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We study whether fund managers' industry experience is an important source of value creation in hedge fund activism. We find that the targets of industry-expert fund managers realize higher activism announcement returns and better operating performance, particularly when fund managers' industry expertise is more valuable for targets. These targets also engage in more focused acquisition and divestiture activities in industries where fund managers have experience, allocate more employees to these industries, and cut investments more in the postacquisition period. The superior performance of targets of industry-expert fund managers is robust to controlling for the endogeneity concern and the attrition bias. KEYWORDS acquisition, announcement return, hedge fund activism, hedge fund manager, industry experience, operating performance, target, 1 INTRODUCTION The literature shows that targets of hedge fund activism realize positive and significant abnormal returns around Schedule 13D filings. However, the source of this value gain in hedge [...]

Since the financial crisis, pension plans across the country have fought a long battle to improve their funded status. Many have. Some are well on their way to a derisking [...]

Modeling a hedge fund's probability of failure with a dynamic logit regression, I find that the probability of a fund's failure has a significantly negative effect on the fund's future [...]

THERE IS A point in a conversation with Yngve Slyngstad when he invokes Bjorn Borg, the Nordic tennis star of the 1970s. The Borg approach—make sure you don't lose; above [...]

The 100 best performing hedge funds based on annualized returns over three years are listed. The practices of some managers in charge of these hedge funds are also described.

Using a complete set of U.S. SEC filing information on hedge funds (Form ADV) and data from the Lipper TASS Hedge Fund Database, the study reported here developed a quantitative model called the [omega]-score to measure hedge fund operational risk. The [omega]-score is related to conflict-of-interest issues, concentrated ownership, and reduced leverage in the Form ADV data. With a statistical methodology, the study further related the [omega]-score to such readily available information as fund performance, volatility, size, age, and fee structures. Finally, the study demonstrated that although operational risk is more significant than financial risk in explaining fund failure, a significant and positive interaction exists between operational risk and financial risk.

Brian Hunter was a considered a brilliant trader in Wall Street before he was blamed for the fall of the Amaranth hedge fund. Some people blame Hunter for placing bets based on unpredictable weather when he was a trader for Amaranth Advisors LLC. The accusation against Hunter that he conspired to manipulate natural gas prices is also discussed.

Investors face many decisions when deciding to allocate to hedge funds, one of the first being what kind of vehicle should be used. This article addresses two options investors have available to gain diversified exposure to multiple hedge fund strategies: multistrategy funds and hedge fund of funds. Pros and cons of each implementation method are weighed in order to help investors make informed decisions regarding hedge fund allocation.

The growth in hedge fund and private equity buyouts which enabled companies to pay high pay packages to senior executives is discussed.

Although there is no consensus allocation framework among institutional investors, assets invested in hedge funds have grown steadily in recent years. The reasons behind the absence of such a framework [...]

The role of speculators in derivatives markets has been, for several centuries, the source of considerable interest as well as controversy. Famously, Adam Smith [1776] and John Stuart Mill [1871] [...]

Hedge funds (HFs) have been increasing in popularity over the last 15 years and still attract a great deal of interest among the finance community. The HF industry has been [...]

Three reputed professionals Peter Thiel, head of the US$2.3 billion global macro hedge fund Clarium Capital Management, John Bader, co-chairman and managing principal of Halcyon Asset Management, a multi-strategy firm with US$5.7 billion under management, and Blaine Tomlinson, founder of Financial Risk Management, a fund of funds with US$12 billion in assets, analyze the hedge-fund industry and its trends. They particularly focus on issues like rapid asset growth to a lack of volatility in the market to the implosion of hedge fund Amaranth Advisors in 2006.

Abstract Purpose--To provide a detailed description of personal trading policies that apply to hedge fund managers. Design/methodology/approach--Summarizes Sections 206(1) and (2) of the Investment Advisers Act of 1940 ('Advisers Act'), [...]

The fact that many hedge fund returns exhibit significant levels of serial correlation is now well-known and generally accepted as fact. The effect of this serial correlation on hedge fund [...]

The structure of hedge funds exposes the investor to numerous risk factors such as volatility, counterparty, or liquidity risk. Exposure to these risk factors is not only a source of [...]

THE FACE of Asian stock borrowing and lending is changing. The products are changing, the lenders are changing and the prime brokers are changing, but at the bottom, this trend [...]

Hedge funds differ from mutual funds in their leveraging practices, pricing, and liquidity, as well as in their fee structures, investor profiles, and degree of regulatory oversight. The alternative investment [...]

Robert Wilson, an 80-year-old retired hedge fund manager-turned-conservation philanthropist, has made hundreds of millions 'shorting stocks' that upside-down investment strategy wherein money is made on declines in share prices. Through his charitable trust, he is fulfilling a $100 million pledge to underwrite the 'Wilson Challenge', a matching-grant program.

The decade of the 1990s saw tremendous growth in the hedge fund industry. As the number of hedge funds has grown, they have played a significant role in the daily [...]

This is the second part of 'Best Practices for Hedge Funds.' Part 1 was published in the Winter 2005 Edition of the Journal of Alternate Investments. In April 2003, a [...]

In less-liquid investments, such as hedge funds and private equity, capital may be tied-up for months or years. (1) Consequently, monthly risk measures like value at risk (VaR) can understate [...]

Recent research has shown that the returns generated by hedge funds are driven primarily by macro-factors, related to market and economic conditions, and microfactors, related to fund-specific characteristics (Schneeweis et [...]

United States based hedge funds are being accused of manipulating Canadian stock markets, becoming influential enough on the board of companies to prompt some short-term transaction that increases share prices, and then walking away with the loot. The cases pending in Canada against some of these hedge funds are discussed in greater detail.

Management of hedge funds in downside stock prices scenario and risk management concepts for this are presented.

The world of alternative investments is growing and with investors, both institutional and retail, realizing the need to have alternatives to a traditional stock and bond portfolio, alternative managers need [...]

Abstract Purpose--The development of alternative investment has not yet been accompanied by genuine consideration of the specific characteristics of the risks and returns of hedge funds with regard to the [...]

Abstract Purpose--The purpose of this article is to describe the process for forming and registering a new investment company (or mutual fund) or converting an existing hedge fund into a [...]

Hedge-fund manager William Ackman had liquidated his once highflying hedge fund, Gotham Partners due to the bad performance of some private-equity investments and high-profile investigations by Government regulators into abusive hedge-fund trading tactics. However, in January 2004, he came back as the general partner of a new hedge-fund organization, Perishing Square Capital Management.

For John DiRocco, COO of start-up hedge fund Balance Asset Management, prime brokerage is simple. It's just another service: 'Whether it's the people who supply electricity or the guy that [...]