Skenderbeg: Hedge Funds Are Quietly Doing Pretty Well – ValueWalk Premium
Hedge Funds July 2018

Skenderbeg: Hedge Funds Are Quietly Doing Pretty Well

Hedge funds – Put into perspective by Skenderbeg Alternative Investments

“Many people watch the prices of stocks they have recently sold more closely than the prices of those they still own; thus they show themselves to be more concerned with justifying past actions than in planning future ones.” – John Brooks

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Q2 hedge fund letters, conference, scoops etc

Hedge Funds

Managers and investors alike see a number of risks that threaten the industry

Hedge Funds July 2018


Hedge fund performance during the business cycle

Hedge Funds July 2018


Active industry weight of hedge funds over time

Hedge Funds July 2018

Goldman Sachs

Active style factor exposure of hedge funds over time

Hedge Funds July 2018

Goldman Sachs

Fee provisions provided by hedge fund managers

Hedge Funds July 2018


Reasons why hedge fund managers have offered fee concessions

Hedge Funds July 2018


Hedge funds are quietly doing pretty well

Hedge funds have now marked a third straight quarter of launches outnumbering liquidations. In the first quarter this year, more hedge funds were born (158) than died (145), according to Hedge Fund Research. But both measures are down: In the same period of 2017, 189 hedge funds started out, and 259 closed their doors. The first quarter was the second-lowest period for liquidations since HFR began tracking the data in 2008. The lowest period was the fourth quarter of last year, at 166 liquidations. It might be because the sector is actually making money: the HFRI Asset Weighted Composite Index has gained 1.5% this year, with 0.7% of that coming in May  Barron's noted in February that sentiment for hedge funds was recovering.

And fees have continued to come down; the old "2 and 20" model — a 2% management fee plus a 20% incentive fee — continues to be a myth. HFR estimates that less than a third of all hedge funds charge fees at or above those legendary numbers. The average management and incentive fees started the year at the cheapest since HFR began tracking the data, also in 2008, though the average incentive fee climbed a little. The average management fee declined from the prior period, by one basis point, to 1.4%, HFR found, while the average incentive fee climbed two basis points to 17.1%. At launch, management fees are even lower, as firms try coax in new clients to get going: funds launched in the first quarter charged an average management fee of 1.19%, down 15 basis points from 2017's average at launch. But incentive fees held in: the average incentive fee at launch in the first quarter was 17.2%, up 19 basis points over 2017's average.

Financial News

Crunching the numbers regarding not-so-creative hedge fund names

Investment strategies might vary wildly, but hedge fund managers seem to lose their creative streak when it
comes to naming their firms, research from data-sharing service SumZero Inc., New York, showed.

Luke Schiefelbein, vice president of data at the firm, analyzed the names of the more than 5,000 hedge funds registered on SumZero's information platform and tested the validity of the old joke in the hedge fund industry that all hedge funds name themselves after three things — trees, classical figures and geological features, said Nicholas Kapur, SumZero's chief operating officer. Mr. Schiefelbein used natural language processing and machine learning tricks to massage the data and created an interactive word map to trace the most popular categories, subcategories and words.

Among the 30 most common root words are value, street, point, river, hill, rock, view, pacific, bridge, blue, wealth, new, creek, alpha and stone. Mr. Kapur said a very typical name construction using root words would be something like Value Street Capital. Mr. Schiefelbein's analytical method had some limitations; it could classify only proper English words and couldn't include in the name universe unusual people or place names such as leucadia, balyasny and coatue; acronyms such as AQR, SAC or PDT; or Latin sounding, but not real Latin words such as visium, diversis or infinitas.

Pensions & Investments

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