Jan

31

Domestic and Offshore Hedge Funds: The Differences

January 31, 2008 | Leave a Comment

The following is a broad summary of the rules governing hedge funds. It is not intended as legal, investment or operating advice of any kind. Readers must consult their own legal, financial and tax advisers regarding these matters. As with all investments, the investor is ultimately responsible for evaluating the appropriateness of the vehicle relative […]

Jan

31

Q&A About the Sharpe Ratio

January 31, 2008 | Leave a Comment

Q: I am wondering if any of you sharp minds out there can help me understand the Sharp ratio.     In order to achieve a high Sharp ratio, doesn’t one have to have high cash levels at all time?    A: This explanation is offered by site visitor Trevor:    In my opinion a high, and consistent, Sharpe […]

Jan

30

The Origin of Hedge Funds

January 30, 2008 | Leave a Comment

The first hedge fund was set up by Alfred W. Jones in 1949. Jones wanted to eliminate a part of the market risk involved in holding long stock positions by short-selling other stocks. He thereby shifted most of his exposure from market timing to stock picking. Jones was the first to use short sales, leverage […]

Jan

30

The SEC’s Definition of a Hedge Fund

January 30, 2008 | Leave a Comment

Hedge fund is a general, non-legal term that was originally used to describe a type of private and unregistered investment pool that employed sophisticated hedging and arbitrage techniques to trade in the corporate equity markets. Hedge funds have traditionally been limited to sophisticated, wealthy investors. Over time, the activities of hedge funds broadened into other […]

Jan

30

FAQ Concerning Investment Limited Partnerships (Hedge Funds)

January 30, 2008 | 2 Comments

Akin, Gump, Strauss, Hauer & Feld, L.L.P. (reprinted with permission)     1700 Pacific Avenue, Suite 4100 Dallas, Texas 75201-4675 Telephone: (214) 969-2800 by Ford Lacy, P.C. ([email protected]) and Eliot D. Raffkind, P.C. ([email protected])     Q: What sort of legal structure should be used?     A: The simplest, least expensive, least complicated form for an investment limited partnership (“Hedge Fund”) […]

Jan

30

Basic Hedging Techniques

January 30, 2008 | Leave a Comment

With all this talk of hedging, it might help to provide a definition of what is meant so those who are unaware can get up to speed. Hedging is simply an investment strategy that is designed to offset investment risk. Depending on the type of investing, various hedge strategies can be employed. In theory, a […]

Jan

30

Mutual Funds vs. Hedge Funds: Differences

January 30, 2008 | Leave a Comment

Mutual funds are operated by investment companies, regulated by the SEC, the IRS and other agencies and entities.   Money for the funds is raised from the public. Usually, very little of the investment company’s own money is actually invested.   Investors share equally in gains and losses proportionate to their investment.   Mutual Funds offer investors professional […]

Jan

30

Hedge Fund Strategies/Styles

January 30, 2008 | Leave a Comment

Convertible Arbitrage: An investment strategy that is long convertible securities (usually preferred shares or bonds) that are exchangeable for a set number of another form (usually common shares) at a prestated price, and short the underlying equities.  Distressed Securities: Fund invests in securities (equity and/or debt) of a company either already in bankruptcy or facing […]

Jan

30

What is a Hedge Fund?

January 30, 2008 | Leave a Comment

A hedge fund is a private investment limited partnership that invests in a variety of securities. There are two types of partners in a hedge fund, a general partner and limited partners. The term hedge fund is misleading in that a hedge fund does not necessarily have to hedge. The term “hedge fund” now means […]

Jan

31

Review Your Hedge Fund’s Advisor Agreements

January 31, 2005 | Leave a Comment

After revewing a number of fraud cases involving hedge funds, I noticed an area of concern that will be added to our due diligence program. In several instances three of more individuals get together to launch a hedge fund. Usually there are two individuals with world class marketing skills on a cap raising tour touting […]

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