Weekend Link Summaries - 4/26/08

In addition to traditional blog entries, in the future I will also be linking to various articles of interest, usually related to a specific topic, but for which I will usually offer a short summary, commentary, or opinion. These are articles that I felt were worth reading, and offered something new, even if it is just a new perspective, or a better/different explanation of an existing issue. This first set of links will include various hedge fund articles, a topic for which I am very interested in. My hope it to release this and other lists (commodities, energy, derivatives, quantitative finance, computational finance, financial engineering, and trading among others) each weekend, based on articles from the previous week. This will start slow, but hopefully will get more consistent, especially as the summer approaches when I have more time.

Hedge Funds

"How The 10 Richest Hedge Fund Managers Got That Way"
Heidi N. Moore - Deal Journal Blog at the WSJ
* Turns out, it was not just those funds that shorted sub-prime that did well, although that certainly helped and made large contributions.

"A Reprieve for Hedge Funds - But Challenges Remain"
Cam Hui - Seeking Alpha
* Nice discussion of hedge fund correlation with market indexes, and whether we should continue to pay up when we can replicate for less.

"Hedge Fund Assets Grew by 27%"
Kathy Shwiff - WSJ
* Hedge fund assets up to $2.65 trillion in AUM. 144 of the 391 hedge funds with assets of at least $1 billion are in New York.

"Top Holdings of the Top Hedge Fund Earners Last Year"
Bespoke Investment Group - Seeking Alpha
* A listing of the top 10 long holding from the top 3 hedge fund earners. Even more interesting then the long holdings is how poorly they did on average. The real money was made on the short side, but unfortunately, that data is not released.

"Where is the Hedge Fund Industry Going, 2 Years Later?"
Roger Ehrenberg - Information Arbitrage
* I discussed this article more in a recent blog, but in a nutshell, it is forecasted that industry consolidation will continue, and that the shape of the industry will continue to approach a "barbell," with large players on one end, and smaller boutiques on the other. Multi-strategy funds will increase, and funds-of-funds will continue to gain popularity before leveling off.

"Why Do Investors Pay Fund-of-Funds Managers?"
Felix Salmon - Seeking Alpha
* Another case against paying hedge fund managers the usual 2/20 fees, in particular, fund-of-funds managers. Of interest is data showing the negative returns of traditional hedge strategies, such as convertible arbitrage, event driven, and long/short, while the dedicated short sellers (aka Jim Chanos) are not surprisingly doing well. But aren't they all hedged anyway? .... just kidding.