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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.
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."
Introduction
Why Hedge Funds Now and Forever? xi
Chapter 1 Hedge Fund Basics 1
The Near Collapse of Long-Term Capital Management 4
The Credit Crisis and Hedge Funds 13
A Brief History of Hedge Funds 17
The Current State of the Hedge Fund Industry 21
Alfred Winslow Jones—The Original Hedge Fund Manager 24
Chapter 2 How Hedge Funds Operate 33
Starting a Hedge Fund 36
Hedge Fund Regulations and Structures 53
How Hedge Funds Use Leverage 62
Patriarchs of the Hedge Fund World 62
Hedge Funds Take All the Heat 66
George Soros—The World's Greatest Investor 68
Chapter 3 The Managers 71
Guy Wyser-Pratte—Wyser-Pratte 74
Bill Michaelcheck—Mariner Investment Group 80
Nancy Havens—Havens Advisors LLC 85
Steve Cohen—SAC Capital 89
Chapter 4 Hedge Fund Investing 95
The Role of an Investment Adviser 98
An Institutional Investor 99
Third-Party Marketers 103
An Individual Investor 105
A Consulting Firm 108
A Manager of Managers 111
Conclusion 117
Appendix A Hedge Fund Strategies 121
Appendix B Example of Material Included in an Onshore Document 125
Overview 125
Important General Considerations 128
Summary of Offering and Partnership Terms 130
Management 146
Appendix C Example of Material Included in a Cayman-Based Fund for Tax-Exempt Investors 149
Part 1: Establishing an Offshore Fund Domiciled in the Cayman Islands 149
Part 2: Summary of Key Disclosures for Cayman Islands Offering Document 154
Glossary 161
Notes 171
About the Author 175
Index 177
Overview
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 ...