tour will roll on in 2008 --- look for the email alerts. It is going to be great and even better than 2007. If you are interested in learning more about the series or have some ideas how we can make it better, please get in touch.
Right now the Red Sox have a magic number of 13 - things are looking good for the boys from Beantown!
© DASP 2007 – All Rights Reserved
Once again, hedge fund managers are being blamed for the evils that have caused economic havoc from Wall Street to Main Street. On a daily basis, the popular press is littered with articles about why these so-called “swashbucklers” of the securities markets are the main reason for all that is wrong with the economy and the financial world. My only comment is don’t believe all that you read, see or hear. Think for yourself and do your own due diligence. You will find out rather quickly how truly uneducated and ill-informed most of the press is about the workings of the hedge fund industry.
The theme of the questions that have been coming in to the blog seems to be about getting started and budgets for year one of operation. I also received a number of questions asking how long it takes to get a fund up and running. I think that it is safe to say that you should plan to spend between $45,000 and $75,000 depending on which law firm you use to complete the fund documents and then have them reviewed by an accountant and administrator. As for ongoing year one operating budgets, think about the $100,000 number. This amount of course will vary depending on your physical location and technical requirements but it is probably a fair number. You should also plan to have funds for living expenses to cover life as you like it. This is an amount that only you will be able to come up with but it cannot be overlooked as you put your business plan together. In terms of time frames, I believe the right answer is ninety days – some firms can get it done sooner others will take longer. You need to get a commitment from your service providers at the outset of the engagement so you have a reasonable expectation of when things will be complete.
HedgeAnswers closed out the 2007 season with our event last week in Chicago. The end of the tour went up in smoke, literally, as a few of the panelists, some participants and yours truly, indulged in a nice cigar at the bar at the Peninsula hotel. It seems that of the three places we hit in the 2007 tour, Chi-town is the only one where you can still smoke indoors. (This too will come to an end when a city-wide smoking ban goes into the effect on January 1, 2008.) I guess that all good things must come to an end!
The Chicago event focused on providing answers to participants interested in setting up a hedge fund or expanding their existing business. The HedgeAnswers conference tour will roll on in 2008 --- look for the email alerts. It is going to be great and even better than 2007. If you are interested in learning more about the series or have some ideas how we can make it better, please get in touch.
Right now the Red Sox have a magic number of 13 - things are looking good for the boys from Beantown!
© DASP 2007 – All Rights Reserved
Tuesday, September 4, 2007
The summer is over and the party has just begun…
Over the last few weeks, unless you were stranded on a desert island, you couldn’t have missed the ocean of news about the hedge fund industry. It hasn’t been great; nor has it been pretty and, frankly, some of it has been a bit weird.
Particularly weird is the continuing saga of Sentinel, as is the series of bankruptcy court rulings on the Bear Stearns funds. Both stories have been covered extensively and so I won’t be breaking any news today. Both, while completely different, show just how tangled is the web the hedge fund industry has woven over the last few years. Everyone is truly intertwined in bed with each other.
Even with the continuing market turmoil, the destruction of the real estate market and loss of Roger Clemens for at least one start, the good news is that the Red Sox are firmly in control of the A.L. East and on to great things. (Couldn’t resist.)
More important (and more to the point), the hedge fund industry seems primed for growth in 2008. Early indications from some of the lawyers whom I frequently talk with are that interest from potential managers continues to be strong and that many existing fund complexes continue to roll out new funds and new products.
The e-mail questions on start-ups keep coming in and they all seem to be more of the same: How do I launch? Who do I talk to about the documents? What kind of deal can I get from a seeder? Why do I need a prime broker? What will an auditor do for me? And how long does it take to get a fund up and running?
The answers to these and other questions can be found in previous postings. Let me say however, if you can’t find the answer you’re looking for, send me a question and I will respond.
As the fourth quarter quickly approaches, time is of the essence for new funds to be ready for launch by January 1, 2008. You need to get started. The worst thing that can happen is that you fail to launch in time for the current wave.
Today I am heading to Chicago for the final installment of the 2007 HedgeAnswers series. We are very proud of what we have created over the past year and look forward to another great series of events in 2008. The cries have been to bring HedgeAnswers to New York and let me tell you that we are working on it. Be prepared. I expect to see all of you there.
© DASP 2007 – All Rights Reserved
Particularly weird is the continuing saga of Sentinel, as is the series of bankruptcy court rulings on the Bear Stearns funds. Both stories have been covered extensively and so I won’t be breaking any news today. Both, while completely different, show just how tangled is the web the hedge fund industry has woven over the last few years. Everyone is truly intertwined in bed with each other.
Even with the continuing market turmoil, the destruction of the real estate market and loss of Roger Clemens for at least one start, the good news is that the Red Sox are firmly in control of the A.L. East and on to great things. (Couldn’t resist.)
More important (and more to the point), the hedge fund industry seems primed for growth in 2008. Early indications from some of the lawyers whom I frequently talk with are that interest from potential managers continues to be strong and that many existing fund complexes continue to roll out new funds and new products.
The e-mail questions on start-ups keep coming in and they all seem to be more of the same: How do I launch? Who do I talk to about the documents? What kind of deal can I get from a seeder? Why do I need a prime broker? What will an auditor do for me? And how long does it take to get a fund up and running?
The answers to these and other questions can be found in previous postings. Let me say however, if you can’t find the answer you’re looking for, send me a question and I will respond.
As the fourth quarter quickly approaches, time is of the essence for new funds to be ready for launch by January 1, 2008. You need to get started. The worst thing that can happen is that you fail to launch in time for the current wave.
Today I am heading to Chicago for the final installment of the 2007 HedgeAnswers series. We are very proud of what we have created over the past year and look forward to another great series of events in 2008. The cries have been to bring HedgeAnswers to New York and let me tell you that we are working on it. Be prepared. I expect to see all of you there.
© DASP 2007 – All Rights Reserved
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