Getting Started in Hedge Funds E-Book

Daniel A. Strachman

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Veröffentlichungsjahr: 2011

Beschreibung

The book on hedge fund basics, completely updated to reflect today’s post-crisis industry

The hedge fund industry has been reeling in the wake of recent Ponzi schemes and insider trading scandals as well as the loss of billions of dollars in assets under management due to fund closures. Getting Started in Hedge Funds, Third Edition focuses on the current state of the industry; how hedge funds did or did not survive the subprime and subsequent credit crisis; and, what the future holds for investors. Getting Started in Hedge Funds, Third Edition also provides readers with a brief overview of the industry's history, and describes the inner-workings of these complex investment vehicles, including how to start a hedge fund, and what new regulations means for managers and investors.
•    Profiles 10 highly successful hedge fund managers
•    Addresses the Madoff scandal, as well as other lesser known Ponzi schemes, and analyzes the ripple effect felt throughout the industry as a result of these and other scandals
Despite the performance of some of these funds in the last few years, hedge funds are here to stay. In this Third Edition, Getting Started in Hedge Funds, Strachman provides an updated "how-to" guide for investors interested in hedge funds in this era of "new normal."

Leseprobe

Contents

Cover

Series: Books in the Getting Started in Series

Title Page

Copyright

Dedication

Acknowledgments

Introduction

Why Hedge Funds Now and Forever?

Chapter 1: Hedge Fund Basics

The Near Collapse of Long-Term Capital Management

The Credit Crisis and Hedge Funds

A Brief History of Hedge Funds

The Current State of the Hedge Fund Industry

Alfred Winslow Jones—The Original Hedge Fund Manager

Chapter 2: How Hedge Funds Operate

Starting a Hedge Fund

Hedge Fund Regulations and Structures

How Hedge Funds Use Leverage

Patriarchs of the Hedge Fund World

Hedge Funds Take All the Heat

George Soros—The World's Greatest Investor

Chapter 3: The Managers

Guy Wyser-Pratte—Wyser-Pratte

Bill Michaelcheck—Mariner Investment Group

Nancy Havens—Havens Advisors LLC

Steve Cohen—SAC Capital

Chapter 4: Hedge Fund Investing

The Role of an Investment Adviser

An Institutional Investor

Third-Party Marketers

An Individual Investor

A Consulting Firm

A Manager of Managers

Conclusion

Appendix A: Hedge Fund Strategies

Appendix B: Example of Material Included in an Onshore Document

Overview

Important General Considerations

Summary of Offering and Partnership Terms

Management

Appendix C: Example of Material Included in a Cayman-Based Fund for Tax-Exempt US-Investors

Part 1: Establishing an Offshore Fund Domiciled in the Cayman Islands

Part 2: Summary of Key Disclosures for Cayman Islands Offering Document

Glossary

Notes

Introduction

Chapter 1 Hedge Fund Basics

Chapter 2 How Hedge Funds Operate

About the Author

Index

Books in the Getting Started in Series

Getting Started in Asset Allocation by Bill Bresnan and Eric P. Gelb

Getting Started in Investment Clubs by Marsha Bertrand

Getting Started in Internet Auctions by Alan Elliott

Getting Started in Stocks by Alvin D. Hall

Getting Started in Mutual Funds by Alvin D. Hall

Getting Started in Estate Planning by Kerry Hannon

Getting Started in Online Personal Finance by Brad Hill

Getting Started in 401(k) Investing by Paul Katzeff

Getting Started in Security Analysis by Peter J. Klein

Getting Started in Global Investing by Robert P. Kreitler

Getting Started in Futures, Fifth Edition by Todd Lofton

Getting Started in Financial Information by Daniel Moreau and Tracey Longo

Getting Started in Emerging Markets by Christopher Poillon

Getting Started in Technical Analysis by Jack D. Schwager

Getting Started in Real Estate Investing by Michael C. Thomsett and Jean Freestone

Getting Started in Tax-Savvy Investing by Andrew Westham and Don Korn

Getting Started in Annuities by Gordon M. Williamson

Getting Started in Bonds, Second Edition by Sharon Saltzgiver Wright

Getting Started in Retirement Planning by Ronald M. Yolles and Murray Yolles

Getting Started in Project Management by Paula Martin and Karen Tate

Getting Started in Six Sigma by Michael C. Thomsett

Getting Started in Rental Income by Michael C. Thomsett

Getting Started in REITs by Richard Imperiale

Getting Started in Property Flipping by Michael C. Thomsett

Getting Started in Fundamental Analysis by Michael C. Thomsett

Getting Started in Chart Patterns by Thomas N. Bulkowski

Getting Started in ETFs by Todd K. Lofton

Getting Started in Swing Trading by Michael C. Thomsett

Getting Started in Options, Seventh Edition by Michael C. Thomsett

Getting Started in A Financially Secure Retirement by Henry Hebeler

Getting Started in Candlestick Charting by Tina Logan

Getting Started in Forex Trading Strategies by Michael D. Archer

Getting Started in Value Investing by Charles Mizrahi

Getting Started in Currency Trading, Second Edition by Michael D. Archer

Getting Started in Options, Eighth Edition by Michael C. Thomsett

Getting Started in Rebuilding Your 401(k), Second Edition by Paul Katzeff

Getting Started in Mutual Funds, Second Edition by Alvin D. Hall

Copyright © 2011 by Daniel A. Strachman. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data:

Strachman, Daniel A., 1971-

Getting started in hedge funds: from launching a hedge fund to new regulation, the use of leverage, and top manager profiles / Daniel A. Strachman. – 3rd ed.

p. cm. – (Getting started in..... ; 88)

Includes bibliographical references and index.

ISBN 978-0-470-63025-9 (pbk.); ISBN 978-1-118-01896-5 (ebk); ISBN 978-1-118-01897-2 (ebk); ISBN 978-1-118-01898-9 (ebk)

1. Hedge funds. I. Title.

HG4530.S837 2010

332.64′524–dc22 2010023267

To my wife, Felice, my daughter, Leah and my son, Jonah

Acknowledgments

The idea for the first edition of this book came to me in the mid-1990s while I was working at Cantor Fitzgerald and, as a result of a number of unique events, that book became a reality in January of 2000. Now some ten years later, Wiley is publishing a third edition.

I started working on this revision in December 2009, and over the past four or five months, I have tried to update the pages of this book to make it as relevant as possible for those interested in learning more about hedge funds and the hedge fund industry. I hope that you, the reader, find it worthwhile and, more importantly, worthy of your time. Your interest in hedge funds has made this book possible, and I thank you very much for your pursuit of this fascinating subject.

Like it or not, hedge funds are here to stay. As an investment vehicle they are no longer considered an alternative investment but rather an important investment in a diversified portfolio. And although hedge funds have not yet become traditional, in the months and years ahead I believe that the differences that separate traditional investment funds or mutual funds and hedge funds are going to become smaller and smaller. Hedge funds, no matter what the people in Washington say or the popular press writes, are not going anywhere because people understand the value of creating a portfolio that is hedged against market volatility and provides an opportunity to make money regardless of which way the market is moving. Hedge funds are now being used by investors of all shapes and sizes and play an important role in the future of the financial markets around the globe.

To write this book I called on many of the usual suspects who have helped me over the years to make me look good in print. Without their help, I probably would not have been able to complete this project. They are of course Viki Goldman, the greatest librarian and researcher I have ever known and Sam Graff, the only true newspaper man I know in the tri-state area. Thank you both for the hard work you perform to make my work better. I truly appreciate it.

The people at Wiley have once again provided a platform for my work and to all of them, I say thank you. I hope the book is all you intended it to be when you gave me the go-ahead to write it.

I want to thank my family for their support and guidance over the years. It is through your efforts that this book, as well as the others, have been possible.

And finally to Felice, all I can say is thank you for being a provider of inspiration and support to see this project through. I appreciate your effort to keep Leah and Jonah out of the attic so I could complete the manuscript in time to hit the deadline, as well as your willingness to allow me to pursue my dreams day in and day out.

Daniel A. Strachman Fanwood, NJ October 2010

Introduction

Why Hedge Funds Now and Forever?

Over the past 10 years, hedge funds have gone from relative obscurity to being a topic of cocktail party chatter and the place to work on the Street to being blamed for everything that is wrong in the world of finance and beyond. Hardly a day goes by without a report of how hedge funds and those who provide services to them are reaping benefits on the backs of unsuspecting and unwilling victims around the globe. In the wake of the credit crisis and the government-led bailout of the banks, hedge funds and those who manage and invest in them have become the most talked about investment products since the Internet initial public offerings (IPOs) of the technology boom.

The rise from obscurity began with the astronomical returns that many hedge funds posted during the euphoria that swept the investment world at the close of the last century and the new century's first decade. These outsized returns have led to interest by investors of all shapes and sizes in years leading up to the credit crisis. In the post–credit crisis environment, interest in hedge funds and those who manage these—often thought of as secretive—investment vehicles has been sparked by the opposite: losses racked up in the past few years by many of the hedge fund world's most famous and sought-after managers. At the beginning of the new millennium, the issues for investors were “How do I invest?” and “How much can I expect?” At the halfway point of the decade the issues had become “How do I get my money out?” and “Is there anything left?” At the end of the decade, the issue was “What happened to the money?”

After the technology bubble burst and investors realized that there was more to making money in the markets than simply buying companies with .com in their names, they began to look to alternative investments as ways to juice the returns of their portfolios. In this case, the alternative investment happened to be anything and everything that was not considered a mutual fund or exchange traded fund.