Hedge Fund Book V3

HedgeFundBlogger.com | HedgeFundGroup.Org | CHADesignation.
Org
Hedge Fund Blog Book

By Richard Wilson
I truly believe that if you spend your time helping others get what they
need or want that the relationships you build will bring you what you
need. In this spirit I’m offering the Hedge Fund Blog Book for free. If
you read this and still have questions, need advice or a resource or
would just like to introduce yourself please email me at
Richard@HedgeFundGroup.org
- Richard Wilson
This book is brought to you by:

HedgeFundBlogger.com | HedgeFundGroup.Org | CHADesignation.Org
Richard Wilson
Richard Wilson is a hedge fund consultant, author and trainer. Richard is the
founder of the Hedge Fund Consulting Group and a 15,000+ person networking
association, the Hedge Fund Group (HFG).
Richard has advised and consulted with

over 125 hedge fund managers and
investment funds and regularly works with
them on hedge fund marketing, training
and prime brokerage related projects. Richard has 7 years of experience in risk
consulting, marketing money managers and completing prime brokerage/capital
introduction activities. The Hedge Fund Consulting Group offers these services:
• Training through the CHA Designation Program http://CHADesignation.org

• Hedge Fund Marketing Materials Evaluation, Improvement & Outsourcing.
Projects include PowerPoint presentations, newsletters, one pagers and
websites
• Prime Brokerage Due Diligence, Introductions and Capital Introductions
• Operational, Risk and Legal Evaluations – Institutionalization or pre-
marketing assistance
• Hedge Fund Startup Guidance, free tools, service provider due diligence,
and marketing plan creation
Hedge Fund Training & Workshops
The Hedge Fund Group (HFG) and Hedge Fund Consulting Group run a number
of training programs and workshops throughout the year. Many of these are one-
off sessions both within the United States and abroad. One of these programs is
a professional certification program called the CHA Designation.
CHA Designation is a professional certification

program catering to professionals in the hedge fund
industry. The CHA Designation is the only
certification program designed for those professionals
who work in the hedge fund industry or for wealth
management and service providers who would like to
better understand and serve hedge funds as clients.
To learn more about the CHA Designation please see http://CHADesignation.org.

Sponsors Notes & Disclaimers
Links: Since this book was created from my previous blog posts you will see
thousands of links to resources and other blog posts. Feel free to click these and
click “allow” if Adobe asks you whether you want to follow the link or not.
Note: While I am in talks with one of the largest business book publishers
regarding putting out a paperback or hardback published book in traditional form
this book is largely unformatted and and un-edited. No warrants are provided as
to the accuracy of this information and it is simply provided as a free tool for
those who would like to read hundreds of m y blog posts from
HedgeFundBlogger.com within a single document.
Disclaimer: The content of this blog/book is in no way a means of financial

advice or a solicitation to sell hedge funds. None of what I write in the Hedge
Fund Consulting Blog is ever an offer of financial or investment advice or
products in any way. There is no guarantee that the information included here is
accurate, complete or updated it simply provide a high level overview of the
industry.
Date Founded: December 1st, 2007
Statistics: 15,350 Members
How much is membership - $0
How to Join? – HedgeFundGroup.Org
Purpose: Open networking, resource sharing, business leads, training

opportunities and offering of the Chartered Hedge Fund Associate (CHA)
designation program.
Goal: Grow the Hedge Fund Group (HFG) from 5,000 members to 50,000
members by Q1 of 2010. Any help in growing this group through email list
distribution or a link on your website would be much appreciated.
Chartered Hedge Fund Associate (CHA) Program:

Similar to the CAIA and CFA this program offers
individuals specific knowledge and training focused
exclusively on the hedge fund industry. The first level
of the certification ensures a broad base of
knowledge across 8 different learning modules
including hedge fund strategies, terms, due diligence, portfolio management,
regulation and career guidance. The second level of the certification prepares
you for a very specific role in the hedge fund industry such as an analyst or
marketing/sales professional. To learn more visit http://CHADesignation.org
To get involved please visit http://HedgeFundGroup.Org or email me at

Richard@HedgeFundGroup.org.
Table of Contents
Part 1: Due Diligence______________________________Page 6
Part 2: Hedge Fund Careers________________________Page 18
Part 3: Regulation & Compliance ____________________Page 65
Page 4: Hedge Fund Strategies______________________Page 83
Part 4: Starting a Hedge Fund_______________________Page 110
Part 6: Hedge Fund Marketing_______________________Page 126
Appendix A: Service Provider Listings__________________Page 194
Appendix B: Additional Hedge Fund Resources___________Page 197

Part 1: Due Diligence
HEDGE FUD DUE DILLIGECE GUIDE

New hedge funds are launched daily, which is constantly increasing the importance of
conducting formal hedge fund due diligence and determining which hedge funds are
appropriate for you or your firm to invest in becomes increasingly important. Every
person or company is going to have different investment horizons, risk tolerances,
strategy preferences, etc. so it is usually more valuable to know the basics of how to
evaluate a hedge fund then it is to hear someone say which hedge funds are "the best." I
think giving hedge fund recommendations even to the degree of suggesting exactly how
to evaluate a hedge fund is too close to finance advice to put online but offical site for
the SEC provides this advice in conducting a minimum level of hedge fund due diligence
before investing:
1.Read a fund's prospectus or offering memorandum and related materials

2. Understand how a fund's assets are valued
3. Ask questions about fees
4. Understand any limitations on your right to redeem your shares
5. Research the backgrounds of hedge fund managers
6. Don't be afraid to ask questions
Hedge Fund Risk Analysis

Hedge Fund Risk Analysis Table
When discussing risk management in the hedge fund industry, obtaining a clear
definition of the different types of risk exposure for each kind of hedge fund is important.
Considering the wide range of objectives and diverse trading instruments used by each
specific type of hedge fund, it is important to note the varying risk concerns which apply
to different types of hedge fund managers.   A good consolidation of the results in a
matrix form was developed by Jaeger and Säfvenblad , who define the different risk
exposures by each type of hedge fund as follows (click to enlarge the image below): 
Using the table above, but now with a investor’s perspective, it should be also clear that
the risks associated to investing in a long-short hedge fund are completely different from
those associated to, for instance, investing in a Fixed-Income Arbitrage hedge fund.
Thereby, for both hedge fund managers and investors, uncovering the different
dimensions of risk present in each hedge fund portfolio becomes the first step towards
managing risk effectively.
Read more articles like this within the Hedge Fund Due Diligence Guide. 
*I have been collecting these hedge fund due diligence resources over the past 18
months and I'm providing them with the hope that they will help construct a relatively
holistic view of what hedge fund due diligence is about along with provide a few example
RFPs and tools to use while conducting due diligence on hedge fund managers. This is
not an exhaustive list and the information anywhere, or within the linked sites, should not
be treated as investment advice or a substitute for financial advice of any type. This is
simply an aggregation of online hedge fund due diligence resources. I have only listed
21 resources here so far, I hope to make this more robust, if you have something you
think should be added here please email me at Richard@RichardCWilson.com.
Hedge Fund Fraud

SEC Fraud Analysis | Case Study
Hedge fund fraud cases are important because they give
some definition and life to the various investment advisor
and hedge fund laws. Much of the advice that hedge fund
lawyers give to their clients is based on reasonableness
and best guesses on how the securities laws will be
implemented in the hedge fund context. For many hedge
fund issues there are not clear- cut cases which give
color to the securities laws. One of my colleagues refers
to this as the “square peg – round hole” dilemma by
which he means it is hard to apply the archaic securities laws with the current state of
the hedge fund and investment management industry.
When the SEC does bring cases, as practitioners we get to see how the SEC views the
securities rules and how we should be advising clients. While many of the fraud cases
represent completely unbelievable actions by unscrupulous people, there are still
lessons, which well-intentioned managers can learn from.
Specifically this case gives us an opportunity to examine five separate areas which
investment managers should be aware of:
1. Make sure all statements in the hedge fund offering documents and collateral
marketing materials is are accurate.
In this case the hedge fund offering documents contained many material misstatements
including materially false and misleading statements in offering materials and
newsletters about, among other things, the Funds’ holdings, performances, values and
management backgrounds. For example the complaint alleges:
Specifically, both PPMs represented that most investments made by Partners and
Offshore would trade on “listed exchanges.” In truth, a majority of those funds’
investments were and are on unlisted exchanges such as the OTCBB or pink sheets.
Furthermore, the Partners’ PPM stated that investors would receive yearly audited
financials upon request. Partners has not obtained audited financials since the year
ended 2000 and repeatedly refused at least one investor’s requests for audited
financials for the year ended 2001.
2. Make sure all appropriate disclosure relating to personnel are made.
Hedge fund attorneys will usually spend time with the manager discussing the
employees of the management company and their backgrounds. During this time the
attorney will ask the manager, among other questions, whether any person who is part
of the management company has been involved in any securities related offense. In this
case there were two specific items, which the manager should have disclosed in the
offering documents and other collateral material:
Failed to disclose that a “consultant” to the management company was enjoined, fined
and also barred from serving as an officer or director of a public company for five years
for his fraudulent conduct involving, among other things, misallocating to himself
securities while serving as CFO and later president of a publicly traded company.
Failed to disclose a member of the fund’s board of directors was barred from associating
with any broker or dealer for 9 years.
3. Take care when going outside stated valuation policies.
Many hedge fund documents have stated valuation policies but then allow the manager
to modify the valuation, in the manager’s discretion, to better reflect the true value of the
securities. However, when a manager uses this discretion, the manager should have a
basis for the valuation. Such valuation should not be based on an artificially inflated
value of the asset. To be safe managers should probably have some internal valuation
policies which should be in line with generally accepted valuation standards for such
assets. I found the following paragraph from the SEC’s complaint particularly interesting
(emphasis added):
II. Bogus Valuations
34. In order to obtain at least year-end 2001 audited financials for Offshore, Lancer
Management provided Offshore’s auditor with appraisals valuing certain of that fund’s
holdings. These appraisals mirrored or closely approximated the values assigned to
Offshore’s holdings by Defendants based on the manipulated closing prices at month
end. These valuation reports were, however, fatally flawed and did not reflect the true
values of Offshore’s holdings under the generally accepted Uniform Standards of
Professional Appraisal Practice or American Society of Appraisers Business Valuation
Standards. For example, the valuations were improperly based on unreliable market
prices of thinly traded securities; unjustified prices of private transactions in thinly traded
securities; unfounded, baseless and unrealistic projections; hypotheticals; and/or an
averaging of various factors. Indeed, under accepted standards of valuing businesses,
certain of the Funds’ holdings were and/or are essentially worthless.
4. Do not engage in market manipulation.
Many of the securities in which this hedge fund invested were traded on the OTCBB.
The fund engaged in trading in these securities near valuation periods in order to
artificially inflate the price of these very thinly traded securities. Additionally, the
complaint alleges many incidents of “marking the close.” This goes without saying but a
hedge fund manager should not engage in market manipulation.
5. Always produce accurate portfolio statements. Do not overstate earnings.

Always make sure that statements to investors are accurate.
Enough said.
While many of the examples above are so egregious they probably do not need to be
listed on a “do not” list, you should make sure you do not engage in any of these
activities. Additionally, if you do make some error or mistake (for example, if a valuation
turns out to be incorrect or inaccurate), immediately contact your attorney to create a
plan to inform investors about the incorrect or inaccurate statements. A mistake can
generally be cured, all out fraud cannot.
Guest post published in partnership with the Hedge Fund Law Blog
Hedge Fund Manager Due Diligence
Ongoing Hedge Fund Manager Due Diligence

I recently found a great article on hedge fund manager due diligence, it focused on
ongoing hedge fund manager due diligence. When reviewing a hedge fund, process
transparency is crucial to the method as risk transparency. Institutional investors must
hold the prerequisite that their investments meet the prudent man standard. They need
to understand; what a hedge fund manager’s abilities are; is there a process for
measuring and assessing risk as well as reward; the manager’s strategy and allowable
deviations from it; the safeguards in place to shun fraud; that the people operating the
hedge fund are honest.
Some additional topics to consider are alpha generation, risk measures, risk mitigation
strategies, basis of performance, warning signs, imploding scenarios. Some classic due
diligence topics include, how risk is managed, recovery plans, max leverage, and risk
transparency.
Ongoing due diligence and intelligent manager selection are the most crucial parts of the
process. In depth knowledge of the specific strategy being used as well as awareness of
how hedge fund managers “operate” are key qualities one must possess to perform true
hedge fund due diligence and exam all inherent risks involved. Evaluation of how these
risks are supervised by the manager is an essential part of the procedure as well.
- Gregory Schink & Richard Wilson
High Net Worth Clients

Hedge Funds + High Net Worth Clients

Here is in article published by Advisor Perspectives which tells the story of two
Boston-based wealth management firms which emphasize the importance of due diligence.
The two firms, RINET and Colony, use a strategy for placing its high net worth clients in
riskier investments based on their level of wealth. The policy addresses the investors
personally, by requiring its investors to have at least $5 million in investable assets to qualify
for investing in hedge funds. Those HNW clients who do not qualify for hedge funds are
placed in sometimes less risky, more traditional investments, such as separate managed
accounts or mutual funds. This simple strategy reduces risk for those clients not financially
ready to invest in less liquid or secure investments.
Another lesson in reducing risk is that RINET favors placing its high net worth
investors in fund of funds over single hedge funds. This diversifies the investor's portfolio and
the investor is less vulnerable. When considering hedge funds, the firms look at the historic
performance and the fund's level of risk. They measure this by examining standard deviation,
comparing the fund with the S&P 500, and looking at the hedge fund manager's Alpha. Also,
the firms go beyond the hedge fund's strategy and process to back office operation concerns
and factors that have effected historical performance. Finally, RINET and Colony see hedge
fund due diligence as an ongoing process that doesn't stop at the investment. The firms
practice due diligence throughout to secure steady returns to its investors and protect against
fraud and other hedge funds hazards.
Investment Due Diligence Resource

Last month someone sent me this resource on due diligence. Fortis offers this guide to
investment due diligence which goes beyond the initial selection process. The article
focuses primarily on identifying potential problems by maintaining contact with hedge
fund managers and thoroughly looking into the operations. Although much can be
learned from traditional due diligence, Fortis suggests simply talking with the staff and
manager. They suggest that a practical understanding of psychology helps detect the
underlying factors that could effect a manager's performance. This article advocates a
close relationship with the manager, adding a level of transparency for the investor and
includes helpful tips for building this relationship.
Institutional Hedge Fund

Institutional Hedge Funds Trend

A recent white paper stressed that as hedge funds continue to flourish, they have started
to look to the institutional market for new opportunities to expand their growth. However,
hedge funds must prepare themselves for the distinct set of demands these institutions
have. In order to set themselves up for success, hedge fund managers should consider
five main challenges in order to attract investment from the institutional market.
1.Exhibit high quality infrastructure and operations
2.Increase transparency
3.Create stable, likeable management teams consisting of people with a variety of skill
sets
4.Shift away from a focus of high risk and high performance to one of stability and
constancy
5.Devote resources to ensure that general business practices are followed
Essentially, institutions prefer doing business with hedge fund managers that operate as
they do. This means being highly organized, transparent, and honest. The most
successful hedge funds will be able to match these qualities while also performing at the
same high level that originally attracted investors.
Due Diligence Questions
Hedge Fund Due Diligence Questions

Last month I found this article on questions you should ask during a hedge fund due
diligence process. While nothing within this blog should be taken as financial advice this
article and the hedge fund due diligence guide on my website might give you a high level
overview of hedge fund due diligence.
According to Douglas Dick, the best place to look for information on the hedge fund you
are completing due diligence on is in the offering memorandum. This document will state
all the hedge funds outside supporters, from law firms to independent contributors. The
first sign of caution is when you ask a question that the hedge fund is not willing to
answer. Willingness to answer all questions without it being too much of a hassle is a
small but good sign and will be the foundation for a trustful relationship between you and
the fund.
Here are four questions to consider during your time of due diligence. They’ll
allow you to get started but it’s extremely important to do thorough research with an
expert into all aspects of the fund.
1.Does the hedge fund use a third party marketing firm?
2.What technology services do they use? How are they supported?
3.What law firms are involved with the fund? What other types of hedge funds do they
work with?
4.Who is the outside administration?
Looking into how the hedge fund presents itself and works from the outside is always
an important thing. It’s equally important, however, to look at the hedge fund from the inside
too. By asking some of these questions you’ll be able to discover valuable information that
will eventually help you decide where you will invest your money.
Fund of Fund
Fund of Fund Due Diligence
I recently found this fund of fund due diligence article, which you might have seen a link
to within my hedge fund due diligence guide. Within this article Jim Tomeo, Chief
Operating officer and Senior Portfolio Manager of SSARIS Advisors, presents some
interesting information regarding hedge funds asset allocation process. He talks a lot
about building a portfolio using a bottom up / top down approach and the due diligence
that requires. This approach includes taking into consideration two different investment
philosophies:
Convergent Strategy – The value of an equity is based on the company’s future
expected earnings, future growth rate of these earnings, and uncertainty of these
predictions.
Divergent Strategy – Past patterns in security prices can forecast future price patterns.
His process calls for 50% of returns coming from the convergent strategy and 50%
coming from the divergent strategy. It also emphasizes the importance of proper pricing
on hedge fund success. Another point that Jim stresses within this article is the
importance of constantly evaluating hedge fund managers. This means frequent hedge
fund manager due diligence:
Reviewing internal structure / procedure
Background checking
Review of hedge fund documentation including memorandums
Jim believes that taking cautions in terms of pricing, manager selections, in addition to
sticking with a bottom up and top down approach can help hedge funds endure through
tough times and succeed.
Additional Resources:
Book- Hedge Fund Due Dilligence: Professional Tools to Investigate Hedge Fund
Managers, By Randy Shain
FINRA Broker Check

Hedge Fund of Fund RFP Example - Used in Institutional Due Diligence Processes
HFN's Guide to Hedge Fund Due Diligence
Whitepaper on Hedge Fund Operational Risk & Transparency
Alpha through rigorous hedge fund due diligence
In-depth hedge fund risk & due diligence PowerPoint
Part 2: Hedge Fund Careers & Jobs

Hedge Fund Jobs
Looking for a Hedge Fund Job?

Hedge fund jobs are in high demand, many MBA graduates and experienced financial
professionals now are looking for ways into the hedge fund industry. If you are looking
around at hedge fund jobs let me know. I have received a few notices from Hedge Funds
looking to fill open hedge fund jobs and I know of a few recruiters that you might want to
be speaking with.
I often get email questions about how to prepare a resume for a hedge fund job interview.
What is the perfect hedge fund resume for hedge fund jobs? There isn't one. While not
the case, some hedge fund professionals never graduate from high school but make
over $1m/year in their job trading or selling for a hedge fund. That said, some of the
below factors are a few of what can help land you hedge fund jobs:
Quantitative experience and abilities
CFA, CHA, or CAIA designation
2.Education - Ivy league, MBA, Quant focused PhD
3.Signs of loyalty, passion, and being humble
4.Something Extra such as PR expertise, asset gathering ability, or Information
Advantage
5.High quality names from your last few hedge fund jobs - large wirehouse experience
6.How much money did you personally bring in to the firm or make for the firm?
7.A stomach for a high commission/bonus structure
One highly successful hedge fund manager said that they don't have any hard and fast
experience requirements while filling their open hedge fund jobs, they simply look for
people who are hungry, humble, and smart.
Quick Links: Hedge Fund Employment Guide
Hedge Fund Job Listings
Hedge Fund Job Websites:

Two great places to look for hedge fund jobs are the Albourne Village and
HedgeFundMessageBoard.com. I'm collecting resources on hedge fund jobs. Let me
know if you have some great hedge fund job website that I could list here.
To read dozens of additional articles related to Hedge Fund Jobs like this one please
visit our Hedge Fund Employment Guide. Coming soon - the Hedge Fund Jobs Guide.
- Richard
The Chartered Hedge Fund Association (CHA)
Join The Hedge Fund Group Via Linkedin

http://www.linkedin.com/groups?gid=44059&shar
edKey=5FC1F8699305
Job Listings
Open Hedge Fund Positions

Starting this week I will be adding a series of hedge fund job listings here to this section
of the blog. These job listings will be broken up into 5 categories which include:
1.Legal & Compliance Jobs

2.Marketing, Sales & Investor Relations Jobs
3.Analyst & Due Diligence Positions
4.Portfolio Management Jobs
5.Finance and Accounting Jobs
There are also several experienced recruiters available to contact here:
Hede Fund Recruiters
If you have any questions or would like to add your job listing to one of these pages or
the "Hedge Fund Recruiters" page please send me an email at
Richard@HedgeFundGroup.org. - Richard
CHA Designation
CHA Investment Designation | Update
A class of over 60 participants are currently preparing for
the CHA Level 1 Exam next month. The Chartered Hedge
Fund Associate (CHA) Designation Program continues to
grow despite the recent financial crisis. Our team is seeing
an increased interest from participants considering the CHA
Designation as the hedge fund industry job market becomes more competitive. We are
also being contacted by many hedge fund managers who are looking to ensure they
have a broad foundation of knowledge on which to run their business.
There are currently over 50 hedge funds and fund of hedge funds which have agreed to
join our Advisory Board and over 1,500 individuals who have signed up to learn more
about the CHA Designation through our Email Alerts.
The Hedge Fund Group (HFG) is preparing to open registration again on January 15th,
2009 to the first 200 participants who register for the program. The new website for the
designation will be available shortly. For now information on the program can be found
here: CHA Overview.
4 Career Tips
If someone wanted to start a hedge fund career, what a re 4

pieces of advice you would give them?
5. The day you graduate from college start studying for and earning your Chartered
Financial Analyst (CFA), Chartered Hedge Fund Associate (CHA) or CAIA
designation.
6. Figure out if your passion is in trading, analytics or marketing & sales. Choosing your
specialty area early will help you more quickly develop the experience and skill
sets needed to do well in that type of position.
7. Never do anything un-ethical. If you are sharp and passionate you have no need to
ever cut corners. Avoid people that do at all costs.
Do you own compliance and due diligence research. Look up your potential or current
boss within the FINRA or SEC records to see if they have marks against them. Meet with
a compliance lawyer yourself to make sure your activities are all legal with securities
laws. Do your own homework because many times nobody is going to do it for you.
Hedge Fund Internship

Looking for a hedge fund internship? Send me your resume, the dream hedge fund job
you would like to have in 3-24 months and what type of internship you are looking for
(time commitment and type of work). I have enough work for 3-4 unpaid hedge fund
internships and connections to place 1-2 students or professionals into a paid hedge
fund internship.
If you were to start a hedge fund internship with me the possibilities would include:
8. Hedge Fund Internship focussed on Strategy Analysis
9. Hedge Fund Internship focussed on Analytics
10. Hedge Fund Internship focussed on Public Relations
11. Hedge Fund Internship focussed on Best Practices in the industry
12. Hedge Fund Internship focussed on Hedge Fund News Tracking & Synthesis
13. Hedge Fund Internship focussed on Hedge Fund Article & White Paper
Development
14. Hedge Fund Internship focussed on InvestmentDefinition.com - Creating an
index of 250 hedge fund related definitions (good base understanding of lingo
that many experienced hedge fund managers don't have a firm grasp on)
Indicating which of the above areas look most interesting to you might be a good way to
start a discussion. No matter what you work on if you put in the time I can assure that
you will know the basic landscape of the hedge fund industry and are up to speed on
recent trends and norms that will help you present yourself as a professional in the
industry when you apply for hedge fund jobs. I look forward to speaking with you.
Hedge Fund Marketing Job

Hedge Fund Marketing Job Open

For Hedge Fund Marketing, Sales and Investor Relations jobs please see our Hedge Fund Job
Listings page or visit the Marketing, Sales & Investor Relations Jobs page directly.
If you would like to post a job within the Marketing, Sales & Investor Relations
Jobs category please email me at Richard@HedgeFundGroup.org
HedgeME Book Review

 I found Hedge Me to be a great guide to beginning a career in the hedge fund industry.
Some have bought Hedge Me simply for the comprehensive list of hedge fund
employers and recruiters that is included in the book. The hedge fund industry is a very
competitive place to work and by reading this guide you can increase your chances of
getting a job as well as possibly avoiding the mistake of working in the wrong type of
hedge fund position.  For example this book provides insights into the day-to-day
activities of hedge fund traders, analysts and sales professionals. This shows you what
their schedules and responsibilities look like and it can help paint a clearer picture that is
sometimes hard to piece together through reading articles online and conducting
informational interviews.  Hedge Me is also great for statistical references on what you
can expect to get paid and how large the industry is. If nothing else you will have hard
numbers to go off of and if you can negotiate $35 more pay than that alone has paid for
the price of this book.
Enjoy this book review? Read a few more by visiting our Investment Book Reviews
Directory.  - Richard 
Hedge Me Claude Schwab
Best Price $39.00  or Buy New $39.00
Privacy Information
To read dozens of additional articles related to Hedge Fund Jobs like this one please
visit our Hedge Fund Employment Guide. 
Investment Internships
Open Investment Internship
I have two investment internships available that would start sometime this summer.
These roles would largely consist of doing research on different hedge fund & private
equity investment strategies, profiling top hedge fund managers and helping construct
niche guides to the hedge fund industry based on personal topics of interest. I am
looking for hungry, pro-active, computer literate and well written interns who are open to
working on a variety of projects If you are interested in this type of an investment
internship opportunity please email me at Richard@RichardCWilson.com.
Hedge Fund
Forum
Hedge Fund Forum - HedgeFundMessageBoard.com

As many of you already know there is a growing hedge fund forum connected to this
hedge fund blog. To make it easy for you to get there I have purchased
HedgeFundMessageBoard.com for this forum and you may now use that domain
name to reach this message board on hedge funds.
Since we live in a time of much hedge fund regulation please do not post any
performance figures or advertisements on this forum - it should be used to network,
share resources, ask questions, announce events and provide feedback for the Hedge
Fund Group (HFG) and this blog.
Hedge Fund Careers
Hedge Fund Career Trends

With hedge funds now a mainstay in the public eye many MBA graduates and
accounting/audit professionals are starting a hedge fund career with hopes of increased
salaries and less big box corporate pains.
If it would help you find a Hedge Fund Job please visit HedgeFundGroup.org and join
our networking association for free. We have over 13,500 members in the group so far
and you may contact anyone there at no cost.
Also, take a look at the CHA Designation Program offered by the Hedge Fund Group
(HFG). I have helped create this certification program and it is designed for hedge fund
managers, hedge fund professionals and those who work with hedge funds.
I will be posting more on hedge fund career tips, hedge fund career guides and hedge
fund career experts over the next couple of quarters. Please see below for links to
additional resources.  - Richard
Hedge Fund Associations

Directory of Hedge Fund Associations
There are literally hundreds of hedge fund related associations and organizations around
the world. Many of you may already be part of the Hedge Fund Group (HFG) or your
own local city specific hedge fund association but I thought it would be useful to create a
listing of all hedge fund associations in existence. This list will start small and hopefully
grow each quarter as I get more inquiries from existing hedge fund associations and
professionals such as yourself. Please email me at Richard@RichardCWilson.com if you
would like to increase the exposure for your hedge fund or alternative investment
association or organization.
Hedge Fund Analysts / Associates

Need to hire a hedge fund analyst, trader or portfolio manager?
Hedge fund industry has a relatively high turnover rate. This is often due to talent
poaching, performance drops, mergers & acquisitions and over-sized bonus envy or
complacency. This page has been created to announce the availability of hedge fund
professionals who would like to be contacted by hedge fund managers, alternative
investment and hedge fund consulting firms and hedge fund recruiters that are looking to
fill open positions.
Currently Available Hedge Fund Analysts, Traders, Associates and Portfolio

Managers:
15. Hedge Fund Analyst Available: I am an analyst who wants to find profitable
opportunities in the investment world. I try to look for undervalued stocks,
companies, situations and want to see if there is any hidden potential which can
be unlocked. I have done lot of financial modeling, forecasting, and growth study
of companies like Google etc. I am interested in getting an analyst level role in a
hedge fund. I have quantitative skills, educational back ground (by studying
hedge fund course books), trading experience, which can be easily used in a
hedge fund. Key Strengths: understanding hidden opportunities & distressed
scenarios, solving complex business & analytical problems, excellent financial
modeling skills, perfect quantitative scores. My ideal job will be in a hedge fund
as an analyst, where I can use my financial skills and investment principles to
locate new opportunities in companies, scenarios, deals, commodities,
currencies etc. Cell - 248-635-2970 Email: mnath.mech@yahoo.com
16. Hedge Fund Trader/Financial Services Manager Available: My extensive
experience as a Trader/Financial Services Manager has been highlighted with
increasing degrees of responsibility. While I have spent the last couple of years
as a private trader and consultant, I am especially proud of my record in trading
and team-building for companies like Goldman Sachs and Lehman Brothers. I
have consistently accomplished all goals assigned to me, particularly in revenue
production and customer service. 516 297 7950 (Cell Phone)
17. Hedge Fund Analyst - Value investor with non-traditional background seeks
non-traditional situation. I have spent the last three years working as an equity
analyst and am looking for home-based consulting work. Margin of safety is very
important and my specialty is financials, particularly insurance companies where
I worked for 18 years. Cell (484) 802-4630 roscoe86@rcn.com
18. Junior Hedge Fund Trader: A highly motivated and goal oriented college
graduate in Economics seeking a position with a hedge fund in New York. I have
experience working in the financial services industry with UBS, where I obtained
research and financial analysis on mutual funds, ETFs, and stocks in order to
provide information to financial advisors and clients, prepared performance and
other financial reports for over $350 million in accounts for client reviews, created
and maintaining spreadsheets and databases. I have experience trading a
personal account focusing on mostly large-cap and small/micro-cap stocks where
I have been short biased, trading options, and now getting involved in futures
trading as well as experience managing leverage. Cell: 440-669-7048 email:
wiel.1@osu.edu
If you would like to have your 3 sentence bio and contact details added to this list please
send an email to Richard@RichardCWilson.com to set it up.
Hedge Fund Work
Hedge Fund Work - Email Question

I just got this hedge fund work related email on Wednesday of last week from a hedge
fund recruiter who is a member of the Hedge Fund Group (HFG) and based in Hong
Kong.  "Hi Richard - Been enjoying all of your informative articles on hedge funds and
through those I can see your passion and desire to make a difference. I am a recruiter
based in Hong Kong and many investment bankers and finance professionals are
seeking hedge fund jobs here. With so many hedge fund managers out there in the
industry how do you qualify which type of hedge fund would be good to work for?"  "The
easy answer is, it depends. It depends on what your short and long-term career goals
are within the hedge fund industry. The better short answer is that it would probably be
most beneficial to work with a hedge fund with over $100M in assets under management,
ideally with offices in London and/or the United States. Much of the hedge fund asset
raising activity is going on within the EU and America so joining a hedge fund large
enough to compensate you well for your efforts while also growing quickly in terms of
assets might be your best bet.
Dozens of additional hedge funds will most likely be opening offices in Hong Kong over
the next 3-5 years, the trick will probably be developing relationships with those firms
while they are planning who to hire locally to be based in Hong Kong to represent their
fund."
For more information on hedge fund jobs, the Chartered Hedge Fund Associate (CHA)
certification, internships, careers, resumes, etc. please see the Guide to Hedge Fund
Employment.
Read dozens of additional articles related to Hedge Fund Jobs by visiting the Hedge
Fund Employment Guide.  - Richard
Hedge Fund Recruiters

Hedge Fund Recruitment - A listing of Hedge Fund Recruiters
I get emails each week from hedge fund professionals looking for new employment
opportunities, and many of these are interested in contacting hedge fund recruiters who
are focused on hedge funds. Below are my efforts towards compiling a list of top hedge
fund recruiters that are dedicated to working with hedge fund professionals and
alternative investment clients in general. If you are one of these please send me an
email at Richard@RichardCWilson.com. If you need a hedge fund recruiter please
choose one from the list below. I will be adding more hedge fund recruiters here each
month.  Top Hedge Fund Industry Recruiters:    Marc Goormastic (President of
Goormastic Executive Search, United States) - I recruit Sales, Business Development, &
Capital Raising (including TPM) talent for private money firms, private equity firms,
mutual funds, & hedge funds. Retainer-basis with one year guarantee. SMALL FIRM
FRIENDLY: I will accept my fee in up to twelve monthly installments to ease cash flow
impact. Excellent industry client references available upon request. Contact Details -
marcus@goormastic.com Also see http://www.goormastic.com/     Anthony
   Solazzo, of
Masonboro Partners is focused in on recruiting in the financial services space world-
wide (investment banking/private equity, and hedge fund opportunities). You can email
him at: anthony@masonboropartners.com or at 240.476.9785     Howard
   Ross is a
leading hedge fund recruiter with BOC Staffing Solutions. BOC is a specialty provider of
permanent and consulting staffing to all levels of positions within Middle and Back Office
Operations and Front-Office Trade lifecycle support. BOC brings a strength of database
and staffing expertise gained over 15+years in providing the talent sought, from the
hourly worker providing non-exempt support to senior executives managing
departments/divisions. Our candidates have expertise in such business disciplines
as:CSR, Bookrunners and Sales/Trader Assistants,
Confirmations/Settlements/Reconciliation specialists, Market/Credit/Operations/VaR
Risk Professionals, Product Controllers, Accounting Tax and Compliance experts,
Business Analysts, etc. Howard can be contacted at 212-490-2233 or

HRoss@BOCStaffing.com
Ken Murray - Mercury Partners is a leading Hedge Fund Executive Search firm based in
NYC. Since 2000 we have executed hundreds on searches for Analysts, Portfolio
Mangers, and Traders in Long/Short, Event Driven Equities, Distressed/High Yield, and
Quantiative Strategies for blue-chip and boutique hedge funds in the United States and
London. We also provide extensive marketplace statistics for and compensation data as
well as hiring trends and growth areas for our clients to better understand the
marketplace. Ken can be contacted at 212.687.3982 or
kenmurray@mercurypartner.com  Sameer Vishwanathan, Partner, Mark Lewis, Inc.,
Chicago -- we recruit exclusively for hedge funds and proprietary trading firms across the
US; a fair majority of our clients utilize high-frequency, black box, algorithmic trading
strategies. We focus on quantitative and technology placements of both experienced
professionals and recent grads for roles in the front-office and the middle-office; if you
are interested in working as a Quantitative Programmer, Quantitative Analyst, Trader,
Portfolio Manager or a similar role, please email a copy of your resume to
sameer@marklewisinc.com or call us at 646.340.2136. Please note that we will never
share your resume or any other information unless we have your explicit permission.
You can also visit us online at www.marklewisinc.com.
Investment Books
Hedge Fund & Alternative
Investment Book Reviews

Since starting this blog last year I have published several reviews of books that either
directly discusses alternative investments or presents powerful business lessons which
can be directly applied to the hedge fund industry. I will continue to do so and will use
this page to organize all of these book reviews in one place. If you have read a great
book and don't see it below please send me an email with your book summary and I will
publish it here on my Hedge Fund Consulting Blog.
19.
20. The Black Swan by Nassim Taleb
21. Hedge Fund Blog Book by Richard Wilson
22. Running Money by Andy Kessler
23. An American Hedge Fund by Tim Sykes
24. Hedge Me by Claude Schwab
25. Hedge Fund Blog Book by Richard Wilson
26. The Strangest Secret
27. The Instant Millionaire Book
28. In Search Of Excellence by Tom Peters
29. Summary of Good to Great by Jim Collins
30. Psychology Of Influence by Robert Cialdini
31. Top 10 Hedge Fund Books
Rainmaker
Investment Certification
Chartered Hedge Fund Associate (CHA)
Quick Link: Chartered Hedge Fund Associate (CHA)

Designation
The Hedge Fund Group (HFG) has grown to over 15,000 members with an average of
50 new members joining each day. This international hedge fund association is free to
join and we hope to be adding new resources to HedgeFundGroup.org each quarter.  
The Hedge Fund Group (HFG) offers an investment certification called the Chartered
Hedge Fund Associate (CHA) Program. It is a two level certification program aimed at
helping hedge fund career professionals, financial professionals looking to work within
the hedge fund industry.
Level 1 of the CHA Designation educates participants within 6 learning modules related
to hedge funds - providing them with a strong foundation of knowledge covering many
areas of the industry. Level 2 helps participants specialize within one area of their choice
which includes due diligence, marketing and sales or analytics.
The name Chartered Hedge Fund Associate was chosen over Charted Hedge Fund
Analyst for this investment certification because there are dozens of types of hedge fund
jobs and "analyst" is only a small segment of the total job market. This designation seeks
to help hedge fund professionals in the areas of portfolio management, trading,
marketing, prime brokerage, investors relations, recruiting, due diligence, fund of funds
as well as analytics.
To learn more please visit http://CHADesignation.org

Prime Brokerage Jobs

Open Prime Brokerage Jobs
The following are available prime brokerage jobs in the industry:

Prime Brokerage Relationship Management - A New York City based firm is looking
for additional relationship managers for their prime brokerage firm. For more details and
to apply please email Richard@HedgeFundGroup.org.
Prime Brokerage Risk Manager - A leading global Fund of Hedge Funds with approx
$15bn AUM and fantastic performance record is currently seeking an experienced Prime
Brokerage risk manager to lead their risk monitoring and control team following a
restructuring within their risk division. The team will be responsible for monitoring and
controlling risk of the underlying hedge fund investments and monitoring the hedge
funds’ liquidity risks. It will also involve monitoring whether they remain within agreed
trading limits, whether they remain within asset allocation limits, and identifying and
assessing any other potential risks within the portfolios. This position will involve
leading/mentoring a small team of analysts.  Suitable candidates must have a strong
academic record with degree level qualifications in a finance related discipline.
Candidates should have a strong risk management background from either a: FOF,
Hedge Fund or an Investment Bank PB risk function and you understand risks from a
hedge fund perspective. Candidates must be highly motivated, self-directed individuals
who enjoy working in an entrepreneurial environment and possess excellent
communication / interpersonal skills as you will be interacting with clients. Strong
VBA/VaR/Excel skills are required. Previous managerial experience would be highly
advantageous. Learn more by reading here.
Don't Miss Important Hedge Fund Resources, Subscribe to the Daily Hedge Fund
Newsletter
Why Work at a Hedge Fund?

Why is Working at a Hedge Fund So Desirable?
While recent market problems mean many in the financial sector will be out of work or
taking home smaller bonuses, there’s still wealth waiting for those in hedge funds. That
wealth attracts many entrepreneurs, workers and students to hedge fund employment.
Why work for a hedge fund?
- Working at a hedge fund requires varied skills and abilities. Whether involved in
designing a fund, it strategies or its sales, hedge fund work can be challenging and
invigorating. Not only will you manage or oversee a portfolio, you’ll have to make sure
you’re serving the interests of you clients while ensuring your corporate practices are
tight, legal and profitable.
- Hedge funds can cater to your type of experience. Funds require people skilled in
accounting, investment banking, economic analysis and business. There’s room for
everyone.
- Unique corporate cultures. The smallest funds may be run by one or two busy traders;
the largest by hundreds. Seek the one that’s best for you.
- A base salary will start around six figures.
- And the best is yet to come: the real money’s in the bonus, which can reach another six
figures.
The downside? If your fund doesn’t earn, you’ll miss out on a large part of your wages.
But that incentive is probably the ideal thing for someone skilled in business, dedicated
to performance and eagerly seeking profit.
Family Offices Group

A bit after I started the Hedge Fund Group (HFG) i started the Family Offices Group.
This is a network of single and multi-family offices and consultants who share resources,
refer business and eventually will plan networking events surrounding the family offices
and ultra high net worth advisers.
Join The Family Offices Group
The Family Offices Group website is FamilyOfficesGroup.com. The group is free to join
and as of 3.10.08 has around 225 members. If you work directly for or with a family
office of any type please join us by clicking on this link:
http://www.linkedin.com/e/gis/44339/3D5D157F95DF
Hedge Fund Salaries

Recent Hedge Fund Salaries Article
One of the most popular economics blogs today is The Big Picture which recently
published a story on hedge fund salaries. Last year each of the top 10 earners brought
home over $500M each 5 hedge fund managers earning over $1B in profits.
I happen to agree with The Big Picture's take on this issue which you can read about
here if you have a minute.
Hedge Fund Pay

Top Hedge Fund Pay Outs
It is no secret that hedge fund managers are some of the top paid professionals in the
world. Here are the pay outs for the top 10 highest rewarded hedge fund managers in
2007. My guess is that 2008 will be a more bar-belled list probably consisting of those
hedge fund managers that take huge profits from the ongoing volatility and then those
who were operating within areas only slightly affected by it.
Top Hedge Fund Manager Pay Outs
1.John Paulson (Harbinger Capital) -

$3 billion
2.Phil Falcone (Harbinger Capital) -

$1.5-2 billion
3.Jim Simons (Renaissance

Technologies) - $1.5-2 billion
4.Steve Cohen (SAC Capital) - $1-1.5

billion
5.Ken Griffin (Citadel Investment) -

$1-1.5 billion
6.Chris Hohn (TCI) - $800-900 million
7.Noam Gottesman (GLG Partners) -

$700-800 million
8.Pierre Lagrange (GLG Partners) -

$700-800 million
9.Alan Howard (Brevan Howard) -

$700-800 million
.
10/Paul Tudor Jones (Tudor
Investment) - $600-700 millio
Investment Training
Investment Training Q & A
Question: Where can I find information an investment training programs available for recent graduates? I have
3 years of experience working in the investment industry but I'm looking for designations or programs to help
improve my career. Would you suggest earning the CPA designation?
Answer: While the CPA is a highly rated designation if you would like to be an accountant there are other
designations and programs which may be more directly applicable base on what type of investment training, or
what path of an investment career you are taking. Here are links to three of these programs:
5. Chartered Financial Analyst (CFA)
6. Chartered Hedge Fund Associate (CHA)
Chartered Alternative Investment Analyst (CAIA)
Hedge Fund Compensation

Hedge Fund Compensation Trends
Hedge fund compensation has gone through the roof over the last 5 years. Half of the new entrants on the list
of the 400 richest Americans are hedge fund related. Many MBA graduates can immediately earn 80-125k with
top entrants earning over 180k/year.
Are you looking for a hedge fund job or do you want to discuss hedge fund compensation for an employee you
might hire? Give me a call when you get a minute. If I can't answer your questions I will find someone who will
get you an answer.
Hedge Fund Salary

Hedge Fund Salary Levels
There is much talk about astronomical hedge fund salary levels and cases every year where hedge fund
managers realize $1B+ in total earnings, but just how well are most hedge fund professionals compensated? I
just found some recent hedge fund salary details online by Alpha Magazine. Here are the figures:
Single Manager Hedge Fund CEO Salary Figures
Please visit HedgeFundBlogger.com or HedgeFundGroup.Org for more information.

Junior Analyst Hedge Fund Salary Figures
Senior Trader Hedge Fund Salary Figures
Marketing Hedge Funds


Also see my macro-article on Hedge Fund Marketing
Over the weekend I got an email from a hedge fund professional working for a very well known bank in London.
He was looking for advice on getting into third party marketing or hedge fund sales. He specifically asked if I
knew of any great books on third party marketing or hedge fund sales and wanted details on typical fee
structures/compensation, etc. My response is pasted below as I thought it might answer some other people's
questions while looking for information on marketing hedge funds.
Thanks for the email. There are no great books on third party marketing that I am aware of, everyone is pretty
close vested within the industry. I haven't found a great book on investment sales either, but I know there are a
few of those if you look around on Amazon. If you are looking for great books just on sales I really like Jeffrey
Gitomer's 3 books: The Sales Bible, The Little Red Book of Sales Answers, and Yes! Attitude. Those books
have changed my career.
Hedge fund marketing & sales fee structures vary depending on the type, reputation, and abilities of the third
party marketing firm (3PM firm). Some retain only 2-3 clients at a time and charge retainers for this focus of
their attention while others might work with 10 money managers (clients) at once and only get paid on
commissions. Usually commissions is 20% of both the base fee and performance fee when working with hedge
funds.
If you work for a hedge fund you will be restricted to their strategy(s) so if their performance dips or the strategy
goes out of favor you might not raise any money and it wouldn't be your fault. If you work for a 3PM firm you
would probably get to market 2-3 different money managers in some capacity across diverse distribution
channels such as endowments & foundations, broker dealers, and direct to high net worth individuals. If a
strategy goes out of favor you just find a new money manager to market as a firm, you avoid that downside of
being a hedge fund sales professional. Common compensation for internal hedge fund sales people is 80k-
200k with some making 400-800k/year and maybe 3-10 commissions that might trail off over time. Common
compensation for a 3PM as I mentioned above is a retainer of 60k-150k (if they get one) and 20% of fees.
I'm not even 30 years old yet so I'm going the third party marketing route because I want to be able to have
knowledge of the DNA and powerful relationships in every major distribution channel and I want figure out
where the real money and momentum is and be able to shift my focus to that point. I believe it is harder to get
a 3PM job because most want you to have a book of business or solid relationships, but it can be done. To
work in my first third party marketing position I worked for free for 3 weeks to prove myself and took a big cut in
pay coming in the door, but now I'm in my dream job getting experience that I believe will continue to be more
valuable each year.
Interested in hedge fund marketing? Read dozens of more hedge fund marketing & sales articles along with
details on third party marketing within the Hedge Fund Marketing Guide.
Hedge Fund Ethics
In the hedge fund industry you have one name and one reputation. If you ruin that you could have influential
people in the industry refusing to do business with you for 15-20 years after their initial opinion is formed. In
such a competitive close vested industry where large profits can be made the temptation to cut corners or look
past fiduciary duties is sometimes too much.  The FBI recently had agents posing as a Florida-based hedge
fund manager to nab 10 individuals in 5 kickback schemes connected to securities sales. The SEC charged 10
individuals and the U.S. Attorneys office charged six with criminal offenses.  In each case the posing hedge
fund manager told the targets that their actions must be kept secret because it violated his fiduciary duties,
making it explicitly known that what was going on was illegal and un-ethical. “This case illustrates the
Commission’s ability to work together with criminal authorities in creative ways to uncover fraudulent schemes
and to protect our markets,” Linda Chatman Thomas, the head of the SEC’s enforcement division, said.  
Bottom Line: If you are smart enough and hard working enough to be successful then you don't need to ever
cut corners and blatantly break securities laws. Innovation and relationships are the competitive advantage that
should make you extremely profitable, not cheating the system.
Hedge Fund Newsletter
Hedge Fund Newsletter
I know some of my frequent site visitors are already part of my hedge fund newsletter, but as I speak to people
within the Hedge Fund Group (HFG) and those who email me directly from my blog most people were not
aware that one was offered through this website on hedge funds.
The free hedge fund newsletter that I produce is different from other great newsletters on hedge funds that you

might read. I don't use RSS news feeds and I don't re-hash stories first reported on by other organizations. For
better or worse, I have decided not to compete with Google News and only write about and aggregate
educational materials on the hedge fund industry. Each day I write 1-5 articles on hedge funds, and what is
written is sent out the next morning via the hedge fund newsletter.
Hedge Fund Training
Top 50 Hedge Fund Training Course Options
Quick Link: CHA Designation | Hedge Fund Certification Program
Here is a long yet not exhaustive list of hedge fund training programs. These options include private seminars,
university courses, online training guides, or classes that build skills that are highly revelant to common hedge
fund jobs. Special thanks to Adam Feinberg, a investment/hedge fund learning and development expert for
helping me flush this list out.
Hedge Fund Training Options:
Chartered Hedge Fund Associate (CHA) Designation - A professional designation for hedge fund professionals
and those who work with hedge funds as clients. In the past participants have included hedge fund managers,
analysts, due diligence professionals, private wealth management executives, students and professors. Learn
more at http://CHADesignation.org
Fitch Training - Hedge Funds A Credit Perspective

JG Advisory, LLC
http://www.difm.uk.com/
http://www.ibtraining.com/
http://www.nyif.com/ / http://www.ftknowledge.com/ (sister companies)
http://www.risklatte.com/training/
http://www.stcusa.com/
http://www.trainingthestreet.com/
http://www.wallstreetprep.com/
http://www.globecon.com/
http://www.gfmi.com/
http://www.matchettgroup.com/FinancialLearning/
http://www.wallst-training.com/
http://www.bppfinancialservices.com/
http://www.kaplanfinancial.co.uk/
http://www.wallacect.co.uk/training.html
http://www.fintuition.com/
http://www.intuitionweb.com/ e-learning and classroom instruction
http://www.zoologic.com/ e-learning and classroom instruction
http://www.acf-financialtraining.com/ e-learning and classroom instruction
http://www.ciftweb.com/jsp/website/index.jsp e-learning and classroom instruction
http://www.complinet.com/connected/solutions/regulatory-insight/e-learning/ e-learning and classroom

instruction
http://www.eukleia-training.com/index.php?page=Home e-learning and classroom instruction
http://www.absolutelytraining.com/ e-learning and classroom instruction
http://www.epic.co.uk/ e-learning and classroom instruction
http://www.inmarkets.com/ e-learning
http://www.chisholmroth.com/ e-learning
http://www.statmanconsulting.com/
http://www.stalla.com/
http://www.schweser.com/
http://www.knopman.com/
http://www.greico.com/
http://www.firesolutions.com/
http://www.terrapinnfinancial.com/Gateway.aspx
http://www.gftt.com/
http://training.efinancialcareers.co.uk/
http://www.absolutelytraining.com/index.shtml
http://www.redcliffetraining.co.uk/index.html
http://www.wbstraining.com/
http://www.bgconsulting.com/
http://www.garp.com/
http://www.citycompass.org/Default.asp
http://www.bgconsulting.com/
http://www.mdatraining.com/
http://www.ctguk.com/
http://www.enbconsulting.com/
http://www.londonfs.com/
http://www.dcgtraining.com/default.asp
http://www.iff-training.com/default.php
http://www.waters-training.com/
http://www.euromoneytraining.com/
http://www.taylorassociates.co.uk/
http://www.reedlearning.co.uk/default.aspx (a little generic much like the U.S. American Management

Association)
http://www.passpro.com/

http://www.infoline.org.uk/
http://www.dnatrainingconsulting.com/
http://www.first-finance.com/
http://www.londonmet.ac.uk/lfa/
http://www.lywood-david.co.uk/index.htm
http://www.cclcitytraining.com/
http://www.value-consultants.co.uk/index.htm
http://www.moodys.com/cust/prodserv/prodserv.aspx?source=StaticContent/Free%20Pages/Products%20and
%20Services/MoodysTrainingServices/Moodys%20Training%20Services.htm&viewtemplate=/templates/mdcH
eaderFooter.xml
http://www.icmacentre.ac.uk/
http://www.foranfinancial.com/flash.html
http://www.gpworldwide.com/
Coming Soon...Hedge Fund Training Guides
If you are a a hedge fund training professional or are looking for something specific please send me an email
at Richard@RichardCWilson.com
Financial Certification
Financial Certification in Hedge Funds

Here is the result of a recent interview I completed with the Financial Times regarding the Hedge Fund Group
(HFG) and Chartered Hedge Fund Associate (CHA) Designation, a new financial certification. Thanks to Fintag
for the friendly (overly friendly) plug over on his blog here.
Here is a short excerpt from the Financial Times article:
“Students can receive qualifications for almost anything, be it a "maple syrup" course at New York's Alfred
University or "cyberfeminism" at Cornell. Basic economics teaches that so long as there is demand and
resources, supply will shortly follow.
Richard Wilson, founder of the Hedge Fund Group (HFG), a professional networking organisation,
witnessed a demand for a program dedicated to the study of hedge funds. This discovery led to the Chartered
Hedge Fund Association Designate initiative. Mr Wilson previously worked for a currency and commodity
hedge fund and a fund of funds in South Africa before joining a hedge fund marketing firm.
The charter he has helped create is a program designed to prepare students for life in a hedge fund. "It
will also save two-thirds of training on the job and enable them to walk right in and know what is going on,"
says Mr Wilson.
The Chartered Financial Analyst and Chartered Alternative Investment Analyst are well established
rival programs The CHFA project, launched in mid-July, is designed to be similar, but not a copy of othersK.
An online training forum provides career advice, CV checks, and access to a directory of managing directors
and recruiters for students. Students gain admission to the Hedge Fund Group (HFG) and its 9,000 members.
The charter received roughly 900 applications for the first year, but intake was limited to 100K. "The
Hedge Fund Group (HFG) team has been fabulous. They answer every question quickly, accurately and
professionally. It's this stuff that, quite simply, builds credibility," says, Sameer Vishwanathan, a new student of
the CHA Designation Program.”
Hedge Fund Websites

Top 50 Hedge Fund Websites

Hedge funds are now mentioned in the news over 1,000 times/day. There are over 15,000 hedge funds and
well over 200 distinct investment strategies among those funds. I am trying to aggregate educational hedge
fund material in my hedge fund blog here but there are dozens of other high quality websites on hedge funds
that all take a different angle on providing something value to the hedge fund community. Here are 50 of the
best hedge fund websites.
1. Hedge Fund Blogger.com
2. Fin Alternatives
3. Fintag's Hedge Fund News Site
4. Albourne Village
5. Hedge Fund Center
6. Veran's Hedge Fund Blog
7. Alex Akesson's Hedge fund Weblog
8. AleaBlog.com
9. Energy Hedge Funds
10. U of Iowa on Hedge Funds
11. Harvard Hedge Funds Guide
12.
13. Hedge Week
14. Seeking Alpha - Hedge Funds
15. Google News on Hedge Funds
16. HedgeWorld.com
17. HedgeBoard
18. Hedge Fund Group (HFG)
19. Prime Brokerage Guide
20. All About Alpha
21. Hedge Fund Message Board .com
22. HFMA
23. Hedge Funds Cheat Sheet
24. HedgeFundBookstore.com
25. Barclays Hedge Fund Databases
26. Hedge Fund Books Blog
27. SEC Website on Hedge Funds
28. Wikipedia on Hedge Funds
29. Magnum Hedge Fund Investments
30. HedgeCO
31. HedgeFundPR.net
32. TheHedgeFundLibrary.com
33. NY Mag on Hedge Funds
34. Third Party Marketing
35. PENTA - Hedge Fund Corporate Event Planning
36. Family Offices Group
37. Preqin Hedge Fund Institutional Investor Services
38. Hedge Fund Implode
39. Investopedia on Hedge Funds
40. Hedge Fund Dynamics
41. Jeff Mathews is not making this up
42. Between the Hedges
43. NY Times Dealbook - on Hedge Funds
44. HedgeFundJobsOnly.com
45. HedgeFund.net
46. Hedge Funds Care
47. Hedge Fund News Blog
48. Hedge Fund Alert
49. 100 Women in Hedge Funds
50. Hedge Fund Research
51. About.com on Hedge Funds
Hedge Fund Conferences
Get a Hedge Fund Job
I recently wrote a hedge fund career related article for Investopedia.com on how to get a job at a hedge fund.
This is a short two page article which details from my experience what tangible steps one can take to work in
the hedge fund industry. The steps I suggest include:
1.Make sure you really want to get a hedge fund job

2.Become a student of the hedge fund industry
3.Use the 3 circles strategy for your career decision making progress
4.Identify several mentors to help you secure a hedge fund job
5.Complete multiple hedge fund internships
6.Develop your unique value proposition
7.Hedge fund job tips
8.Land the unadvertised hedge fund job
9.Consider hedge fund service provider jobs
10.Apply to hedge fund jobs
To read the advice given under each of these 10 sections please read the full 2 page hedge fund career advice
article here: http://www.investopedia.com/articles/financialcareers/08/hedge-fund-career.asp
Read dozens of additional articles related to Hedge Fund Jobs by visiting the Hedge Fund Employment Guide.
Middle Office Jobs

Middle Office Job & Operations Jobs Available
Just a short note that I've posted two new open hedge fund positions to the Finance and Accounting Job
section of my Hedge Fund Job Listings page.
The first is a Hedge Fund Operations Associate position and the other is a Hedge Fund Middle Office
Associate position. To view both please see this page: Finance and Accounting Jobs.
-Richard

Portfolio Management Jobs

Open Portfolio Management Jobs
Please see below for open portfolio management jobs within the
hedge fund industry:
Position #1: Coming Soon - Please email Richard@HedgeFundGroup.org to add your open portfolio
management position here now.
Not interested in these positions but interested in looking at other open hedge fund jobs? Please see
HedgeFundBlogger.com's Hedge Fund Job Listings page.

Finance and Accounting Jobs

Finance and Accounting Hedge Fund Jobs
Please see below for open finance and accounting positions within the hedge fund industry. We currently have
two positions list here for a Hedge Fund Accountant & Hedge Fund Operations Associate.
Open Position #1: Hedge Fund Accountant (New York Tri-State Area)This firm is
expanding their middle office and seeking an experienced accountant who has public accounting experience
for the financial services/alternative investment space, and wants to work for a growing Hedge Fund that's
been around for over 15 years. Must be a entrepreneurial and want to help grow the business, brining things to
the next level.
1.Job Description:You will help with trade support, i.e. work with the traders and the PMs, reconcile
breaks, talk to clients, settle trades, etc. You will also help with generating the Financial Reports and
Performance Reporting for the fund's portfolios.
2.Required Experience: You MUST have public accounting experience, or be presently work for a hedge
fund in a financial reporting/performance reporting capacity. We are looking for someone with 2-6yrs
experience who can help grow a business. CPA is a plus.
3.Compensation: $80K-125K + bonus
Marketing Sales Jobs

Marketing, Sales & Investor Relations Jobs
Please see below for open marketing, sales and investor relations jobs within the hedge fund industry
Position: Senior Capital Raiser/Marketer
Comp: Significant Salary plus bonus/commission plus benefits
Small West Coast hedge fund wants experienced capital raiser/marketer who can also add to executive
discussions and fit into a team culture. Relocation unnecessary - Telecommute okay and any required travel
paid for by firm. Marketing materials supplied.
Firm strategy NOT based on equities/bonds but rather real estate, lease equipment, and/or high-end consumer
debt.
Please send resume to marcus@goormastic.com. All resumes kept confidential.
Venture Capital Fundraising Position
Exceptional People, Inc. (www.exceptionalpeople.com) has been retained by a top Venture Capital firm to
locate an executive responsible for Investor Relations and Fundraising for the firm. With more than $4.0 billion
of capital under management, the Firm leads investments in entrepreneurial companies at all stages of
development in the CleanTech, Healthcare, and Information Technology sectors. The Firm uniquely offers
investors previously unobtainable access to some of North America’s most respected venture capital portfolio
companies.

This senior position reports to the firm's co-founder who provides general guidance and supervision. This is an
opportunity to participate in a high growth organization by overseeing fundraising activities and investor
relations. Candidate’s efforts will make an impact every day with the Firm’s Limited Partners.
If you are a genuinely a top performing institutional sales and relationship management professional, then you
will have the opportunity to work with world class leaders in the VC and LP communities while making a direct
impact on the Firm’s continued growth and success. You will be excited by the opportunity to be pro-active in
strategy associated with new fund creation, raise significant funds from institutions such as; Private Banks,
Banks, IFA¹s, Wealth Managers, PE Funds, Fund of Funds, Hedge Funds, Pension Funds while also
overseeing all Limited Partner communications and programs. The work environment is team oriented and
entrepreneurial.
Position Description:
The hired executive will be responsible raising capital for the Firm’s new funds while overseeing investor
relations for current limited partners. The emphasis of this senior high profile, high touch role is to lead fund
raising activities including both development of new investor targets as well as due diligence materials
development and follow up. Building and maintaining relationships (and tracking) of existing and potential
investors, keeping investors informed through proactive, comprehensive IR programs and identifying and
educating new investors about new and existing funds are critical to the success of the role. Preparing
presentations, coordinating relationship management internally and externally and monitoring the success of
fund raising programs are also included in scope of this position.
The ability to thrive in a fast paced corporate environment is essential. Must have excellent writing, planning,
organizational and problem solving skills and be adept at influence management. The ideal candidate must be
capable of establishing internal and external networks and working on cross-functional teams and be a self-
starter who functions well independently or within a team.
Extensive fund raising, investor relations, a detailed understanding of the workings of the venture capital and
private equity markets and possessing strong presentation and diplomacy skills are essential for the hired
candidate.
Demonstrated experience selling to sophisticated institutional and private investors, with a track record of
demonstrating measurable and meaningful results at raising capital, building brand equity and developing
visibility with all organizations familiar with alternative assets.
Specific Requirement & Qualifications
Strong relationship management skills, understanding and ability to explain technology, and have a wide
ranging network are requirements for this position.

Must be self-directed, highly motivated and able to prioritize workload and willing to take on additional
responsibilities rapidly, based on shifting needs and requirements.
Minimum of 7-10 years prior experience in fund raising and investor relations.
Successfully raised Venture funds (more than 100 M) Scope of activities covers all the fundraising activities
(PPM, LP road shows, Investors Relations)
Tracking, recording and analysis of relevant fund raising information and trends
Understanding of venture capital/private equity financial concepts is highly desirable (taxation, partnership
accounting and structures, investment metrics, securities laws). Strong financial analysis skills.
Strong client relationship skills and evidence of building lasting relationships with an institutional client base.
Ability to quickly analyze, grasp and communicate financial and economic information about the industry, the
Firm and its portfolio companies
Strong quantitative skills and detail oriented with roll-up-your-sleeves attitude
Excellent written and verbal communication skills to support interaction with the Firm's institutional investors.
Business process development and management skills. Proven experience in quality sensitive operations.
Computer literate with knowledge of and experience in database applications and analysis tools, Excel, Word,
PowerPoint and contact manager software. Knowledge of private equity management systems (e.g. Investran)
highly desirable.
Undergraduate degree or higher in a business related field
Ability to travel (moderate amount; domestic and international)
Direct prior experience from a pension fund, state fund system, insurance company, endowment, foundation,
or fund of funds is also desirable
For additional information and to send your confidential CV, please contact:
Ellen Hathaway
Partner, Exceptional People, Inc.
707-766-6545 office
415-730-4466 cell
eahathaway@earthlink.net
www.exceptionalpeople.com

Third Party Marketing Internship - 2 individuals needed to help conduct research, build resources
and write articles on the hedge fund third party marketing industry. To apply please send an email to
Richard@HedgeFundGroup.org
Not interested in these positions but interested in looking at other open hedge fund jobs? Please see
HedgeFundBlogger.com's Hedge Fund Job Listings page.
Certification & Designation Home

The Hedge Fund Group (HFG) is now offering the Chartered Hedge Fund Associate (CHA)
Designation to qualified professionals. This is a two level training program built by hedge fund
professionals and hedge fund managers.
To learn more about the CHA Designation Program please see our new website:
http://CHADesignation.org
Hedge Fund Videos

Hedge Fund videos on prime brokerage, hedge fund risk, fund of funds, sovereign wealth funds. Click
here to view the hedge fund videos .
Hedge Fund Training

We are currently building up a list of hedge fund training programs available to hedge fund
professionals.
Hedge Fund Strategies

A short Hedge Fund Strategy Guide.
More Resources
Hedge Fund Terms  Here are definitions to over 20 hedge fund terms.

Due Diligence  A short introduction to hedge fund due diligence along with 20 links to related due
diligence resources.
Geographical Guide A series of guides by region are being created and will be posted here shortly.
Hedge Fund Resources

The Hedge Fund Group (HFG) consists of over 15,000 professionals worldwide. Below are a
resources available and details on the Chartered Hedge Fund Associate (CHA) Designation
Program.
Networking: HFG Chapters & HFG Events
Hedge Fund Blog Book
This hedge fund book is a compilation of the 400+ hedge fund articles published daily on
HedgeFundBlogger.com. To download this hedge fund book for free book click here or visit
HedgeFundsBook.com.
The Chartered Hedge Fund Associate (CHA) designation is the only certification program
designed to help prepare professionals for advancement within and entry to the hedge fund industry.
For more details please visit one of these pages:
CHA Overview
Top 10 CHA Benefits
Hedge Fund Group (HFG) Board of Advisors
Investment Training
CHA FAQ
CHA Study Guide
CHA Registration
Hedge Fund Message Board
If you have not done so already please introduce yourself and connect with other hedge fund
professionals via this hedge fund forum - contribute and ask questions or offer resources at
HedgeFundMessageBoard.com.
Group. All rights reserved

Hedge Fund Regulation
Hedge Fund Regulation & Compliance Notes
As part of an effort to offer more diverse hedge fund resources on HedgeFundBlogger.com we are
now publishing some regulatory, compliance and investment law related articles to the site. In the
past we have published some articles related to hedge fund regulations, but we have not done so on
a regular basis. We will now be publishing at least two articles a week on the topic.
SEC Hedge Fund Regulation

SEC Hedge Fund Regulation Resource
Here is another SEC hedge fund regulation resource that I'm adding go the hedge fund due diligence
guide. The Securities and Exchange Commission offers a caution before investing in hedge funds.
The key message is: be aware of the risks. First, the SEC recommends reading the fund's prospectus
to understand the fund and whether it suits you. Also, it advises to be aware of the fees the hedge
fund charges which cut into the investors' returns.
This resource emphasizes the research aspect of due diligence and offers tips on what to investigate
before investing in a hedge fund.
Click here to view the article published by the SEC.
Hedge Fund Lawsuits
Hedge Fund Lawsuit | Legal Actions
Quick Link: Hedge Fund Regulation Corner

(http://HedgeFundBlogger.com) Perhaps more dangerous than a wave of further redemptions in the

hedge fund industry would be a wave of legal actions. With gates dropping as fast as assets at many
hedge funds investors may be often left with locked-up assets, partial withdrawals, steep losses or all
three. The last thing the industry needs is a wave of 500+ lawsuits against hundreds of the top
managers in the industry. Most hedge funds are relatively short on staff as it is and legal battles can
keep managers from trading and raising capital as they should.
Here is a story excerpt about Amaranth and their lawsuit against JP Morgan and their prime
brokerage division:
Remember the days when a hedge fund losing billions was news? Wise men would knot up their
brows and wonder if hedge funds weren’t too loosely regulated or were creating some kind of
systemic risk. After what we’ve been through in the past year that all seems like the good old days.
We were reminded of this today when we discovered that Amaranth’s lawsuit against JP Morgan
Chase was still going on. It seems like a lifetime ago that the fund run by Nick Maounis imploded
amid bad bets on natural gas. It was the trade that made Brian Hunter, Amaranth’s lead energy trader,
famous. Amaranth lost $6 billion, collapsed, and sold its assets to JP Morgan and Citadel.
Afterwards, there were recriminations in all directions. Hunter is said to blame Maounis for not having
the available cash to cover the margin calls. Maounis, for his part, felt he was done in by nefarious
deeds at his prime broker, JP Morgan. Those feelings because a lawsuit, of course. Read more...
New Hedge Fund Regulation
New Hedge Fund Regulation Hearings
(http://HedgeFundBlogger.com) Below is a short article excerpt from Ideoblog discussing how the US
government may attempt to add more regulation to the hedge fund industry. I agree with much of
what is said below - hedge funds should not be blamed for shorting securities which were over-priced,
they ensure that markets become more efficient not less. Here is the first part of the article:
Hedge fund representatives will face Congress this week, another act in a play that will
probably end with some bad regulation unless somebody gets some sense.
I’ve been complaining for more than four years about the prospect of hedge fund regulation,
including registration requirements. For some samples, see, e.g., here, here and here. The bottom
line is that hedge funds are not our current problem, but may be part of our solution. Hedge fund
managers are highly incentivized to exploit current market inefficiencies, including by short-selling
and forcing changes in lagging companies. It’s not surprising incumbent managers of target firms and
their friends in Congress are unhappy.
Moreover, hedge funds face losing their investors if they lag. That’s why we’re seeing hedge
fund liquidations, which may drag the market down. But this is a symptom of the market’s underlying
problems, not a cause.
Forcing changes in hedge fund compensation and disclosures that reduce hedge funds’ ability
to profit will undermine hedge funds and make markets and firms inefficient, which we can ill afford
now. Restricting short-selling has already hurt hedge funds while doing nothing for market efficiency.
Read more...
Read more articles such as this within our Hedge Fund Regulation Corner.
Performance Reporting
Hedge Fund Performance Reporting Requirements
As with all articles on HedgeFundBlogger.com all content provided should never take the place of
legal advice with in-house counsel or qualified outside legal experts.
Performance results are the ribbons of the hedge fund industry. In order to raise institutional money
for your hedge fund you will need good performance results. Even hedge fund managers who will not
be focusing on raising money from institutional investors will need to have performance results in
order to market the hedge fund. Performance results are usually displayed in a hedge fund pitchbook
format, a tearsheet format and/or with monthly or quarterly performance reports to investors.
Whenever performance results are included the manager must make sure that the proper
performance disclosures accompany the results. As a routine matter, all hedge fund performance
results and advertisements should be reviewed by a hedge fund attorney.
SEC Guidance - Clover Capital No-Action Letter
The SEC has authority under the anti-fraud provisions of the investment adviser’s act (which apply to
both registered and unregistered hedge fund managers) to police the performance results of hedge
fund managers. [HFLB note: please see "Basis of SEC authority" below for explanation.] Under this
authority the SEC has provided some guidance on this subject through the Clover Capital no-action
letter. Clover Capital is not famous because of the position of the staff with regard to a certain party,
but because the staff went further and provided guidelines for all managers in how performance
results should be disclaimed.
The Clover Capital letter is notable for a few reasons including that (i) it provides guidance on both
model results (sometimes referred to as “backtested”) and actual results and (ii) it requires that
performance results be present “net of fees.” While some aspects of the Clover Capital requirements
have been softened, in certain specific fact circumstances, in later no-action letters, Clover Capital
remains the central source of guidance for performance reporting requirements. These requirements
(with footnotes omitted) are broken down below.
Model and Actual Results
With regard to model and actual results, the staff believes that a hedge fund manager is prohibited
from publishing an advertisement that:
Fails to disclose the effect of material market or economic conditions on the results portrayed (e.g.,
an advertisement stating that the accounts of the adviser’s clients appreciated in the value
25% without disclosing that the market generally appreciated 40% during the same period);
Includes model or actual results that do not reflect the deduction of advisory fees, brokerage or
other commissions, and any other expenses that a client would have paid or actually paid;
Fails to disclose whether and to what extent the results portrayed reflect the reinvestment of
dividends and other earnings;
Suggests or makes claims about the potential for profit without also disclosing the possibility of loss;
Compares model or actual results to an index without disclosing all material facts relevant to the
comparison (e.g. an advertisement that compares model results to an index without disclosing
that the volatility of the index is materially different from that of the model portfolio);
Fails to disclose any material conditions, objectives, or investment strategies used to obtain the
results portrayed (e.g., the model portfolio contains equity stocks that are managed with a view
towards capital appreciation);
Fails to disclose prominently the limitations inherent in model results, particularly the fact that such
results do not represent actual trading and that they may not reflect the impact that material
economic and market factors might have had on the adviser’s decision-making if the adviser
were actually managing clients’ money;
Fails to disclose, if applicable, that the conditions, objectives, or investment strategies of the model
portfolio changed materially during the time period portrayed in the advertisement and, if so,
the effect of any such change on the results portrayed;
Fails to disclose, if applicable, that any of the securities contained in, or the investment strategies
followed with respect to, the model portfolio do not relate, or only partially relate, to the type of
advisory services currently offered by the adviser (e.g., the model includes some types of
securities that the adviser no longer recommends for its clients);
Fails to disclose, if applicable, that the adviser’s clients had investment results materially different
from the results portrayed in the model;
Actual Results
Additionally, with regard to actual results, the staff believes that a hedge fund manager is prohibited

from publishing an advertisement that fails to disclose prominently, if applicable, that the results
portrayed relate only to a select group of the adviser’s clients, the basis on which the selection was
made, and the effect of this practice on the results portrayed, if material.
Closing
The SEC staff closed the Clover Capital letter with the following statement which should be given
great weight by all hedge fund managers:
We wish to emphasize that: (1) it is the responsibility of every adviser using model or actual results to
ensure that the advertisement is not false or misleading; (2) the list set forth above of advertising
practices the staff believes are prohibited by Rule 206(4)-1(a)(5) is not intended to be all-inclusive or
to provide a safe harbor; and (3) the staff, as a matter of policy, will not review specific
advertisements.
Clover Capital - Basis for SEC authority
The following comes from the Clover Capital no-action letter and states the SEC staff’s basis for their
authority to produce guidance on performance advertising requirements.
Section 206 of the Act prohibits certain transactions by any investment adviser, whether registered or
exempt from registration pursuant to Section 203(b) of the Act. Under paragraph (4) of Section 206,
the Commission has authority to adopt rules defining acts, practices, and courses of business that are
fraudulent, deceptive, or manipulative. Pursuant to this authority, the Commission adopted Rule
206(4)-1, which defines the use of certain specific types of advertisements1 by advisers as fraudulent,
deceptive, or manipulative.* Although the rule does not specifically prohibit an adviser from using
model or actual results, or prescribe the manner of advertising these results, paragraph (5) of the rule
makes it a fraudulent, deceptive, or manipulative act for any investment adviser to distribute, directly
or indirectly, any advertisement that contains any untrue statement of a material fact or that is
otherwise false or misleading.** Accordingly, the applicable legal standard governing the advertising
of model or actual results is that contained in paragraph (5) of the rule, i.e., whether the particular
advertisement is false or misleading.***
* For example, Rule 206(4)-1 prohibits an adviser from using advertisements that include testimonials
(paragraph (a)) or that refer to past specific recommendations unless certain information is provided
(paragraph (b)). The staff is currently reviewing Rule 206(4)-1 to determine whether it needs to be
revised or updated. See Investment Advisers Act Rel. No. 1033 (Aug. 6, 1986).
** As a general matter, whether any advertisement is false or misleading will depend on the particular
facts and circumstances surrounding its use, including (1) the form as well as the content of the
advertisement, (2) the implications or inferences arising out of the advertisement in its total context,
and (3) the sophistication of the prospective client. See, e.g., Covato/ Lipsitz, Inc. (pub. avail. Oct. 23,
1981)(”Covato”); Edward F. O’Keefe (pub. avail. Apr. 13, 1978)(”O’Keefe”); Anametrics Investment
Management (pub. avail. May 5, 1977)(”Anametrics”).
*** Of course, if an advertisement containing model or actual results also includes any of the specific
advertising practices addressed by paragraphs (a)(1)-(a)(4) of the Rule 206(4)-1, the advertisement
would have to comply with the requirements of these paragraphs.
Guest post in partnership with the Hedge Fund Law Blog
Hedge Funds Regulation
An Overview
Here is a short well-written article on hedge fund regulations and why additional regulation targeting
hedge funds may never be put in pace
Hedge fund managers oversee $1.9 trillion in assets, but no one knows what they invest in or even
what those assets are actually worth. That's because hedge funds are not regulated and
consequently aren't required to make the same detailed financial disclosures that are required of
publicly traded companies. This mystery product comes with a Rolex pricetag. Hedge fund managers
generally keep 2% of invested assets and 20% of the profits, known as the "two and twenty rule."
The combination of potentially huge financial rewards and lack of transparency may foster ethical
lapses, Thomas Donaldson, Wharton professor of legal studies and business ethics, said during a
recent talk on hedge fund ethics. "Remember, some of these are hard-to-value assets, like
collateralized debt obligations and credit-default swaps. When you're growing mushrooms in the dark,
you might be tempted to paint a rosier picture." For the week that ended on November 7, hedge fund
selling contributed heavily to steep stock market declines. Several prominent hedge funds are facing
the double-whammy of demands for cash from both investors and lenders.
Those demands force selling of stocks but also are keeping about $400 billion of cash on the
sidelines as fund managers brace for the worst. Donaldson defines hedge funds as "privately owned
financial firms that raise money from large investors, including individuals, pension funds and
charities, for the purpose of increasing the value of the investment." The definition is broad, he said,
because hedge funds are subject to so few limits. "The term 'hedge funds' is a loose-fitting blanket
that covers a bewildering array of financial strategies," he noted in a paper that was the basis of his
talk. "They are capable of doing just about anything to achieve their ends.
They can go long. They can go short. They can hedge currencies." Hedge fund success depends on
this veil of secrecy, Donaldson said. "Hedge funds systematically deny information to their own
investors and to governments in order to protect their competitive advantage." They are not required
to file reports with the U.S. Securities and Exchange Commission, although a few have chosen to do
so. Most of those voluntary reports, however, are little more than a way of letting regulators know that
the fund is in business. Read more...
Read more regulation and compliance related articles within our law section: Hedge Fund Regulation
Corner | Compliance & Law Notes.

Hedge Fund Fraud
SEC Fraud Analysis | Case Study
Hedge fund fraud cases are important because they give some definition and life to the various
investment advisor and hedge fund laws. Much of the advice that hedge fund lawyers give to their
clients is based on reasonableness and best guesses on how the securities laws will be implemented
in the hedge fund context. For many hedge fund issues there are not clear-cut cases, which give
color to the securities laws. One of my colleagues refers to this as the “square peg – round hole”
dilemma by which he means it is hard to apply the archaic securities laws with the current state of the
hedge fund and investment management industry.
When the SEC does bring cases, as practitioners we get to see how the SEC views the securities
rules and how we should be advising clients. While many of the fraud cases represent completely
unbelievable actions by unscrupulous people, there are still lessons, which well-intentioned managers
can learn from.
Specifically this case gives us an opportunity to examine five separate areas which investment
managers should be aware of:
1. Make sure all statements in the hedge fund offering documents and collateral marketing
materials are accurate.
In this case the hedge fund offering documents contained many material misstatements including
materially false and misleading statements in offering materials and newsletters about, among other
things, the Funds’ holdings, performances, values and management backgrounds. For example the
complaint alleges:
Specifically, both PPMs represented that most investments made by Partners and Offshore would
trade on “listed exchanges.” In truth, a majority of those funds’ investments were and are on unlisted
exchanges such as the OTCBB or pink sheets. Furthermore, the Partners’ PPM stated that investors
would receive yearly audited financials upon request. Partners has not obtained audited financials
since the year ended 2000 and repeatedly refused at least one investor’s requests for audited
financials for the year ended 2001.
2. Make sure all appropriate disclosure relating to personnel are made.

Hedge fund attorneys will usually spend time with the manager discussing the employees of the
management company and their backgrounds. During this time the attorney will ask the manager,
among other questions, whether any person who is part of the management company has been
involved in any securities related offense. In this case there were two specific items which the
manager should have disclosed in the offering documents and other collateral material:
Failed to disclose that a “consultant” to the management company was enjoined, fined and also
barred from serving as an officer or director of a public company for five years for his fraudulent
conduct involving, among other things, misallocating to himself securities while serving as CFO and
later president of a publicly traded company.
Failed to disclose to a member of the fund’s board of directors was barred from associating with any
broker or dealer for 9 years.
3. Take care when going outside stated valuation policies.
Many hedge fund documents have stated valuation policies but then allow the manager to modify the
valuation, in the manager’s discretion, to better reflect the true value of the securities. However, when
a manager uses this discretion, the manager should have a basis for the valuation. Such valuation
should not be based on an artificially inflated value of the asset. To be safe managers should
probably have some internal valuation policies which should be in line with generally accepted
valuation standards for such assets. I found the following paragraph from the SEC’s complaint
particularly interesting (emphasis added):
II. Bogus Valuations
34. In order to obtain at least year end 2001 audited financials for Offshore, Lancer Management
provided Offshore’s auditor with appraisals valuing certain of that fund’s holdings. These appraisals
mirrored or closely approximated the values assigned to Offshore’s holdings by Defendants based on
the manipulated closing prices at month end. These valuation reports were, however, fatally flawed
and did not reflect the true values of Offshore’s holdings under the generally accepted Uniform
Standards of Professional Appraisal Practice or American Society of Appraisers Business Valuation
Standards. For example, the valuations were improperly based on unreliable market prices of thinly
traded securities; unjustified prices of private transactions in thinly traded securities; unfounded,
baseless and unrealistic projections; hypotheticals; and/or an averaging of various factors. Indeed,
under accepted standards of valuing businesses, certain of the Funds’ holdings were and/or are
essentially worthless.
4. Do not engage in market manipulation.
Many of the securities in which this hedge fund invested were traded on the OTCBB. The fund
engaged in trading in these securities near valuation periods in order to artificially inflate the price of
these very thinly traded securities. Additionally, the complaint alleges many incidents of “marking the
close.” This goes without saying but a hedge fund manager should not engage in market
manipulation.
5. Always produce accurate portfolio statements. Do not overstate earnings. Always make
sure that statements to investors are accurate.
Enough said.
While many of the examples above are so egregious they probably do not need to be listed on a “do
not” list, you should make sure you do not engage in any of these activities. Additionally, if you do
make some error or mistake (for example, if a valuation turns out to be incorrect or inaccurate),
immediately contact your attorney to create a plan to inform investors about the incorrect or
inaccurate statements. A mistake can generally be cured, all out fraud cannot.
Guest post published in partnership with the Hedge Fund Law Blog
Prime Brokerage Regulation
Prime Brokerage Regulation | New Regulations
Quick Link: Hedge Fund Regulation Corner

(http://PrimeBrokerageGuide.com)
Below is a article from All About Alpha regarding pending regulations on the hedge fund industry and
how they may target prime brokerage firms. From a cost perspective this may make sense since this
is a central point of potential risk control, but I would be surprised if regulators go down this road. I
believe regulations will stay at the security level and then target banks more directly than hedge fund
managers.
While the average hedge fund is small and uses a very small amount of leverage, the average dollar
invested in hedge funds is managed by a large manager who regularly uses leverage. This state of
affairs is courtesy of the significant amount of concentration in the hedge fund industry. Most of the
world’s hedge fund assets are managed by a small group of mega-managers who can shop their
business around to various prime brokers in order to extract the best deal.
A new paper says that in an effort to win this business, prime brokers have been falling over
themselves to offer the most leverage and the best terms. Ergo, it is the prime brokers, not the hedge
funds themselves, that require stricter regulation. (Think: regulating mortgage brokers, not home-
owners[)
By doing so, regulators can also get the prime brokers to do some of their bidding when it comes to
hedge fund oversight. In other words, they’d essentially be informally deputizing the prime brokers.
The paper was written by Michael King of the Bank for International Settlements and Philipp Maier of
the Bank of Canada. (Note to PR departments of these organizations: Relax, the authors say that “No
responsibility should be attributed to the Bank for International Settlements or the Bank of Canada“.)
Read more...
View more of our articles within the Hedge Fund Regulation Corner.
FINRA Broker Check
FINRA Broker Background Check Tool
Completing due diligence on a registered broker in the hedge fund industry?
FINRA offers investors a free online background check service of FINRA-registered securities firms
and brokers. The FINRA BrokerCheck includes search capabilities for both a broker and brokerage
firm, online delivery of the report, an explanation to help investors understand the information
provided, and links to additional resources. BrokerCheck provides background information on an
estimated 677,00 currently registered brokers and almost 5,000 currently registered securities firms.
Also listed is an online collection of information about Investment Adviser firms that are regulated by
the Securities and Exchange Commission.
- Richard

Investment Regulations
Careful What you Wish ForK
This the moral of the Aesop fable the Bee and Jupiter and is an appropriate caution to opponents of
short selling. There has been a shrill chorus of opposition to short selling recently, including assigning
it the blame for the recent market volatility and the plunge in credit and sharemarkets.
Following a ban on short selling by the UK's Financial Services Authority, the US Securities and
Exchange Commission has ordered "In these unusual and extraordinary circumstances, we have
concluded that, to prevent substantial disruption in the securities markets, temporarily prohibiting any
person from effecting a short sale in the publicly traded securities of certain financial firms ..."
Now the Australian Securities and Investment Commission has banned all forms of short selling for
the time being. Mr. Tony D’Aloisio said ‘These measures are necessary to maintain fair and orderly
markets in these exceptional times of global crises of confidence in financial markets. Because of the
relatively small size and the structure of the Australian market, it is necessary to extend the
prohibition to all stocks. To limit the prohibition to financial stocks, as has been done in the UK, could
subject our other stocks to unwarranted attack given the unknown amount of global money which
may be looking for short sell plays’.
I have sympathy with the sentiments - predatory short selling, if it is not illegal, is immoral.
However, short selling in its usual form is a key to the efficient operation of financial markets. Without
it market makers (I note that the regulators give market makers relief), fund managers and other
market participants would not be able to hedge risk.
The United States economy may have dropped down the international pecking order as it bears the
cost of widespread global military intervention, but it still remains the centre of capital markets. It is
the most efficient place to raise capital. At least until now.
The decision to ban short selling in certain securities opens the door for alternative markets to take
leadership. It is in the interests of listed companies to have a deep and liquid market in their securities.
It is also in the interests of investors.
While removing some participants (short sellers) may conjure (manipulate) a higher price in the short
term, it will likely cause wider spreads and reduced demand for these securities in the medium term.
Investors will prefer to trade securities in freer markets and this will drive companies to raise capital in
those markets.
Global companies that list in the United States pay United States tax, will list in other markets and pay
tax in other markets. This erosion in the US tax base will further weaken the United States' position in
the world. These companies already employ a large number of staff in other countries as production
has been outsourced to countries with cheaper sources of labour.
Australia had a remarkable opportunity here. Rather than join Karachi, London and the New York
and respond by intervening in security pricing, we could have re-affirmed the principle of free markets.
I would expect that in response, over time, companies that value these attributes would have drifted
towards an Australian listing and bring investors with them. Imagine an Australian listing for GE,
Google and Exxon Mobil.
Or as Australia has done today we could follow the misguided response of the UK and US policy
makers and intervene by placing limits on short selling. There is currently a short selling bill before
Parliament. Lets hope this knee jerk response doesn't find itself in the black letter law.
Wishing for limits or prohibitions on short selling may appear to improve the situation in the short term,
however as Aesop warns, over time it will shrink the number of participants and kill off any aspirations
of Australia being a regional player in financial services.
The decision by ASIC to follow suit with a harsher response puts in jeopardy the fledgling Australian
hedge fund industry. Australian funds that use short sales in Australian securities to manage risk will
not able to do from Monday. Should these funds be suspended for the period of the limitation? There
is a strong argument that they should be closed and monies returned to investors as the funds cannot
be managed as specified in their respective product disclosure statements.
Any country that can be brave enough to stand firm in support of free and fair financial markets, while
regulators in current leading markets practice their voodoo economics, will have an opportunity to
develop a strong financial services industry with a global presence, bringing new jobs and prosperity.

Hedge Fund Compliance
Hedge Fund Compliance Notes
The recent financial crises has lead to many unique events for our team which runs
HedgeFundBlogger.com. These have included a furry of proposals on how to further regulate hedge
funds, blaming of hedge funds for speculative practices and calls for a greater understanding of
exactly what individual hedge funds are investing in. Since we run a blog, which only discusses
hedge fund related matters we have recently seen:
A member of the White House executive staff has recently joined the Hedge Fund Group (HFG)
Press Inquiries - Many interviews come down to questions on how hedge funds should be further
regulated. My common response is that if it is done in a way where technology can be
leveraged to apply the new regulatory procedures at the prime broker or hedge fund
administrator level and if funds aren't required to disclose their portfolios than it might be
readily accepted within the industry.
Hate mail and voicemails from a few individuals who believe that since I write
HedgeFundBlogger.com I must run a hedge fund and am therefore an evil person or "communist" as
one email put it.
Fund Offering Documents

Hedge Fund Offering Documents | Review
(http://HedgeFundBlogger.com) The central reason that beginning hedge fund managers need a
lawyer is that the lawyer will prepare the offering documents for the fund. The offering documents are
designed to comply with the requirements of the federal securities laws as interests in the fund
(whether the fund is a limited partnership or a limited liability company). Specifically the offering
documents will most likely be drafted to conform to the requirements of Rule 506 of Regulation D
under the Securities Act of 1933.
The offering documents are the necessary paperwork that the manager must give to prospective
investors. The offering documents will look very similar to a mutual fund prospectus. The three parts
of the offering documents are:
1. The private placement memorandum (also sometimes called the offering memorandum). The
private placement memorandum (also known as the “PPM”), is the main offering document. It
provides the prospective investor with information on the structural and business aspects of the fund.
2. The limited partnership agreement (or, if the fund is an LLC, the operating agreement). The
limited partnership agreement (also known as the “LPA”), is the actual governing legal document. It
provides a description of the rights of the investors and the manager. When an investor becomes a
“partner” in the fund, the investor is executing the limited partnership agreement.
3. The subscription documents. The subscription documents are the documents which provide the
manager with background information on the investor. These documents include assurance and
warranties by the potential investor that the potential investor is qualified to invest in the offering.
These documents usually include the signature page to the LPA.
A more in depth description of the potential parts of the offering documents follows:
Private Placement Memorandum
While each law firm’s general PPM template is different, they all share many of the same items of
information which are included. Below is a non-exhaustive list of some of the major sections of the
PPM which you are likely to find in all offering documents.
* Coverage
* Legends and securities laws notices
* Table of contents
* Summary
* Use of proceeds
* Investment Program
* Risk factors
* Description of the management company and managers
* Discussion of fees (Management fees, Performance fees)
* Manner of valuing the investments
* Discussion of conflicts of interest
* Discussion of brokerage
* Discussion of litigation of the investment manager
* Discussion of financial statements of the fund
* A summary of the LPA or Operating Agreement
* Discussion of service providers
* Tax disclosures
* ERISA disclosures
* Other notices (privacy notice, definition of investors qualified to invest, disclosure on the lack of
transferability, etc.)
Limited Partnership Agreement
Like the PPM, each law firm has a different way to draft the LPA. For instance, some law firms will
craft a lengthy definition section at the very beginning, other law firms will have definitions attached as
an appendix, other firms will define specific terms throughout the document. A very rough guideline of
the items which are in the LPA include:
* Cover page
* Table of contents
* Preamble
* Definitions
* Information on formation (business office, registered agent, length of fund, etc.)
* Capitalization structure (initially and on a going-forward basis)
* Manner of allocation of profits and losses (including the various tax allocation provisions)
* Manner of distributions and withdrawals
* Rights and duties of the management company
* Rights and duties of the investors
* Information on accounting, books and records
* Transfer rights
* Dissolution of the partnership; winding up
* Manner of final distributions
* Grant of power of attorney
* Miscellaneous provisions (headings, amendments, applicable law, jurisdiction)
Subscription Documents
The subscription documents from one firm to another may differ fairly substantially. Some firms have
separate subscription documents for individual investors and for institutional investors. Some firms
include the necessary representations with the actual subscription agreement. The basic information
included in the subscription documents includes:
* Cover page with certain legal disclaimers
* Directions on how to complete the subscription documents
* Subscription agreement (including certain acknowledgements, representations and warranties)
* Investor suitability questions (may be embedded in the subscription agreement) - generally
accredited investor, qualified client, or qualified purchaser status
* LPA investor signature page
If a fund accepts non-accredited investors, the manager will need to make sure that the non-
accredited investor meets certain that the non-accredited investor, together if applicable with their
purchaser representative, is sufficiently sophisticated to understand the risks of making an investment
in the fund. These supplemental representations can be made either in the subscription documents or
in a supplement to the subscription documents.
Hedge Fund Strategy

Hedge Funds Strategy Guide

The 10-15,000 hedge funds now being managed throughout the world use between 200-400 different hedge
fund strategies. How can you keep these all straight? The short answer is you can't, but I have started
compiling a list of hedge fund strategy definitions here below. Let me know if you are looking for something and
can't find it here.
- Richard
Emerging Markets
Emerging Markets - Investments

Emerging market investing started to take off when in the mid-1980s when the International Finance
Corporation (IFC) set up the first mutual fund that invested solely in securities from emerging markets with a
seed capital of around $50 million. Since 2002, assets managed by emerging market hedge funds have
increased fourfold and in the first quarter of 2008, they managed approximately $110 billion, according to HFR.
Emerging market hedge funds are defined by the markets they operate in and not the strategies they follow.
Thus, these funds are quite heterogeneous and adopt a variety of strategies such as equity long/short, event
driven, global macro and fixed income arbitrage.
Emerging markets are defined quite broadly. Morgan Stanley describes an emerging market, as a country that
is in the process of building a market-based economy. Others include ideas of large productivity gains from
technological or political change. However, since the 1997-98 Asian financial crisis, the core characteristics of
many emerging nations have changed fundamentally. Once, net importers of capital, emerging markets have
now become net exporters of capital. Once heavily indebted, many emerging market governments have begun
to reduce levels of external debt. These changes have contributed to the recent success and slightly lower
volatility of many emerging market hedge funds. They have also resulted in the creation of entities such as
sovereign wealth funds and have had a strong impact on international financial markets.
Emerging Markets Interview - Emerging Markets Research
Books Related to Emerging Markets
De Brouwer, Gordon. Hedge Funds in Emerging Markets. United Kingdom: Cambridge University Press,
November, 2001.
This book tries to understand the role hedge funds played in exacerbating the Asian Financial Crisis of 1997
and 1998. While this question may not be interesting to most market players, the book also contains
several case studies of how the financial crisis unfolded. These give some insight into the strategies
hedge funds deployed in Asia during this period. However, the book is not a fun read and if you are
interested in hedge fund strategies rather than the market risk posed by hedge funds, you have to
carefully sift through the book for information.
Lhabitant, Francoise-Serge. Handbook of Hedge Funds. West Sussex: John Wiley & Sons, Ltd., 2006.
This is an excellent guide to the industry, with concise and informative descriptions on all of the major hedge
fund strategies and primary methods to measure their risk and performance. Lhabitant also includes an
overview of the legal environment of hedge funds and their organizational structure, while ending with a
short guide to investing in them.
Emerging Market White Papers
Global Derivatives. Overview of Hedge Fund Strategies, November 2003.
Quick and dirty description of all major hedge fund strategies.
Odonnat, Ivan and Rahmouni, Imene. “Do Emerging Market Economies Still Constitute a Homogenous Asset
Class?” Financial Stability Review, No. 9, Banque de France, December 2006
This paper provides a good synopsis on how the current and capital accounts of emerging markets have
changed since the 1990s and describes how the composition of emerging market debt holders has
changed. It also argues that while investors show increased signs of differentiating between emerging
economies when considering portfolio allocations, disruptions may still cause a contagion effect due to
the narrowness of the emerging markets and their dependence on the decisions of non-resident
investors.
Strömqvist, Maria. “Do Emerging Market Hedge Fund Mangers Lack Skills?” Stockholm School of Economics,
October 2006.
Strömqvist examines hedge fund returns from 1994 to 2004 and finds that emerging market hedge funds
have underperformed non-emerging market hedge funds in terms of total and absolute return, while
providing no diversification effects. The data is slightly outdated and includes the 1997-98 financial
crisis, which significantly affects the results of the study. However, it provides an interesting statistics-
based perspective on investing emerging market hedge funds.
Strömqvist, Maria. “Should You Invest in Emerging Market Hedge Funds?” Stockholm School of Economics,
September 2007.
In this more recent paper, Strömqvist uses a the same data set from 1994 to 2004 to find that hedge funds
were able to generate risk-adjusted return in the latter part of the period under study. She also finds
that there is some differentiation in returns at the fund level, with successful funds continuing to
generate above-average returns. However, she also finds that this does not result in increased capital
inflows.
Information Sources
Emerging Markets Monitor

The Emerging Markets Monitor covers the latest events in emerging economies across fixed income, FX,
commodity and equity asset classes, with short pieces that include analysis, forecasts and trade ideas.
Financial Crisis in Emerging Markets, NBER
Run by the National Bureau of Economic Research, this project examines the causes of currency crises in
emerging market economies. As such, it contains a large selection of white papers that may be helpful
to people interested in learning more about the financial markets in emerging economies.
HFR Emerging Markets Industry Report
The Institute of International Finance

Created in 1983, in response to the international debt crisis, the Institute of International Finance Inc is a global
association of financial institutions. It collects a variety of data related to emerging markets and also generates
independent research on the subject. Subscription is available only through registered member institutions and
is not open to individuals.
The Journal of Emerging Market Finance, Sage Publications

This journal contains scholarly articles that cover practical and theoretical issues related to emerging markets.
Networking Events
Terrapin hosts an annual emerging market hedge fund conference
Tracking Tools
Credit Suisse Tremont Hedge Fund Index

CS/Tremont tracks provides registered users with historical data on the performance of variety of hedge fund
strategies.
Short List of Emerging Market Hedge Funds

Axiom Investment Management (Hong Kong) - emerging markets hedge fund focused on Asia.
Farallon Capital Management
Horseman Capital Management
Marathon Asset Management
Moon Capital Management
Moore Capital Management - Moore Emerging Markets
Sloane Robinson - SR Global Fund Emerging Markets, SR Vista Emerging Markets
Thames River Capital (United Kingdom)
Tudor Investment
Guest Post by Sharini Kulasinghe

Equity Long Short
Equity Long Short | Hedge Fund Strategy
As part of HedgeFundBlogger.com's Hedge Fund Strategy Guide here is a short guide to the Equity
Long/Short hedge fund strategy:
The earliest known practitioner of the equity long/short strategy was Alfred Winslow Jones, commonly thought
to have established the first hedge fund in 1949 by developing a tactic that would succeed regardless of
whether the market rose or fell. He came up with the idea of hedging market risk by taking both long and short
equity positions.
Thus, in their simplest formulation equity long/short strategies are designed to minimize exposure to the market.
Instead, they profit from a change in the spread between two stocks. This is achieved by buying an
undervalued stock and selling an overvalued stock. The short portfolio serves several functions: it acts as a
hedge against market decline, gives managers an opportunity to add value by selecting stocks that are most
likely to underperform the market and collects interest on the short amount. What is important in long/short
trades is that the long position outperforms the short position on a relative basis. Thus, the position may still be
profitable if both stocks decline insofar as the long position declines less that the short position.
Equity long/short managers vary in their level of exposure to the market. Some managers will maintain a long
bias, such as 130/30 hedge fund managers. Others will hold equal dollar amounts of long and short positions
and will therefore be market neutral. While it is possible to construct an equity long/short portfolio with a short
bias, this is usually a short-term strategy, as equity markets tend to have a long-bias. Equity long/short
managers can also be distinguished by the geographic market in which they invest (US, Europe, Emerging,
etc), their investment style (value, fundamental, quantitative, activist etc) or sector (financial, healthcare, tech,
etc).

Books related to equity long/short funds
Lhabitant, Francoise-Serge. Handbook of Hedge Funds. West Sussex: John Wiley & Sons, Ltd., 2006.
This is an excellent guide to the industry, with concise and informative descriptions on all of the major hedge
fund strategies and primary methods to measure their risk and performance. Lhabitant also includes an
overview of the legal environment of hedge funds and their organizational structure, while ending with a short
guide to investing in them. In his description of equity long/short strategies, Lhabitant provides a detailed
description of the mechanics of constructing a long/short position and portfolio.
Equity long/short white papers and articles

Fung, William and David A. Hsieh. “Extracting Portable Alphas From Equity Long-Short Hedge Funds.” Journal
of Investment Management, Vol. 2, No. 4, Fourth Quarter 2004.
Fund and Hsieh use data from three different sources to show empirically that between 1996 and 2002, Equity
long/short hedge funds have significant alpha to both conventional and alternative risk factors.
Fung, William and David A. Hsieh. “The Risk in Hedge Fund Strategies: Theory and Evidence from Long/Short
Equity Hedge Funds.”
In this paper, Fund and Hsieh seek to answer three basic questions: is the source of return in long/short equity
hedge funds different from long-only mutual funds; are long/short equity hedge funds exposed to similar risk
factors as long-only mutual funds; and do long/short equity hedge funds provide excess return beyond
compensation for systemic risk? They find that. . . This paper also provides an overview of the mechanics of
constructing and modeling the performance of an equity long/short portfolio.
Freed, Steven F. “An Overview of Long-Short Equity Investing.” November 29, 1999
In this paper, Steven Freed briefly outlines the basics of constructing an equity long/short portfolio. He also
describes three sources of return in equity long/short investing and the effect of market movements on them.
McFall Lamm Jr, R. “The Role of Long/Short Equity Hedge Funds in Investment Portfolios,” DB Absolute
Return Strategies.
This paper examines the historical returns of long/short equity hedge funds and argues that these funds have
outperformed traditional long-only equity exposure and do so with lower risk. The paper also includes a good
description of the equity long/short strategy.
Schmitz, John J. “An Introduction to Market Neutral Equity Strategies”, SciVest Capital Management Inc.
This powerpoint presentation provides a good description of the fundamentals behind putting an equity
long/short strategy together. Also looks at the advantages of the strategy and risk management techniques that
could be used in when putting together an equity long/short strategy.
The Case For Long/Short Equity as a Tool in Traditional Asset Class Construction argues that the long/short
equity approach should be thought of as a specific asset class when building a portfolio because it adds value
to a long-only and tracking error-constrained strategies.
Tracking

Credit Suisse Tremont Hedge Fund Index
CS/Tremont tracks provides registered users with historical data on the performance of variety of hedge fund
strategies.
More Hedge Fund Guides
Hedge Fund Terms
Hedge Fund Marketing
Hedge Fund Due Diligence
Articles Related to Hedge Fund Strategy:
1. Hedge Fund Investment Strategies
2. Multi Strategy Hedge Fund
3. Top 5 Hedge Fund Strategies
4. Hedge Fund Jobs
5. Hedge Fund Managers
6. Hedge Fund Research
Permanent Link: Hedge Fund Strategy
Fixed Income Arbitrage

Fixed Income Arbitrage Investment Strategy
Fixed income arbitrage strategies exploit pricing differentials between fixed income securities. Some of the
most famous fixed income arbitrageurs were the principals of Long Term Capital Management, the hedge fund
that returned annualized returns of over 40% in its first years. However, in 1998, when some of its bets moved
against it, the fund had to be rescued by prominent Wall Street firms with a $3.5 billion package orchestrated
by the Fed.
Some of the most widely used fixed income arbitrage strategies are swap-spread arbitrage, yield curve
arbitrage, volatility arbitrage and capital structure arbitrage, all of which try to exploit perceived mispricing
among one or more fixed income instruments.
Swap-spread arbitrage is a bet on the direction of swap rates, Libor, treasury coupon rates and repo rates. A
typical swap-spread arb trade would consist of a fixed receiver swap and a short position in a par Treasury
bond of the same maturity. The proceeds of the sale of the Treasury bond would be invested in a margin
account earning the repo rate. This trade is a simple bet that the difference between the swap rate and coupon

rate will be more than the difference between Libor and the repo rate. The trade could of course, be
engineered in the opposite direction.
Yield curve arbitrage strategies are designed to profit from shifts in the steepness of or kinks in the US
Treasury yield curve by taking long and short positions on various maturities. This could take the form of a
butterfly trade, where, for example the investor goes long five-year bonds and shorts two and ten-year bonds.
Or, it may take the form of a spread trade, where, the investor goes short the front end of the curve and long
the back end of the curve. The strategy requires the investor to identify some points along the yield curve that
are “rich” or “cheap.”
In their simplest form volatility arbitrage strategies profit from the well-known tendency of implied volatilities to
exceed subsequent realized volatilities. This is done by selling options of fixed income instruments and then
delta-hedging the exposure to the underlying asset. However, many hedge funds implement vastly more
complex volatility arbitrage strategies, some of which are described in our bibliography.
Capital structure arbitrage strategies exploit the lack of co-ordination between various claims on a company,
like its debt and stock, for example. The strategy involves buying one instrument of a company’s capital
structure and hedging that exposure by selling another. For example, a trader, who believes that the debt of a
company is overpriced relative to its equity, would short the company’s debt and buy its stock. Capital structure
arbitrage trades may also trade junior vs. senior debt or even convertible bonds vs. stock.
Books
Lhabitant, Francoise-Serge. Handbook of Hedge Funds. West Sussex: John Wiley & Sons, Ltd., 2006.This is
an excellent guide to the industry, with concise and informative descriptions on all of the major hedge fund
strategies and primary methods to measure their risk and performance. Lhabitant also includes an overview of
the legal environment of hedge funds and their organizational structure as well as a short guide to investing in
them.
Lowenstein, Roger. When Genius Failed: The Rise and Fall of Long-Term Capital Management, Random
House, October 9, 2001
Lowenstein provides an inside look at the story of some of the most famous fixed income arbitrageurs.
White Papers
Yield Curve Arbitrage
Leung, Seng Yuen. “Yield Curve Analysis and Fixed Income Arbitrage.” HKUST, February 23rd, 2006.
Give a good overview of key instruments and principles in the fixed income space.
Volatility Arbitrage
Duarte, Jefferson, Fancis A. Longstaff and Fan Yu, “Risk and Return in Fixed Income Arbitrage: Nickels in
Front of a Steamroller?” March 2006
This paper examines the risk and return characteristics of major fixed income arbitrage strategies and finds

that strategies that require the most intellectual capital to implement, produce significant alpha, contradicting
the view that many strategies in this space are equivalent to ‘picking nickels in front of a steamroller.’ In the
process, this paper provides a detailed overview of all major fixed income arbitrage strategies.
Habib, Rami, “Volatility Arbitrage – A New Hedge Fund Strategy” GTNews, 29th October 2003
Dr. Habib describes the mechanics of common volatility arbitrage strategies
Higgins, Tom, “The Long and Short of Volatility,” Alternative Investor Conference, 2003
Executive VP of Maple Financial Group, Tom Higgins, details some of the risks of volatility arbitrage strategies.
Incisive Media, “Volatility Arbitrage: The Non-Correlated Alternative.” Hedge Funds Review, July 2006.
This paper is a detailed description of volatility arbitrage strategies as well as an overview of the main hedge
funds who work in this area.
Petherick, Martin, “Volatility Arbitrage from the Short Side,” Hedge Fund World, October 2003 This article
describes popular volatility arbitrage trades as well as more complex ones.
Capital Structure Arbitrage
Currie, Antony and Jennifer Morris, “And now for capital structure arbitrage,” Euromoney, December 2002
Currie and Morris provide a very clear explanation of a market in which debt vs. equity capital structure
arbitrage trades would be highly profitable. Writing at the time when capital structure arbitrage was just gaining
ground as a trading strategy, they also provide some of the historic context behind the strategy’s development.
Nelken, Izzy, “Capital Structure Arbitrage,” Super Computer Consulting Inc

This powerpoint presentation describes major capital structure arbitrage strategies.
Yu, Fan, “How Profitable is Capital Structure Arbitrage?” University of California, Irvine, June 3, 2005
Yu examines the risk return characteristics of capital structure arbitrage strategies using the stock price and
CDS spread of 261 companies. He finds that while the excess returns of this strategy are not correlated with
any other major portfolio strategy, its excess returns are similar to all other major fixed income arbitrage
strategies.
130/30 Hedge Fund Resources

130/30 hedge funds are one of the fast growing strategies within the hedge fund industry. 130/30 hedge funds
are like normal 100% long managers except they are allowed to short 30% of the value of the portfolio and
then use those shorting proceeds to go an additional 30% long in the portfolio. The end result is an overall
portfolio position of 130% long and 30% short.
The strategy has just recently been gaining more attention and if you are an investor, consultant or on the
board of an investment group I thought you might be interested in reading more on 130/30 funds.
Global Macro Hedge Fund Strategy

Global Macro Hedge Fund Strategy

Global Macro is a relatively volatile hedge fund strategy that attempts to profit from shifts in the market due to
economic, political, or government related events. Many times these hedge funds use leverage and produce
returns that are not highly correlated with the public equity markets. Hedge fund managers use indexes,
equities, ETFs, bonds, and other asset types while using this strategy. Managers of global macro hedge funds
try to anticipate changes in global macroeconomic trends and make bets to profit from them. They are able to
allocate capital across asset classes, sectors and regions. It is perhaps the widest mandate of all hedge fund
strategies as managers can take a position in any market and instrument. It is therefore no surprise that
managers of global macro hedge funds have very different approaches and trading styles. Some managers will
design trades based on their subjective opinion of market conditions (called discretionary approach), while
others will use quantitative or pre-defined rules to do so (called systematic approach). And others will use a
combination of both methods. However, all global macro managers are linked by the international scope of
their strategies, the use of leverage and a primary focus on structural macroeconomic imbalances and trends.
Global macro trading strategies primarily fall under two categories: directional and relative value. In a
directional trade, a manager will bet on discrete price movements, such as long US dollar, short gold or long
Indian government bonds. On the other hand, relative value trades are structured by pairing a long and short
position in similar assets to take advantage of a relative mis-pricing. For example, a manager can go long
Indonesian government bonds and short Philippine government bonds .One of the most famous global macro
trades is a relative value trade designed by George Soros, who bet that the UK would be forced out of the
European Exchange Rate Mechanism (ERM) in 1992. So, he borrowed the sterling pound and converted it into
a mixture of Deutschmarks and French francs. On September 16th 1992, known as Black Wednesday, Soros’
bet paid off when the pound fell below its minimum level in the ERM. It is this trade that earned Soros the title
of ‘the man who broke the Bank of England.’  Soros and several other star global macro managers such as
Julian Robertson, Lewis Bacon and Bruce Kover have generated outsized returns. In fact, on average, the
performance of global macro funds has been relatively strong, as they have produced high absolute returns,
outperforming traditional asset classes.

Global Macro Funds

Global Macro Hedge Funds
The global macro approach to investing is one of the most popular hedge fund strategies seen today. Global
macro fund managers try to make leveraged bets on aspects of the global macro economy. For example, fund
managers could place these leveraged bets on currencies, commodities, interest rates, or even equities. As
most investors global macro managers would like to minimize downside risk while still offering exceptional

returns. Global macro hedge fund managers often have the liberty of having the choice of using any
investment instrument in almost any market to produce their returns.
Global macro trades could either be directional or of relative value. In directional trades managers make bets
on isolated price movements. For instance, the manager could short the Dollar, long on the Euro, or short on
Brazilian Bonds. On the other hand, relative value trades are used to take advantage of assets which were not
properly priced. Managers will usually couple assets on both the long and short side to expose these mis-
pricings. A usual bet could be a long on US equities versus a short on emerging chinese equities.
The global macro strategy could be executed in any number of markets and because of this fund managers
are not as constrained as other fund managers who could have most of their assets invested in one market.
Because of this, global macro funds have been able to sometimes avoid the bear markets in one country and
take advantage of bull markets in another.
Multi Strategy Hedge Funds

Multi strategy hedge funds use several strategies within the same pool of assets. They might seek returns from
running money focused on shorting equities, investing in global real estate projects, and seeking momentum
focused event driven strategies. The diversification benefits help to smooth returns, reduce volatility and
decrease asset-class and single-strategy risks. These funds may allocate funds in to a certain strategy in
response to market trends allowing them to more easily capitalize on favorable market conditions.Due to the
unpredictable nature of this type of hedge fund, the volatility is variable. A downside to this form of investing is
that they will rarely be the highest performing hedge fund over a short time period. This is because the
diversification dilutes the returns of any highly profitable strategy. The long term consistency, however,
generally outweighs this risk.  I haven't seen this type of fund very often as only the largest funds will have the
resources to effectively employ the strategy. Many people wanting hedge fund exposure to this type of strategy
diversification will buy a fund of hedge fund product.  Here is a Comparison Between Hedge Fund of Funds
and Multi-Strategy Hedge Funds.
Read dozens of more articles like this within my Hedge Fund Strate
Sustainable Investing
Sustainable Investing & Hedge Funds
Socially responsible investing or SRI as it is sometimes called is set to be much more than a blip on the radar
screen of high net worth and institutional investors alike. Just earlier this week there was a new green hedge
fund launched.
Another article on this appeared in the FT this week. Here's a quick excerpt:
Wealthy people increasingly want to invest their money without harming the environment, possibly
heralding the mainstream take-up of such investment principles.
"Even those who aren't actually doing it are talking about it," said Matt Christensen, executive director
of the European Social Investment Forum, which has surveyed both rich individuals and the wealth managers
who look after their money about the topic of sustainability.
Nearly three-quarters of respondents have seen an increase in interest in sustainable investing in the
last 12 months, according to the Eurosif survey, which also forecasts more than €1,000bn (£805bn, $1,473bn)
of rich people's money will be in sustainable investments by 2012. This represents a near doubling of the
absolute levels in 2007, and a proportionate increase from 8 per cent to 12 per cent of rich people's wealth.
New money, either from people who have recently become wealthy, or new flows from established
investors, is driving the flows into sustainable investment strategies or instruments.
"Successful entrepreneurs of today are not the industrialists of yesterday," said one survey respondent.
"They are younger and more interested in sustainable investments."
Historically, rich people have led the way in investment trends, taking up hedge funds and private
equity before these asset classes became generally popular. Read more...
Event Driven Hedge Fund Strategy
Event Driven Hedge Fund Strategies
Event-driven hedge fund managers invest their assets on a opportunistic basis where they see best fit.
Sometimes they will be restricted to a set of certain events and their fund mandate allows them to use a wide

range of assets or investment strategies to take advantage of those environments. Events can include some
things that global macro funds might respond to but they can also include IPOs, mergers, write down
announcements, or backdating scandal announcements. They try to ride the short term momentum either up or
down created by events that are priced into the marketplace.
Want something more meaty? Here is a Event Driven Hedge Fund Strategy White Paper
Read dozens of more articles like this within my Hedge Fund Strategy Guide.
- Richard
Green Hedge Funds

Green & Socially Responsible Funds
Green and socially responsible investing has been growing steady and many
predict the total market for green and socially responsible mandates just on the
institutional level will be 3-4x where it is at right now. Many green hedge funds
have been seeing strong returns and it is an area that is not yet over-crowded
or dominated by large players. New York used to be the sole center for green
hedge fund management but Europe, specifcally London is now gaining ground
in this area of the industry.
Green hedge funds can range in strategies from screen for equities that only invest in "green businesses" to
carbon trading, renewable energy credit trading, ethanol trading and emissions trading. Similar to many other
hedge fund strategies green hedge funds are playing risk arbitrage and variations of long-term value and short
term momentum growth plays to earn returns for their investors.
See what other hedge fund strategies made the top 5 hedge fund strategies list.
- Want to read more on green hedge funds? Here is a good article on the subject.
Art Investment Funds
I have always been curious to see more closely how art hedge funds operate and make their money. I've
recently completed some research on this topic and the results are below.
Interview with fine art hedge fund manager Justin Williams.

He is unconventional short-term art trader (maximum holding of three yrs, Avg. holding only three and a half
months), and he believes art market has enough depth and liquidity to enable him to use that strategy. For
quick sell back, he focuses on living young, upcoming artists’ works. He mentions art market withstood the
global credit crisis, but major geo-political risk (which affecting global economy) is biggest threat to the art
funds.
Great resource on the different motivations to invest in art. This article describes who individuals or hedge
funds often invest art because of a wide range of reasons which can include diversification, capital appreciation,
economic slowdown, speculation, taxation, philanthropy, and social status. View this resource by clicking here.
Article says speculating on art (indirectly betting on art price through art fund) is dangerous idea. Because “The
problem with art is that it is essentially counter-culture and difficult to predict”
Hedge fund turmoil tars hot art market

Article explains about how some hedge fund managers are borrowing against their massive art collection as
collateral to resolve cash problems.(also, selling their possession) “300 managers with a median net worth of
more than $60 million, found the average respondent spent nearly $4 million on fine art in 2005.” So, article

questions if art market price will hold up during this time of hedge fund turmoil.
Article -Hedge-Fund Experts Put Art in the Deal

Hedge fund managers are applying their trading instinct into buying and selling art items. Some managers
intentionally buy and invest in certain artist to bring up their value of the work, thus creating bubble in art
Hedge fund managers turn their attention to new asset class- vintage guitars.
“a London investment firm, is expected to launch the Guitar Fund. Set up as a hedge fund, the Guitar Fund will
seek investment returns by buying rare and vintage electric and acoustic guitars (steel-string and classical),
plus mandolins, banjos and amps.” Strategy to increase value – lending it to famous artist in tours etc. “The
basis for the fund’s idea is Vintage Guitar magazine’s 42 Guitar Index . . . an average annual return of over
31% without experiencing a single down year.”
African Hedge Funds

Articles on African Hedge Funds

The hedge fund industry in Africa is relatively small, there are only a few dozen funds located on the whole
continent. One of my first jobs in the hedge fund industry was actually working on finding institutional investors
for a South African based hedge fund of fund.
Nowadays institutions, sophisticated family offices and local high net worth individuals are taking the lead on
investing in African based hedge funds. Many are looking to Africa more often as PEs in Asia expand and
rumors of a "China bubble" have emerged. Many investors have settled on investing in African based hedge
fund of funds as the nature of it usually provides a less volatile exposure to these frontier economies.
130/30
Hedge Fund Growth
Financial News reports that the amount institutional assets allocated to 130/30 hedge fund strategies could
grow 7 fold over the next 3 years to over $350 Billion. Another survey by Merill Lynch also took a stab at
130/30 growth figures and guessed that over $1 Trillion of both international and domestic institutional and
retail assets will flow into these types of funds over the next 5 years. Finally, a third report from the well -
respected TABB Group predicts that 130/30 strategies will have up to $2 Trillion in international assets within
two years. A high percentage of these assets are expected to come from US pension plans, half of which are
expected to invest in these more heavily in the years to come. Dozens of small shops have created 130/30
strategies alongside large players such as UBS, Bear Stearns and ING. Is it too late to start a 130/30 hedge
fund and take advantage of this growth? Experience would tell me no. There are lessons to be learned about
how current 130/30 portfolio management teams are being constructed and how they have positioned
themselves in the market.

Top 5 Hedge Fund Strategies
There are some hedge fund strategies with over $50 or $100 billion dollars already being put to work while
others are only employed by a small handful of firms. In 5-7 years there will be some new hedge fund
strategies that will take hold and propel small emerging hedge fund managers into the world of $1B + hedge
funds.
Here is a list of what I see as the top 5 hedge fund strategies that will explode in popularity over the next 5-7
years:
1. 130/30
2.Carbon Credit Trading
3. Socially Responsible & Green Hedge Funds
4. Litigation Funding
5.Intellectual Property (Patents, Domains and Licensing Rights)

Litigation Funding
Litigation Funding Hedge Fund Strategy

The latest hedge fund strategy to emerge internationally is litigation funding. This is where a hedge fund
dedicates a portfolio or section of a portfolio towards funding litigation that the manager believes highly favors
the party they are supporting. With third party litigation funding, the investors cover a portion or all of the costs
of litigation in exchange for a share of awards by the court. Funds employing this strategy retain legal experts
and refer to niche experts on each case before weighing in on the change of possible victory. MKM Longboat,
a British hedge fund has had dedicated $100M towards a litigation funding portfolio focused on legal cases in
Europe.
The growth of litigation funding is an important development because it could be yet another way for hedge
funds to produce un-correlated returns to the general stock market. Cases are decided and awards appointed
regardless of bear and bull markets. Three interesting developments might arise out of this movement.
I wonder how many litigation funding hedge funds will sponsor litigation cases involving other hedge funds.
The number of hedge fund savvy lawyers hanging their own shingle on this strategy could explode by the
3rd and 4th quarter of 2008.
If the market became large enough some funds might turn into "green litigation funding" firms only support
cases helping the environment, etc. That could get interesting playing off of current market trends.
12.12.07 Update: Litigation Funding Example 

Short Selling
Short Selling & Hedge Funds
Last week I got a Hedge Fund Group related email from a head of a short selling focused research firm. I have
exchanged several emails with him regarding short selling research and realized I had not written much about
short selling hedge fund strategies or trends here in my blog.
The first hedge fund created was labeled so because each long position was hedged with a short position, this
is often called a "pair trade" or "matched pair." Today in the hedge fund industry many hedge funds still hedge
each position in some manner, but many other hedge funds do not short sell securities or hedge all of their
positions. This is due to several factors, two of the most prominent being the:
1.Migration of some long-only equity managers into hedge fund vehicles, where their skill-set in building
portfolios of long positions
2.Expansion of the definition of a "hedge fund." Now some real estate and private equity like investment
groups are labeled hedge funds less because of hedging and more because of their fee/payout
structure.
A portion of the managers who are using short selling within their portfolios are still moving up the learning
curve on profitably taking these positions. This is because many came from a long only world and usually try
reverse engineering their long only strategy to come up with shorting ideas, some more successfully than
others. For example being in early on a great long idea can prove very profitable within a long only portfolio
where moving in too early on a great short idea can lead to great losses, the timing is more critical. Some
long/short managers I have seen are 90-95 percent net long and don't have very many meaningful short
positions built into their portfolios. Some of this may be by design but a portion of it is simply due to the
experience and skill-set of the portfolio management team at the hedge fund.
Another less common short selling strategy is to find companies beginning to or likely to be involved in
fraudulent activities. This is where a hedge fund manager will seek out publicly traded companies that are
trying to cover something up, prevent poor press exposure or delay the announcement of a negative news
event.
Emerging Market Funds

Emerging markets hedge funds drew in over $9B in new assets last year. This is a great deal more than was
investing in this area 5 years ago when only $3.3B was put into these types of hedge funds. One reason why
this strategy has been receiving so much attention is while the average hedge fund had performance of around
11% last year emerging market hedge funds returned close to 25%.  HFR notes that these high performance
numbers were fueled by eye-popping returns at funds like the GLG Emerging Markets Fund which surged
50.5%, the Kazimir Russia Growth fund which gained 48.77%, and the Moore Emerging Market Fund's 45.62%
increase. "The success of emerging markets hedge funds—combined with recent activity of sovereign wealth
funds—is beginning to have a noticeable impact on global capital markets," Kenneth Heinz, HFR's president,
said in a statement. 
Risk Arbitrage Strategy
Hedge Fund Strategy Explanation: Risk Arbitrage Strategies

Risk arbitrage hedge fund strategies usually involve purchasing stocks of companies that are likely takeover
targets, while assuming short positions in the would-be acquiring companies. Risk arbitrage hedge fund
managers can employ an event-driven investment strategy or merger arbitrage investment strategy, seeking
situations such as hostile takeovers, mergers and leveraged buyouts. Such funds typically experience
moderate amounts of volatility. Technically arbitrage is riskless but this is not realistic, the amount of risk taken
on within each arbitrage situation is decided by the portfolio management team and traders.
List of Litigation Funding Hedge Funds

Near the beginning of this year I named the top 5 hedge fund strategies that I saw exploding in growth over the
next 5-7 years. Litigation funding or IP related hedge funds were among that list. Here are a list of litigation
funding and IP hedge funds in the industry.
1. Intellectual Ventures 400mm - 1bn

2. Coller IP Fund 200mm
3. NW Patent Funding Northwater Cap IP Fund 50-100mm
4.Northwater Cap IP II 250mm (in progress)
5.Bay Ridge partners 5mm
6.New Venture Partners 275mm
7.redE4 100mm (in progress)
8.IP Finance Holdings 300mm
9.1790 Capital LLC 10mm-25mm
10.Acacia Technologies 400mm
11.Acacia Technologies 250mm (in progress)
12.Rembrandt 150mm
13.Ocean Tomo 200mm
14.Ocean Tomo Capital II 300mm (in progress)
15.Altitude Capital 250mm
16.Deutsche Bank Patent 32mm
17.Paradox Capital 280mm
Here is PDF on established and emerging IP models 
Warrant Arbitrage Strategy

Warrant arbitrage strategies originated within the European markets and it combines a blend
of more traditional option pricing calculators together with practical fine tuning to identify
warrant price anomalies on a volatility basis, or warrant prices have broken through their
relative historic relationships with the underlying stock price.

Arbitrage Investment Strategy

Arbit rage Investment Stra tegy Definition
Arbitrage is a investment approach that aims at exploiting price differentials that exist as a result of market
inefficiencies. Arbitrage plays typically involve purchasing a security in one market, while selling an instrument
with similar performance characteristics in another market -- earning returns that far exceed the risk incurred.
Arbitrage is a pretty broad term that is tossed around often and technically could describe a wide swath of
strategies in the hedge fund industry. You may have heard of convertible arbitrage, index arbitrage, dividend
arbitrage or bond arbitrage before. Convertible arbitrage is one of the most popular forms; it is where a hedge
fund manager or trader purchases convertible securities, which are usually bonds. They then short a usually
preset portion of the equity risk by shorting the underlying equity security. Leverage is often applied within
these types of arbitrage portfolios.  
Term Source: HedgeCo

ADDITIONAL RESOURCES:
Additional article: "We've applied a model that has worked in a lot of other asset classes and we've applied it to
art." “Over the past 10 years, returns in the art market have outpaced gains made by the S&P 500, according
to the Mei Moses art index.” “Using this index, art returned 18.27% last year, while the S&P 500 gained
15.79%. Five-year returns also favor art investors, but go back 25 years and the S&P 500 comes out on top.”
130/30 Funds Article - What are They?
A Review of 130/30 Hedge Funds
PowerPoint Analysis of 130/30 by Watson Wyatt
Positives an Negatives of investing in a fund using the 130/30 Strategy
PWC Report on Hedge Fund Growth
54 Page Risk Arbitrage White Paper

Arbitrage PowerPoint Presentation
Older White Paper on Risk Arbitrage in Takeovers
Harvard Business Risk Arbitrage Research Piece
Limited Risk Arbitrage Portfolio Management Approach White Paper
Hedge Fund Startup

Hedge Fund Startup Tools
Due to the number of inquiries I am currently getting from hedge fund startups and
emerging hedge fund managers I will releasing a number of related interviews,
example documents, marketing tips and case studies which hedge funds with less
than $200M/AUM may be interested in using for their businesses. These resources
will be displayed here after being published:
1. Hedge Fund Marketing Tools

2. Hedge Fund Seeding
3. Setup a Hedge Fund
4. Raising Capital With Tenacity
5. Hedge Fund Public Relations
6. Hedge Fund Seed Capital
7. Starting a Hedge Fund | A Sample Timeline
8. How to Start A Hedge Fund
9. Email Newsletter Creation Tool
10. Hedge Fund Ethics
11. Seed Capital Sources
12. Financial Advisor Marketing
13. Marketing to Institutional Investors
14. Third Party Marketing
15. Types of Hedge Fund Investors
16. The Schism | Marketing Hedge Fund Managers
17. More coming soon...
Hedge Fund Marketing Tools

Tools for Hedge Fund Marketers & 3PMs

I have created this page to list a collection of online hedge fund marketing tools
available to professionals within the hedge fund marketing space. If you have a favorite tool or run a firm which
offers a tool for third party marketers please email me at Richard@HedgeFundGroup.org to discuss having it
posted here.
• Fund of Hedge Fund Database Fund of Hedge Funds Database which profiles 2,585 funds and is the
most comprehensive database of its kind
• Fund of Hedge Fund Directory: Directory of Funds of Hedge Funds
profiles 1,032 carefully selected funds of hedge funds and funds of CTAs
• Email :ewsletter Creation Tool: Aweber is the #1 provider of email newsletter creation and
management services. Creating an email newsletter keeps you in front of your prospects and loyal
customers. Aweber offers a suite of low cost professional email newsletter templates and their how-to
guides, quick online support and email tips make them a favorite of thousands of firms. Click here now
to see what Aweber offers.
• Hedge Fund Database: Thorough database which c ontains comprehensive information on 3,169 single
manager hedge funds.
• Hedge Fund Directory: A less expensive and lighter collection of single hedge fund manager contact
details.
• CTA Database A source for managed futures data for the past 20 years and contains comprehensive
data on 864 CTA programs.
• CTA Directory A less expensive lighter version of the database above
• Hedge Fund Asset Flow Reports Order reports to dig into where asset flows are coming and going
within the hedge fund industry. Monthly reports available.
Setup a Hedge Fund

Setup a Hedge Fund | Tips from Sykes
Below is an article being added to our Hedge Fund Startup Tools page. This
piece is from Tim Sykes, a colorful wall street personality with a large online
following and experience in running a small hedge fund and then writing a
book on the experience, which I have reviewed here. I do not agree with
everything noted below but I believe it is valuable as it is rare to read articles
by those who have managed a hedge fund about the struggles of running a
small hedge fund.
______________________
I brought an outline of my strategy and performance to a friend of a family

friend, who supposedly had access to many hedge fund and rich clients - he
was impressed, but wanted to know the details of my strategy but wouldn’t
give me any assurances he simply wouldn't use it for himself. In addition, he
wanted my returns audited and only then would he consider helping me raise
capital in exchange for a "slight" fee. I couldn’t trust this guy and I didn't
want to tell him my secrets so I passed. This encounter made me realize that audited returns would be necessary
because my success was rather unbelievable. I figured this expense would be crucial to my fund raising, so I
found a local accountant familiar with stock trading and spent a college semester’s tuition to have my tens of
thousands of trades audited.
After a few weeks of patiently reviewing all my trades with this accountant, the audit was finally finished and
the numbers looked good. In fact, the numbers looked too good. Yes, my ridiculous returns might be a problem.
Lesson #1:
If you consistently beat the market, you will face endless questions about whether or not you are a fraud.
No matter, I decided to form my own fund and take my chances raising capital. Since I was still in college and
had focused solely on trading for the past few years, I had very few business connections and most of my
friends and family were not wealthy enough to invest considering the all knowing industry regulations stated
my investors would need a net worth of $1 million or more to be worthy of such a “risky investment”. Only my
continued performance could attract new money, but, being my cocky self, that was the one part of the equation
I wasn’t worried about.
Mutual funds could accept less wealthy investors, but had severe investment limitations. No, I did not want to
start a mutual fund because most of them had to be invested at all times and they couldn’t even short sell!
Hedge funds were considered the hot new investment vehicle, so I researched the industry nonstop for a few
weeks and liked what I saw. I discovered the startup costs to be surprisingly modest and I loved the legal
flexibility that would basically allow me to invest in any manner I saw fit.
Before the emergence of discount hedge fund startup shops over the past few years, I found the template for
offering documents and lawyer fees could exceed $75,000. Since then, hedge fund boutiques had appeared,
offering their administrative and startup services so startup costs did not exceed $10,000. That was some
reduction!
I chose the second least expensive boutique I could find (probably something ingrained in me ever since my dad
advised to always purchase the second cheapest bottle of wine from a restaurant’s wine list). Still, I was
surprised there were so many forms to fill out and small fees to be paid, but I went along with whatever my
fund administrator said because he had set up dozens of firms over the past few years. This was the real world
so it would take patience, something never required of me in the trading world.
Lesson #2:
Everything takes much more time in the real business world compared to the trading world.
The ink on my letters of incorporation was barely dry when it hit me. I had been distracted by my quest for
finding outside investors and creating all my companies that my trading had suffered as a result. Successful
trading is all about focus, discipline and concentration and these lessons had been consumed by my ambition
and greed. I had taken some rather stupid losses and now, with my fund inception just days away, I would no
longer have that magic whole number in front of the millions of dollar under management. No, I would have to
put a dreaded decimal point and some other numbers before the word million, hurting my credibility from the
start.
Lesson #3:
Focus on trading first; never schedule investor meetings during market hours.
Meanwhile my fund administrator convinced me to switch brokers because my trusty online discount
brokerages were simply not used in the hedge fund world. I quickly agreed, but I was in for a rather big surprise.
This newly recommended brokerage did not have any electronic trading platform (I was told it would be ready
within weeks) and the traders executing my orders gave me some of the worst executions I had ever seen. I
called to complain, but they brushed me off. They placated me by saying their new online software was only
days away from completion. Almost twenty months later, the software is still almost ready. I switched to yet
another recommended brokerage that had online trading software and I became friends with one trader who
expertly executed my larger orders.
Still, the commissions I paid were much higher than my previous setup so I asked for and received several price
reductions, based on how much trading I did. It quickly became clear which broker I wanted to stay with when
the broker without electronic access incredibly upped their commission on a trade without telling me. When I
called to complain, the broker told me he knew I was paying more at the other broker and therefore he was
entitled to the same rate. He was mistaken on top of the fact that he just had taken matters into his own hands
without consulting me. The difference in price on that one trade was only a few dollars, but I lost my temper
based on the principle of the situation.
Luckily, I had started chatting regularly with a popular industry commentator and he referred to me another
broker that was perfect for short selling. This new broker’s online software, cost, and short-selling list blew
away the competition so, I dropped my other brokers and focused on this new guy.
Lesson #4:
Do not feel bad about changing brokers if they are ripping you and your clients off. They are not girlfriends;
there is always somebody cheaper and better out there.
The CEO of the brokerage I dropped called me to see what they had done wrong and ask why I had closed my
account. I could not understand why it was so important my small fund stayed with their firm that supposedly
had billions of dollars in accounts. My commissions with them barely touched into the thousands. As ridiculous
as this conversation was, I respected this man for his dedication to providing customer service. Too bad their
brokerage services weren’t up to par.
Every fund manager should price as many prime brokers as possible that fit the fund’s strategy. There are many
brokers who may trade for themselves, but mainly exist and make money by taking their share out of our online
trading commissions. They make their money from trading commissions—that’s the bottom line. There should
be no reason to have to pay an individual representative of a major brokerage when we simply use their online
software, but that’s the way it is. I am very skeptical when dealing with these people, and I do not feel bad
about getting into arguments with them. In fact, I’ve grown to enjoy these fights.
Within a few months with my quality broker, my performance moved back to the range of my previous years,
crushing the overall market and my investors were very happy. Yes, my parents and a few of their friends were
elated. After months of solid performance that consistently beat the market, I still had yet to raise much outside
capital. I realize now that it will take a lot longer than I originally anticipated, but I have made so much money
in the past and I am confident in my skill as a trader and that is what gives me the faith to go forward. It doesn’t
hurt that I make up a large portion of my fund so I can probably go on forever, however unhappily, even
without many outside investors.
Lesson #5:
The larger the ‘nest egg’ stake the manager has, with the initial startup--the better.
When I first started my fund, I moved to New York City because I figured it was the epicenter of the hedge
fund industry so I should be able to make thousands of investor contacts. I had met many potential investors and
many in this industry, but no matter how many times people said they were interested, no checks were written
nor wires sent.
One interesting meeting was with a senior manager of a major mutual fund company who had heard about my
performance. I met him at his luxurious house in Florida and we proceeded to discuss my situation. After a few
hours of listening to my story, he told me I was very smart and that I should focus on raising capital by
changing my strategy around to suit potential investors. He told me in his years of experience, investors would
be skeptical of such high returns and would want very low volatility. I told him in my years of outperforming
the market I could care less if people accepted my strategy as I believed people will respond to performance.
He’s probably right, but I take a certain pride in being a true rebel, a modern-day financial speculator.
Lesson #6:
Focus on what works for you and do not change to accommodate others.
Next, I attended a few alternative investment conferences and handed out plenty of business cards. I was even
part of a panel discussion thanks to my fund administrator’s connections, but my speech sounded naïve and
unpolished compared to the more experienced managers and veteran marketers in attendance. In fact, I was
mesmerized by one particular fund marketer who had grown his fund exponentially over six months. I do not
think he said one useful fact during his presentation, but he delivered an eloquent speech and several people,
including me, approached him afterwards. Ah, the power of marketing skill. We discussed marketing my fund,
but he charged some ridiculous fees without guaranteeing results whatsoever. I was just a startup fund; no
matter how great he sounded, I wasn’t going to blow upwards of $10,000 all based on his incredibly polished
speech. So, I decided to send out my marketing materials to all potential investors. I contacted just about
everyone I knew, but the rate of follow-through was ridiculously minimal.
Lesson #7:
Raising money does not come easily for a startup hedge fund manager.
There are very few reasons for individuals to take a chance on a new operation unless they have known you for
years or if your performance warrants the added risk of being invested in a startup. People in large firms will
not want to take a chance on your fund because of the minimal track record, lack of transparency of positions,
and the volatility of returns. Their job is on the line with any investments they make, and if they mess up—they
are fired. For the most part, they would rather underperform than risk losing big. This is what Warren Buffett
once called the “institutional imperative.” It is a herd mentality, where these “institutional lemmings” move
together, not necessarily doing what is best or smartest for their clients, but what is best and smartest for
themselves. The decision to go with a high performing emerging manager is a risky bet, due to the outside
chance of looking like a fool. No fund-of-fund manager will make that decision, because they will be fired or
scolded if these risky investments don’t go exactly according to plan. Similarly, these emerging managers’
careers are to be ended if they do not make positive yearly performance each year.
My wonderful broker, who I was almost completely satisfied with after months of moving down commissions,
recently baited me by saying one of his fund-of-fund clients might be interested in my fund since he was
comfortable with my strategy and my performance had been above average. I had heard this many times before,
from brokers trying to lure me to changing to their brokerage services to potential investors whose checks
always seemed to get lost in the mail. Simple common sense dictates that when a fund-of-fund hears about me--
if they are serious, they will contact me, not through my broker.
Full of doubt, I still met my broker and the fund-of-fund manager for lunch so we could discuss a possible
investment. Initially, I grew rather excited because the conversation was surprisingly detailed as this manager
actually did know about my fund! In fact, his talk of a possible investment sounded rather concrete and the
proposed addition would increase my fund assets by 25-50%. We decided to meet again a few weeks later, so I
spent hours creating a new presentation tailored to this fund-of-fund’s style. I never got to meet the fund-of-
fund manager again, but my broker said he showed him my presentation and he supposedly loved it. The other
day, my broker told me the great news. The manager had agreed to invest in my company without even needing
to meet me again. Wow! Awesome! Of course, there was a catch. My broker felt horrible telling me (as he
claimed), but he could only transfer the funds to me if the commissions on trades for this new investment were
quintuple my normal rate! I felt my heart sink. I anticipated compensating my broker for this capital
introduction, but quintuple fees with no hope for a reduction over time over the lifetime of the investment
seemed somewhat ridiculous. I said no.
Lesson #8:
With capital introduction, there’s always a catch.
My fund is listed on many hedge fund databases, but Hedgeco.net and Hedgefund.net have led to the most
information requests by far. After a year of listing my fund, I have had over a thousand hits on my fund’s web
pages. In fact, many third party marketers have contacted me through these websites. I have a premium listing
on Hedgefund.net that costs the equivalent of a semester of college.
Some third party marketing firms have also contacted me. One marketer said he was showing my PowerPoint
presentation to potential investors the day after I emailed him and he would get back to me. Three months later,
he has yet to get back to me. Another marketer said he would work for my fund, but wanted 50% of the
incentive fee I’d receive on any profits on the investment. Another wanted 30% of the incentive fee. With those
kinds of figures, it would take me too long to make it worth my effort even if my returns continued to trample
the market. I wanted to pay an upfront finders’ fee to them, but they knew that was not where the big money
was. I understood their dilemma; why should they risk their entire reputation on a startup fund with only the
chance for a small payoff?
But there was an individual that said he had the connections and was willing to take a job full time with me
without taking more than 10% of the incentive fee. I just wanted him to introduce my fund to his connections
because I have just a handful of family and friend connections that were wealthy enough to be potential
investors. He demanded an exorbitant yearly pay for his services, and would not guarantee he could raise the
millions he promised, but he was optimistic after reading my presentation and looking at my returns. I was
happy yet skeptical that he did not want to know more about my strategies. It took weeks for him to “write out
some contracts” and he insisted I only use his lawyer. Nevertheless, I was optimistic after having talked to him
several times. But when I looked at the contracts, I was dismayed.
He wanted to focus on completely overhauling my marketing by creating new expensive presentations. He also
tried to sell me on using his buddy as a graphics designer, supposedly the guy who designed the Oakley logo, to
design an incredible logo for me that would surely attract investors! I am no marketing genius, but somehow I
felt a new logo was not the problem and the Oakley guy was more than a little out of my price range. He also
wanted to do a traveling road show to his contacts to present my fund so I could stay put and focus on my
trading. Somehow paying for him to jet around the country without me was not my idea of a good investment. I
told him no and I designed a simple logo on Microsoft Paint. I still receive many compliments on my simple yet
modern logo each week.
Lesson #9:
This industry is full of frauds and con artists.
Are you seeing the pattern here yet? This industry is tough for the little guy because there are many promises
and very little follow through. Not being able to advertise is very difficult and you must rely on contacts and
networking for capital introductions. You have to be willing to give up your strategy and any chance at tiny yet
consistent profits for a shot at the big time. I chose the other path; focus on what I do best and be content to
make some decent money while waiting for more opportunities. I figure there will always be people who want
to raise money for me and they will only multiply with time, especially if I keep outperforming the market. I do
not want to compromise my trading and investing style and I accept the fact that it might take years for
investors to come. Only performance and patience will create the path of success—a journey I am willing to
take.
Lesson #10:
Results are much slower in the real world compared to the trading world.
Timothy Sykes is a hedge fund manager, star of the reality show Wall Street Warriors, and author of the
upcoming book, "An American Hedge Fund" He can be reached at timothysykes.com
Hedge Fund Seed Capital
Hedge Fund Capital Guide Part 1
Hedge Fund Seed capital is the money a hedge fund tries to raise to launch or
within it's first year of operating to try to "get it off the ground" and hopefully
raise enough assets to appear respectable to initial investors and provide initial
momentum towards breaking even as a business. Hedge fund seed capital is in
high demand, there are literally hundreds of investment groups looking for it right
now and only three or four handfuls will receive any significant amount of it.
Some hedge funds are seeded with as little as $500,00 while others receive up to
$350M. From my experience I would guess that 68% of first year hedge fund seed capital levels range from
$3M to $25M.
Hedge Fund Seed Capital Sources

• Hedge Fund Seed Capital Source #1: High Net Worth individuals (accredited investors) who are familiar
with your trading skills, past portfolio management experience, or clearly understand your competitive
advantage in the marketplace.
• Hedge Fund Seed Capital Source #2: Family & Friends who are accredited investors.
• Hedge Fund Seed Capital Source #3: Private Equity Firms. Many private equity funds have jumped into
the space of seeding hedge funds and many will in turn work on raising assets for your fund once it will
benefit both your fund and themselves.
• Hedge Fund Seed Capital Source #3: Hedge Funds. Some hedge funds have huge amounts of free cash
flow and are looking for ways to re-invest it within strategies they understand and do not directly
compete with products that they plan to create on their own.
• Hedge Fund Seed Capital Source #4: Associated banks or investment networks will often seed new
hedge fund products they are launching with significant levels of capital.
Hedge Fund Seed Capital-Related Trends
If you read hedge fund news every day you will notice several trends emerging in the area of hedge fund seed
capital. The most prominent is as mentioned above many private equity firms are agressively placin seed
capital with emerging hedge fund managers. The second is that most of hedge fund seed capital is coming from
established hedge funds and private equity groups or investment banks. I believe that the banks are succeeding
in convincing a small fund to give up 20-40% of equity in return for the funds because they also come with
marketing and distribution resources that will make the total pie of available fees much higher. Many hedge
fund managers have become millionaires after accepting outside seed money or an equity investment.
Start A Hedge Fund

How To Start A Hedge Fund | Tips
Traders and money managers often dream about one day
running their own hedge fund, managing large sums of
money, and competing head to head with the world’s top
traders. For many, though, this dream remains unfulfilled,
because they do not know where to begin and do not want
to squander their resources “reinventing the wheel.” The
first step toward setting up a hedge fund is getting a better
grasp of what exactly a hedge fund is. Hedge funds often
are compared to registered investment companies,
unregistered investment pools, venture capital funds, private
equity funds, and commodity pools. Although all of these
investment vehicles are similar in that they accept investors’
money and generally invest it on a collective basis, they also have characteristics that distinguish them from
hedge funds and they generally are not categorized as hedge funds.

Unlike a mutual fund, a hedge fund is not registered as an investment company under the Investment Company
Act and interest in the fund is not sold in a registered public offering. Hedge funds can trade in a wider range of
assets than a mutual fund. Portfolios of hedge funds may include fixed income securities, currencies, exchange
traded futures, over-the-counter derivatives, futures contracts, commodity options and other non-securities
investments.
As the name indicates, hedge funds initially specialized in hedging and arbitrage strategies. When Alfred
Winslow Jones established the first hedge fund as a private partnership in 1949, that fund invested in equities
and used leverage and short selling to “hedge” the portfolio’s exposure to movements of the corporate equity
markets. Although hedge funds today often employ far more elaborate hedging strategies, it is also true that
some hedge funds simply use traditional, long-only equity strategies.
Hedge funds are also well known for their fee structure, which compensates the adviser based upon a
percentage of the fund’s capital gains and capital appreciation. Advisors at hedge funds often invest significant
amounts of their own money into the funds that they manage.
Although they still represent a relatively small portion of the U.S. financial markets, hedge funds are a rapidly
growing investment vehicle. The growth is fueled primarily by the increased interest of institutional investors
such as pension plans, endowments, and foundations seeking to diversify their portfolios with investments in
vehicles that feature absolute return strategies – flexible investment strategies that hedge fund advisers use to
pursue positive returns in both declining and rising securities markets, while generally attempting to protect
investment principal. In addition, funds of hedge funds, which invest substantially all of their assets in other
hedge funds, have also fueled this growth. This growth has not escaped the notice of the SEC, which has
expressed concerns about the potential impact of hedge funds on the securities markets.
Legal Documents to Set Up a Hedge Fund
To start a hedge fund, documents are prepared to establish the fund and the management company as legal
entities. The subscription agreement and the operating agreements for the fund and the management company
also must be drawn up. One document that is of particular importance is the private placement memorandum
(PPM), since potential investors generally rely heavily on the information that the PPM provides.
The PPM is an extensive document individually created for each hedge fund. Although there are no specific
disclosure requirements for the PPM (provided the offering is made solely to accredited investors), basic
information about the hedge fund’s adviser and the hedge fund itself typically, in fact is disclosed. The
information provided is general in nature, varying from adviser to adviser, and it normally discusses in broad
terms the fund’s investment strategies and practices. For example, disclosures generally include the fact that the
hedge fund’s adviser may invest fund assets in illiquid, difficult to-value securities, and that the adviser reserves
the discretion to value such securities as it believes appropriate under the circumstances. Also often included is
a disclosure about the adviser having discretion to invest fund assets outside the stated strategies.
The PPM usually provides information about the qualifications and procedures for a prospective investor to
become a limited partner. It also provides information on fund operations, such as fund expenses, allocations of
gains and losses, and tax aspects of investing in the fund. Disclosure of lock-up periods, redemption rights and
procedures, fund service providers, potential conflicts of interests to investors, conflicts of interest due to fund
valuation procedures, “side-by-side management” of multiple accounts, and allocation of certain investment
opportunities among clients may be discussed briefly or in greater detail, depending on the fund. The PPM also
may include disclosures concerning soft dollar arrangements, redirection of business to brokerages that
introduce investors to the fund, and further disclosure of how soft dollars are used. Copies of financial
statements may be provided with the PPM.

The PPM reflects market practice and the expectations of sophisticated investors who typically invest in hedge
funds. It also reflects the realization of the sponsors and their attorneys that the exemptions from the registration
and prospectus delivery provisions of Section 5 of the Securities Act, available under Section 4(2) of the
Securities Act and Rule 506 thereunder, do not extend to the antifraud provisions of the federal securities laws.
The disclosures furnished to investors therefore serve as protection to the principals against liability under the
antifraud provisions.
“Accredited Investors” and Due Diligence
Offerings made to “accredited investors” exclusively are exempt from disclosure requirements under Rule 506.
If the offering is made to accredited investors only, issuers are not required to provide any specific information
to prospective investors. The term “accredited investors” is defined to include:
• Individuals who have a net worth, or joint net worth with their spouse, above $1,000,000, or who have income
above $200,000 in the last two years (or joint income with their spouse above $300,000) and a reasonable
expectation of reaching the same income level in the year of investment, or who are directors, officers, or
general partners of the hedge fund or its general partner; and
• Certain institutional investors, including banks, savings and loan associations, registered brokers, dealers and
investment companies, licensed small business investment companies, corporations, partnerships, limited
liability companies, and business trusts with more than $5,000,000 in assets; and
• Many, if not most, employee benefit plans and trusts with more than $5,000,000 in assets.
Of course, the hedge fund may wish to allow non-accredited investors into the fund, in which case it will not be
exempt from disclosure requirements. Moreover, even if the fund will only open to “accredited investors,” those
investors will want information about the fund before buying into it. Indeed, prospective investors will often
subject the fund and its managers to an extensive process of due diligence. Investors often spend significant
resources, frequently hiring a consultant or a private investigation firm, to discover or verify information about
the background and reputation of a hedge fund adviser. Prospective investors may gain access to brokers,
administrators, and other service providers during the initial due diligence process, verifying most information
contained in the PPM (including the adviser’s history). Since the PPM usually is the starting point for those
conducting due diligence, it remains a crucial document, even for offerings exclusively for “accredited
investors.”
“Do I need to register?”
In some cases, subject to a state-by-state determination, a fund manager may be required to sign up with his
state as an investment adviser if he has less than $25 million under management. For amounts under
management between $25 million and under $30 million, the fund manager may choose the regulator – either
the state or the SEC. If the fund manager has more than $30 million under management, he would need to
register with the SEC as an investment adviser.
When the situation is complicated with investors from multiple states, usually a notice filing is required. It is
impossible to make a blanket statement pertaining to registration requirements and exemption options, except to
say that they vary by state and fund structure.
A commodities pool operator (CPO) falls under another set of registration requirements. He must take the
Series 3 exam, although it is not required that he be sponsored to do so. Additionally, the CPO and his related
fund may end up under regulation from the Commodity Futures Trading Commission (CFTC) and its
selfregulatory organization, the National Futures Association (NFA).
The Series 7 has no value to either a Registered Investment Adviser (RIA) or CPO. If someone has a current
Series 7 (they have been registered within the past two years with a broker/dealer), he can choose to take the
Series 66 instead of the Series 65. The Series 7 plus the Series 66 is always (in all states) equivalent to the
Series 65. After two years of not being with a broker/dealer, all prior registrations (such as a Series 7) expire
and are no longer valid. Similarly, if someone previously passed the Series 65, but did not register it with either
a broker/dealer or an investment advisory firm, the exam has expired and will need to be taken again.
Alternatives to Full Hedge Fund Development
Given the registration requirements and the extent of disclosure necessary, it is no wonder that many fledgling
hedge fund managers abandon their business plan due to potentially onerous startup requirements. There is,
however, an alternative for hedge fund startups that do not have yet the track record necessary to attract new
investors.
An “Incubator” can be created by breaking down the hedge fund development process into two stages and
isolating the first. The first stage sets up the fund and management company entities, as well as pertinent
operating agreements and resolutions. This is enough to allow the hedge fund to begin trading, usually with the
manager’s own funds. By trading under this structure, the manager can develop a track record, which can be
marketed legally to potential investors in the offering documents. Then, in the second stage, the PPM is
developed with the performance information included. The Incubator method affords the opportunity for those
with a skill for trading (often in their personal accounts) to break down the hedge fund development process
into a manageable undertaking.
One of the caveats of the Incubator option is that the fund manager cannot be compensated for his trading
activity. Thus, the acceptance of outside funds, although permitted, exposes the fund manager to fiduciary
obligations for which he cannot receive any compensation. If outside funds are to be accepted, careful planning
is required to avoid potential legal issues.
Offshore
Though often assumed, offshore funds are not established for the purpose of avoiding U.S. taxation. This is the
wrong reason to consider an offshore fund. In short, setting up an offshore fund is not a tax minimization
strategy, as U.S. citizens and resident aliens (e.g., green card holders) are taxable on their worldwide income.
The U.S. tax results depend on the nationality and domicile of the fund manager and his or her management
company.
The word “offshore” has a certain mystique to many. Offshore hedge funds are investment vehicles organized
in offshore financial centers (“OFC”). OFCs are countries that cater to the establishment and administration of
mutual and hedge funds (“funds”). Offshore funds offer securities primarily to non-U.S. investors and to U.S.
tax-exempt investors (e.g. retirement plans, pension plans, universities, hospitals, etc.). U.S. money managers
who have significant potential investors outside the United States and tax exempt investors typically create
offshore funds. In many OFCs, the low costs of setting up a company, along with a kind tax environment,
makes them attractive to establishing funds. Offshore funds generally attract the investment of U.S. tax-exempt
entities, such as pension funds, charitable trusts, foundations, and endowments, as well as non-U.S. residents.
U.S. tax-exempt investors favor investments in offshore hedge funds because they may be subject to taxation if
they invest in domestic limited partnership hedge funds. Offshore hedge funds may be organized by foreign
financial institutions or by U.S. financial institutions or their affiliates. Sales of interests in the United States in
offshore hedge funds are subject to the registration and antifraud provisions of the federal securities laws.
Offshore hedge funds typically contract with an investment adviser, which may employ a U.S. entity to serve as
sub-adviser. An offshore hedge fund often has an independent fund administrator, also located offshore, that
may assist the hedge fund’s adviser to value securities and calculate the fund’s net asset value, maintain fund
records, process investor transactions, handle fund accounting, and perform other services. An offshore hedge
fund sponsor typically appoints a board of directors to provide oversight activities for the fund. These funds,
especially those formed more recently, may have directors who are independent of the investment adviser.
Consider setting up an offshore fund if you manage money for foreign and/or U.S. tax-exempt individuals and
businesses. Under U.S. income tax laws, a tax-exempt organization (such as an ERISA plan, a foundation, or an
endowment) engaging in an investment strategy that involves borrowing money is liable for a tax on “unrelated
business taxable income” (“UBTI”), notwithstanding its tax-exempt status. The UBTI tax can be avoided by the
tax-exempt entity by investing in non-U.S. corporate structures (i.e., offshore hedge funds).
A manager planning a new fund needs to answer a few key questions in order to decide where to register, what
kind of investor the vehicle is for, where those investors are, and what they want in a domicile. Experienced
alternatives investors typically are less worried about domicile than are first-time investors. Funds designed for
mass distribution to the retail market need to have more regulation than those meant for wealthy individuals
who already are in hedge funds. Some institutions may be bound by rules that limit investment to regulated
jurisdictions, while others face no such requirement.
Single-strategy managers continue to gravitate to traditional Caribbean locations and Bermuda, where costs are
lower and the regulatory burden lighter than in Dublin and Luxembourg. Basic administrative fees are similar in
all jurisdictions, but regulatory oversight adds to the expense in the European centers. For instance, in Dublin,
funds need to have a custodian, which is not the case in the Cayman Islands. While banks and large fund
companies like to have regulations for their retail vehicles to reassure investors, the majority of hedge fund
managers are small operators, for whom the extra costs can be a major burden.
Hedge funds tend to be domiciled in a handful of places worldwide. In the United States, domestic hedge fund
businesses tend to cluster in a few states, in particular California, Delaware, Connecticut, Illinois, New Jersey,
New York, and Texas. Each state has different tax and regulatory laws. Outside the United States, several
centers in the Caribbean and Europe present different benefits and costs to fund managers. Regulatory burdens
and expenses can be worth bearing, depending on the nature of the investment vehicle and its clients. A key
distinction is sometimes forgotten. The domicile of the fund need not be the same as that of its administrator
and custodian. A fund’s service providers can hail from the other side of the world. Moreover, the service
providers’ jurisdiction sometimes turns out to be the more important issue. Let us specifically review several of
the top offshore funds havens around the globe. A potential fund manager would first want to avoid any country
lacking monetary or political stability.
Bermuda: Any fund that wants to incorporate in Bermuda has to be approved by the Bermuda Monetary
Authority. The investment manager, as well as the administrator, prime broker, custodian, and auditors, are
subject to BMA approval. Any change of service providers requires the prior consent of the BMA. The
authority conducts due diligence on proposed service providers and investment manager personnel, including
for instance, background checks in databases to find out whether there has been any legal action or NASD or
SEC disciplinary sanctions against such individuals. In addition, a Bermuda incorporated fund is required to file
monthly reports with the BMA, providing financial information such as the fund’s net asset value, change in
NAV from the prior month, amounts of monthly subscriptions, and redemptions and number of securities
outstanding. The administrator usually makes these filing. Incorporation can take longer in Bermuda because of
BMA approval rules; however, the process includes preparation of offering documents and service provider
agreements, which as a practical matter have to be ready before the fund can commence operation in any case.
For comparison, in the Cayman Islands, fund incorporation can occur earlier in the process, but afterwards time
has to be spent preparing documentation.

British Virgin Islands: More than 2,000 mutual funds worth an estimated $55 billion currently are
incorporated in the BVI. So too are many hedge funds. In all, 11 banks operate on the BVI, catering mainly to
high net-worth wealth and trust management. The government launched new laws to placate the international
community’s concerns over a lack of financial regulation.
Cayman Islands: The Cayman Islands is one of the world’s lowest tax domiciles with no personal or corporate
taxes. Registering in the Cayman Islands does not involve much due diligence by the Cayman Islands Monetary
Authority during the incorporation process, but is not necessarily cheaper or faster overall. Cayman does not
require monthly reports or prior consent to change service providers, but before a fund can commence trading, it
has to be registered with CIMA under the Mutual Funds Law (subject to some exceptions). This means
identifying all service providers to the fund and providing certain information about the fund and the offering of
its securities, and CIMA has to be notified of any subsequent changes. However, currently the Cayman Islands
does not require a fund to file regular reports with CIMA.
The Bahamas: The Bahamas is a very low tax jurisdiction. Banking, wealth and asset management are core
industries, with around $200 billion under management. The island
also boasts some 700 mutual funds with around $100 billion.
Master-Feeder Funds
The corporate structure of a hedge fund depends primarily on whether the fund is organized under U.S. law
(“domestic hedge fund”) or under foreign law and located outside of the United States (“offshore hedge fund”).
The investment adviser of a domestic hedge fund often operates a related offshore hedge fund, either as a
separate hedge fund or often by employing a “master-feeder” structure that allows for the unified management
of multiple pools of assets for investors in different taxable categories.
The master/feeder fund structure allows the investment manager to manage money collectively for varying
types of investors in different investment vehicles without having to allocate trades and while producing similar
performance returns for the same strategies. Feeder funds invest fund assets in a master fund that has the same
investment strategy as the feeder fund. The master fund, structured as a partnership, engages in all trading
activity. In today’s trading environment, a master/feeder structure will include a U.S. limited partnership or
limited liability company for U.S. investors and a foreign corporation for foreign investors and U.S. tax-exempt
organizations. The typical investors in an offshore hedge fund structured as a corporation will be foreign
investors, U.S.-tax exempt entities, and offshore funds of funds.
Although certain organizations, such as qualified retirement plans, generally are exempt from federal income
tax, unrelated business taxable income (UBTI) passed through partnerships to tax-exempt partners is subject to
that tax. UBTI is income from regularly carrying on a trade or business that is not substantially related to the
organization’s exempt purpose. UBTI excludes various types of income such as dividends, interest, royalties,
rents from real property (and incidental rent from personal property), and gains from the disposition of capital
assets, unless the income is from “debt-financed property.” Debt-financed property is any property that is held
to produce income with respect to which there is acquisition indebtedness (such as margin debt). As a fund’s
income attributable to debt-financed property allocable to tax-exempt partners may constitute UBTI to them,
tax-exempt investors generally refrain from investing in offshore hedge funds classified as partnerships that
expect to engage in leveraged trading strategies. As a result, fund sponsors organize separate offshore hedge
funds for tax exempt investors and have such corporate funds participate in the master-feeder fund structure.
If U.S. individual investors participate in an offshore hedge fund structured as a corporation, they may be
exposed to onerous tax rules applicable to controlled foreign corporations, foreign personal holding companies,
or a passive foreign investment company (PFIC). To attract U.S. individual investors, fund sponsors organize
separate hedge funds that elect to be treated as partnerships for U.S. tax purposes so that these investors receive
favorable tax treatment. These funds participate in the master/feeder structure. Under the U.S. entity
classification rules, an offshore hedge fund can elect to be treated as a partnership for U.S. tax purposes by
filing Form 8832, “Entity Classification Election,” so long as the fund is not one of several enumerated entities
required to be treated as corporations.
Legal Development Process
The legal development process is one that requires careful planning. As seen above, a variety of regulatory
issues intersects concurrently when developing a fund: tax, registration, entity type and classification,
jurisdiction, security type, and so on. The wisest course of action for those thinking about developing a fund is
to consult with qualified legal counsel before taking definitive steps. Due to the many regulatory issues that
must be complied with, it is best to define the structure of your fund properly before commencing any form of
fund development or engaging the services of administrators or service providers.
The legal development process normally begins with a planning consultation with an attorney experienced in
forming hedge funds. This is where important determinations such as registration, jurisdiction choice, and
utilization of safe harbors are made. The consultation may expose areas (outside the legal process) that need
further planning, thus requiring the manager to deal with those issues before proceeding. After clearing up any
such issues, a full engagement is entered into and the legal development process begins.
The fund and management company entities are first formed in their appropriate jurisdictions. This enables the
fund manager to begin the process of opening bank and brokerage accounts and setting up the administrative
functions of the fund. After the entities are formed, the legal team gathers the necessary information to form the
operating agreements for the entities and then the offering documents, first in draft stage and then finalized for
distribution to prospective investors. The legal process of setting up a hedge fund usually can be completed
within 60-90 days, though registration as a Commodity Pool Operator, specialized circumstances, or delays in
providing information can lengthen the process. Source
Seed Capital
Seed Capital Funding
Many hedge fund managers open their business with one or two seed
capital investors, this funding could come through a formal seed capital
program with an established institution such as a bank or seeding
platform, a fund of fund or private source that likes to stay off most
people's radar screen. Many of you already know of the Hedge Fund
Group (HFG) and the connected hedge fund forum at
HedgeFundMessageBoard.com. Last week I had someone post a list of
hedge fund seed capital sources that I wanted to re-post here for everyone's
benefit.
Seed Capital Funding Sources

• Asset Alliance http://www.assetalliance.com/
• BRI Partners http://www.bripartners.com/
• Capital Z Investment Partners http://www.capitalz.com/
• Fairfield Greenwich Group http://www.fggus.com/
• Focus Investment Group http://www.focusinvestmentgroup.com/
• Fortune Asset Management http://www.fortune.co.uk/
• FRM Capital Advisors http://www.frmcapitaladvisors.com/
• FrontPoint Partners http://www.fppartners.com/
• Hardt Group Advisors http://www.hardtgroup.com/
• HedgeCo Investments http://www.hedgecoinvestments.com/
• JPMorgan Incubator Strategies http://www.jpmorgan.com/
• Larch Lane Advisors http://www.2100capital.com/
• M.D. Sass-Macquarie http://www.mdsass.com/
• Man Global Strategies http://www.maninvestments.com/
• Protégé Partners http://www.protegepartners.com/
• RMF Hedge Fund Strategies http://www.rmf.ch/
• SkyBridge Capital http://www.skybridgecapital.com/
• Weston Capital Management http://www.westoncapital.com/
• Blackstone - http://www.blackstone.com/maam/fund_hedge/team.html
There are over 100 other threads un-related to seed capital on HedgeFundMessageBoard.com and
many consultants, analysts, hedge fund managers and academics visit the site frequently.
MARKETING
Hedge Fund Relationship Building
The best part about writing in this blog is getting 30-50 emails a day from hedge
fund professionals, investors and students in finance. One of the most frequent
questions I get is "can you help our hedge fund raise capital from new investors?"
I usually refer these people on to others as the firm I am with already has our hands full in raising capital right
now for a set number of funds. One piece of advice relevant to everyone though is mentioned here at
MajorGiftsGuru.com. Tom quotes Woody Allen's great quote: "80% of success in life is simply showing up."
Show up at your local CFA and hedge fund association meetings. Meet face-to-face with local financial
advisors, institutional consultants and foundations. We are looking for something more out of our jobs than a
simple paycheck and if your fund offers something within the parameters of what they are allowed to choose
they might choose your product simply because of your relationship. My favorite sales author Jeffrey Gitomer
always says, "that all things equal people like to do business with their friendsKand all things NOT being equal
people still like to do business with their friends." My quick advice to most funds is to make sure your
compliance details are in order and then start "showing up" everywhere you can to start building long-term
multi-year relationships in the industry. Maybe even join the Hedge Fund Group!
Investment Marketing
Investment Marketing Hurdles for Hedge Funds
I just read an interesting article on AllAboutAlpha discussing the challenges today in marketing hedge funds to
new potential investors. Within the piece AAA discusses how the US has one of the most restrictive regulatory
regimes in the world when it comes to the hedge fund industry. The countries of Australia, Canada, Japan and
China are all less restrictive.
Here's a short excerpt from the article:
An article in this month’s Journal of Financial Transformation illustrates why this is. The piece, titled "Hedge
fund marketing in an era of regulatory uncertainty” covers many of the issues faced by those trying to raise
money in the US. It’s a great update on the ebb and flow of SEC edicts over the past year and was co-
authored by hedge fund personality James Hedges. Here’s some of what Hedges suggests:
Avoid speaking to the media about your funds - even if you’re not actively selling, but just “conditioning the
market”.
Avoid “print, radio and television advertisements or solicitations regarding funding or investment matters”.
When giving presentations, “address the risks associated with hedge funds in general as well as the specific
risks associated with the hedge fund being offered.”
When your fund has a great year, make sure you “disclose the reasons for extraordinary performanceK”

No “mass mailings” except to “individual investors, or a discrete group of accredited investors”
Also see my macro-article on Hedge Fund Marketing
Over the weekend I got an email from a hedge fund professional working for a very well known bank in London.
He was looking for advice on getting into third party marketing or hedge fund sales. He specifically asked if I
knew of any great books on third party marketing or hedge fund sales and wanted details on typical fee
structures/compensation, etc. My response is pasted below as I thought it might answer some other people's
questions while looking for information on marketing hedge funds.
Thanks for the email. There are no great books on third party marketing that I am aware of, everyone is pretty
close vested within the industry. I haven't found a great book on investment sales either, but I know there are a
few of those if you look around on Amazon. If you are looking for great books just on sales I really like Jeffrey
Gitomer's 3 books: The Sales Bible, The Little Red Book of Sales Answers, and Yes! Attitude. Those books
have changed my career.
Hedge fund marketing & sales fee structures vary depending on the type, reputation, and abilities of the third
party marketing firm (3PM firm). Some retain only 2-3 clients at a time and charge retainers for this focus of
their attention while others might work with 10 money managers (clients) at once and only get paid on
commissions. Usually commissions is 20% of both the base fee and performance fee when working with hedge
funds.
If you work for a hedge fund you will be restricted to their strategy(s) so if their performance dips or the strategy
goes out of favor you might not raise any money and it wouldn't be your fault. If you work for a 3PM firm you
would probably get to market 2-3 different money managers in some capacity across diverse distribution
channels such as endowments & foundations, broker dealers, and direct to high net worth individuals. If a
strategy goes out of favor you just find a new money manager to market as a firm, you avoid that downside of
being a hedge fund sales professional. Common compensation for internal hedge fund sales people is 80k-

200k with some making 400-800k/year and maybe 3-10 commissions that might trail off over time. Common
compensation for a 3PM as I mentioned above is a retainer of 60k-150k (if they get one) and 20% of fees.
I'm not even 30 years old yet so I'm going the third party marketing route because I want to be able to have
knowledge of the DNA and powerful relationships in every major distribution channel and I want figure out
where the real money and momentum is and be able to shift my focus to that point. I believe it is harder to get
a 3PM job because most want you to have a book of business or solid relationships, but it can be done. To
work in my first third party marketing position I worked for free for 3 weeks to prove myself and took a big cut in
pay coming in the door, but now I'm in my dream job getting experience that I believe will continue to be more
valuable each year.
Third Party Marketing Careers

If you are starting a third party marketing career you are in good company, dozens of highly experienced
investment and hedge fund marketing/sales professionals are entering the industry each year. In terms of total
firms offering services the industry is growing by over 15% each year. While some professionals may leave an
investment manager or hedge fund to start their own third party marketing firm many more first work or partner
with an existing third party marketing firm. The benefits of starting or working for a third party marketing firm
are many and doing either is relatively easy to do.
If you can raise capital, and consistently bring in $100m-$200M/year you can typically eliminate most types of
political/corporate risks while earning 2-10x more than you would while working for a large institution such as
Lehman Brothers or Goldman Sachs. As the economy goes through this rough patch and bonuses are
skimmed and 50-year-old executives laid off I see this trend of third party marketing startups and career moves
increasing.
Institutional Hedge Fund Marketing

A recent Preqin survey provided some great insight into what is important in marketing hedge fund managers
to institutional investors. They surveyed over 1,000 institutional investors and found that the following factors
were the most important for determining which hedge fund managers to invest in, with the last 3 points barely
having any impact on the decision.
Performance Record
Risk Management
Quality of Personnel
Source of Returns
Fees
Firm Reputation
Client Service
What is interesting about this list from a third party marketing or hedge fund marketing perspective is that
points 2, 3 and 4 can be improved over a year or two by working on a firm’s investment process, team and risk
management procedures. By taking an institutional best practices risk management approach, working with the
right vendors, hiring the right professionals and ensuring that your investment process is repeatable and is
producing the returns you boast you can increase your chances of winning new institutional hedge fund
mandates. I think this is fascinating and this type of deep insight should be another layer of insight that third
party marketer can provide to hedge fund clients.
The Lucrative World Of Third-Party Marketing
Third-party marketing is a consulting service provided to hedge fund managers who need the expertise
of seasoned marketing professionals. Third-party marketing firms, also known as third-party
distributors, employ experienced investment marketing and sales experts. These individuals raise assets
for hedge funds through their relationships within distribution channels, including institutional
investors, broker-dealers, investment platforms, financial advisors and high-net-worth individuals. In
this article we'll explore this lucrative field, describing how these experts bring in the big money, and
what a career in third-party marketing entails.
Why Hire Third-Party Marketers?

Hedge funds hire marketers because the hedge fund manager's core expertise is usually in managing the
portfolio for investors, and not growing new relationships with them. While the majority of hedge
funds use only one marketing firm at a time, some do employ several, assigning specific geographical
regions or distribution channels to each. Most third-party marketers make money by charging a small
retainer while also taking 20% of all management fees on assets raised.
Becoming A Third-Party Marketer

One challenge of starting a third-party marketing career is finding a firm that will take the time to show
you how they operate and compete against other firms in the industry. Most marketing firms play it
close to the vest, and are slow to hire unless the individual applying for the job is coming from another
third-party marketing firm or can show a substantial track record of raising assets that can be confirmed
by some objective means.
Employing A Hired Gun

Most third-party marketing services are completed off-site within the offices of the marketing firm.
These firms may be working on behalf of many hedge fund managers at any one time. There are
dozens of activities that third-party marketing firms provide to their hedge fund clients, but most can be
split into one of two categories: marketing and sales.
Marketing
The range of activities completed by a third-party marketer depends on the size and background of both
the firm and hedge fund client. The types of marketing services that third-party marketing firms may
offer include:
Developing marketing materials
New product guidance
Investor database development
Media relations
Request for proposal (RFP) development
Event marketing
Many third-party marketers work with their hedge fund clients on a commission-only basis, but some
have strong marketing backgrounds and charge a moderate retainer while also taking a percentage of
the fees on assets raised. The importance of whether a third-party marketer has helped with marketing,
public relations, database completion or selecting a new assistant portfolio manager pales in
comparison to the importance of how successful a third-party marketing firm is at raising assets for its
client. There are exceptions, but most marketers are evaluated almost exclusively on their ability to
raise assets. (If the marketing side appeals to you, read The Marketing Director's Pitch.)
Sales
The sales activities that third-party marketers take on can include:
Cold calling
Attending industry conferences
Managing a sales team
Choreographing conference calls and on-site visits
In general a third-party marketer manages the sales cycle for hedge fund clients, involving the chief
investment officer or other portfolio managers as needed to educate potential investors or meet with
analysts. Duties include educating potential investors, or meeting with analysts. Sales cycles can range
from as little as six weeks to as long as 18-24 months. Because of this, most third-party marketing
contracts are for three to five years and often include momentum clauses that ensure that the marketer
is compensated even if the sale comes in after they stop working with this particular hedge fund client.
(For more on the sales side of third-party marketing, check out Sales Director Career Provides Daily
Challenge.)
Due Diligence
Hedge funds conducting due diligence on a third-party marketing firm should always ask questions
about the firm and their employees. Evaluating a potential marketer should be as rigorous as
completing a RFP for an institutional consultant. A partnership is being formed, and investing time and
money with the wrong professionals can be expensive in terms of real dollars and opportunity costs.
Areas to cover while conducting due diligence on a third-party marketer include:
Past work experience
Current licensing and broker check
Asset-raising history throughout their careers
Asset-raising track record while working together within the firm
Referrals from past hedge fund clients
Number of years experience
Scope of their distribution channel expertise
Number of total current clients
Potential commitment of time in terms of hours per week and duration of the contract, and
Personality and culture of the group
At the same time, third-party marketers need to perform due diligence on a potential client. If a hedge
fund manager has a poor reputation, it could reflect poorly on the marketer that is doing the promoting.
Conclusion
The potential to soak up 20% of a hedge fund's management fees is an obvious attraction to this career
path. However, this is a challenging, cutthroat industry to work in. While third-party marketing
services will always focus on marketing and sales, their service models continually evolve and adapt to
meet the demands of their hedge fund clients.

Third Party Marketing Due Diligence
Hedge funds conducting due diligence on a third party marketing firm should always ask questions about the
firm and their employees. Evaluating a potential marketer should be as rigorous as completing a RFP for an
institutional consultant. A partnership is being formed, and investing time and money with the wrong
professionals can be expensive in terms of real dollars and opportunity costs. Areas to cover while conducting
due diligence on a third party marketer include:
Past work experience
Current licensing and broker check
Asset-raising history throughout their careers
asset-raising track record while working together within the firm
Referrals from past hedge fund clients
Number of years experience
Scope of their distribution channel expertise
Number of total current clients
Potential commitment of time in terms of hours per week and duration of the contract, and Personality and
culture of the third party marketing group
At the same time, third party marketers need to perform due diligence on a potential client. If a hedge fund
manager has a poor reputation, it could reflect poorly on the marketer that is doing the promoting.
Switzerland-Based Marketing
Hedge Fund Marketing in Switzerland
I recently came across a short whitepaper on hedge fund marketing in Switzerland. Here is a short excerpt
from this article and a link to the full copy.
In the last few years, alternative investments and hedge funds in particular have become part of the standard
asset allocation process in the Swiss private banking business as well as for many Swiss institutional investors.
This is the case even though, given legal and regulatory constraints, hedge funds may only be distributed in
Switzerland by way of private placement, without any public offering. In addition, Swiss law and the practice of
the supervisory authority, the Federal Banking Commission, allow for the setting up and the public distribution
of collective investment schemes which take different forms and which invest into hedge funds (e.g. investment
companies, investment foundations, and funds of hedge funds). These structures have also contributed to the
success of alternative investments in Switzerland. For the rest, the on-going revision of the Swiss mutual fund
legislation is expected to create additional flexibility in regards to the offering of this type of investments to the
Swiss market.
The Swiss market

Switzerland is an important player in the alternative investment arena, especially for hedge funds. Although
reliable statistics on this topic are difficult to come by, it is generally considered that, after the U.S., Switzerland
is the second-largest market for hedge funds in the world. A number of factors have contributed to this situation.
Firstly, Swiss private banking and its sophisticated clientele have been among the first to invest in hedge funds,
and to do so massively. With the years, a number of Swiss banks and financial advisors have thus developed
an expertise in alternative investments. In parallel, Swiss institutional investors (e.g. pension funds) have been
quick to include alternative investments in their asset allocation model. Recent changes in the applicable
regulatory framework have further expanded the ability of these Swiss investors to invest in hedge funds, or
funds of hedge funds.
Read the full whitepaper here.
- Richard
Financial Advisor Marketing Differences Q&A

Today I received this question from a New York based hedge fund marketer.
Question:When marketing to financial advisors for your hedge fund, what necessary steps do you need to
take dealing with these guys? Is it any different that dealing with family offices?
Answer: Marketing to financial advisors is much different than marketing to single and multi-family offices.
Here are the main differences between the two that I have noticed:

Family ffices have more established due diligence procedures, often involving
consultants or internal analysts which do nothing but look at hedge funds or alternative investment products.
Financial advisors have lower minimum asset levels for what they will consider investing. 90% of family offices
only seriously consider investing in hedge funds with at least $75M-$100M, and many require $250-$300M or
even $1B in assets under management.
Family offices are more tight lipped. It will take more effort to develop a relationship, meet in person and get
clear feedback on why or why a hedge fund is a good fit for what they are looking for.
Family offices are harder to identify in the first place. Financial advisors are easier to find, there are more of
them and they advertise more openly. Some family offices advertise but many stay below the radar and
some purposefully don't even have a website.
While family offices service to high net worth investors almost exclusively many financial advisors work with
a broad spectrum of client types - this might require more caution by them and your fund in marketing
products to them. It might also mean sorting through more financial advisors to find one with several
HNW clients.
In my experience financial advisors seem much more sensitive and motivated by how they will earn a
commission or income from the transaction whereas many family offices charge rich enough fees that
this is less of an issue.
While some financial advisors may take 16-24 months to really get "on board" with a relevant hedge fund
manager, understand your investment process and possibly invest most will come to terms a bit before
then. Family offices on the other hand often take 18-24 months just to complete their due diligence and
committee meetings, it is a very long sales process.
Both family offices and financial advisors require genuine relationship-building efforts and tenacity
From a legal standpoint there may be other precautions your fund should take but I am not a legal expert so
I can't provide any guidance within that space.
I recently published a blog post which provided more tips on marketing hedge funds to financial advisors here:
Marketing Hedge Funds to Financial Advisors and I have 30 additional articles within the Hedge Fund
Marketing Guide section of my blog.
Finally, I run small websites on both third party marketing and family offices which may be of use.- Richard

Marketing Hedge Funds to Financial Advisors
Almost every hedge fund manager has asset-raising goals and ambitions. I often get emails from hedge fund
managers looking for someone who can help them raise capital. In general, hedge funds can raise assets
through either:
1) Increasing their effectiveness within current channels of distribution, or
2) Pursuing new channels of distribution
Due to the difficulty in recruiting experienced hedge fund marketing professionals, most hedge funds stick to
where they have raised assets in the past, in the areas they are are most comfortable with and have seen
some success either by others or their own firm in the past. Many aren't aware of all the new channels
available to them, or how to capitalize on each one.
The financial advisor channel – I recently read a guidebook on the advisor channels that was written by
Michael Sakraida, an investment sales expert. Mike handed out this guidebook, titled "7 Key Rules for Selling
Hedge Funds to Financial Advisors" at a recent speech he gave to a group of hedge fund professionals. Many
were surprised to hear that the advisor channels represent around $10 trillion in assets under management.
Mutual misunderstanding – Michael Sakraida shared with me his enthusiasm for the advisor channels for
hedge funds. Mike commented that "right now a substantial majority of advisors don't understand hedge funds,
and an equal majority of hedge funds don't understand advisors." He went on to say that "the hedge funds that

fully understand and work with the unique advisor channels can raise substantial assets levels." While many
hedge fund marketers focus on institutional asset raising efforts, some professionals such as Mike are
experienced in raising assets and setting up distribution channels within this area.
+ The 7 Key Rules for Selling Hedge Funds to Financial Advisors – Mike will email this guidebook to those who
email their requests to him. In the meantime, for those interested in a quick listing of these key rules right now,
I've listed them below.
Rule #1 – Distribution Rules Over All
Rule #2 – It is About the Two-Stage Sale
Rule #3 – Advisors Aren't Consultants or Institutions
Rule #4 – It isn't About Your Brilliance
Rule #5 – You Must be Passionate
Rule #6 – Build Valuable Relationships
Rule #7 – Need a Plan and Timelines
If you work for a hedge fund and want to connect directly with Michael Sakraida and his firm, Coastal
Consulting, his email address is m.sakraida@att.net.
- Richard

Third Party Marketing (3PM) Definition
Third party marketing is a type of consulting service offered by consultants to hedge fund managers. These
consultants help hedge funds raise their assets under management by introducing them to new investors. The
types of services that hedge fund third party marketing firms offer can include:
Fully outsourced marketing and sales services

Channel or geographically specific marketing efforts
Creation of marketing materials including a full PowerPoint presentation, one page marketing piece
Assistance in developing a standard RFP and populating major hedge fund database
Representation at industry social events, conferences and private dinner parties
Advice on how to best move forward within a diverse range of capital raising channels
Public Relations & Media consultation as needed
There are as many types of third party marketing agreements in the hedge fund industry as there are third
party marketers, but most of the value provided to hedge fund clients is through one of the activities listed
above.

- 3PM
3PM - Third Party Marketing

3PM is another term for third party marketing or 3rd party marketing. While the third party marketing term itself
is used within the IT and public relations world from time to time it is most often used to describe an outside
investment consulting that helps raise capital for money managers, often hedge fund managers. If you would
like more information on third party marketing here are a few links to articles I have written on 3PM:
Marketing To
Institutional Investors
SEI recently completed a survey of institutional investors and
their perspective on hedge funds. 100 institutions were
surveyed and 47 were currently invested in hedge funds. Even the ones who were investing in hedge funds
had extra due diligence steps to ensure that each allocation to a hedge fund manager is done in a deliberate
and cautious fashion.
The problem I have with this is often selecting hedge funds in a "deliberate and cautious fashion" often boils
down to a RFP or due diligence checklist where you are basically looking for those 30 hedge funds that can
check every box on your list. This is not a bad thing to have in itself but often it becomes the real life and center
if not whole process in selecting a hedge fund manager.
"Headline risk" was named by 37% of survey respondents as their biggest worry, followed by lack of
transparency (19%) and poor performance (15%). Institutions also remain cautious in selecting hedge funds,
the survey found, devoting an average of seven months to due diligence and 12 additional weeks to approval.
Interviewees ranked "consistent, stable returns," "uncorrelated returns," and "high risk- adjusted returns" as
more important objectives than "high absolute returns." Seventy-two percent of interviewees said the
investment strategy, rather than performance, is their starting point for hedge fund selection.
Paul Schaeffer, managing director of strategy and innovation for SEI’s investment manager services division
says, “To maintain that growth trajectory, the hedge fund industry will need to branch out from its traditional
high-net-worth, foundation and endowment clientele to serve the broader institutional market.” He adds: “But to
compete for those assets, the industry must recognize that large institutions have a distinct set of demands.”
Top 4 Factors Institutional Investors Look For In Hedge Funds
Reporting & Transparency (85% of institutional investors reported that they would not invest in a strategy
they did not understand)
Institutional Quality Infrastructure and Operations (54% of institutional investors pointed out that better
managed firms return higher performance)
People. Build stable hedge fund management teams At all levels the hedge fund company
Shift away from focusing exclusively on performance to investment disciplines
The white paper concludes by stating:  The take-away message is that institutions clearly prefer to do
business with institutional-style organizations," concluded Schaeffer. "For hedge funds, the challenge will be to
fit the profile of an institutional-quality fund while preserving the performance attributes that attracted major
investors in the first place."

Hedge Fund Marketing Tools

I have created this page to list a collection of online hedge fund marketing tools available to professionals
within the hedge fund marketing space. If you have a favorite tool or run a firm which offers a tool for third party
marketers please email me at Richard@HedgeFundGroup.org to discuss having it posted here.
Fund of Hedge Fund Database Fund of Hedge Funds Database which profiles 2,585 funds and is the most
comprehensive database of its kind
Fund of Hedge Fund Directory: Directory of Funds of Hedge Funds profiles 1,032 carefully selected funds
of hedge funds and funds of CTAs
Email Newsletter Creation Tool: Aweber is the #1 provider of email newsletter creation and management
services. Creating an email newsletter keeps you in front of your prospects and loyal customers.
Aweber offers a suite of low cost professional email newsletter templates and their how-to guides, quick
online support and email tips make them a favorite of thousands of firms. Click here now to see what
Aweber offers.
Hedge Fund Database: Thorough database which c ontains comprehensive information on 3,169 single
manager hedge funds.
Hedge Fund Directory: A less expensive and lighter collection of single hedge fund manager contact
details.
CTA Database A source for managed futures data for the past 20 years and contains comprehensive data
on 864 CTA programs.
CTA Directory A less expensive lighter version of the database above
Hedge Fund Asset Flow Reports Order reports to dig into where asset flows are coming and going within
the hedge fund industry. Monthly reports available.
- Richard
- Also see my macro-article on Hedge Fund Marketing
- Over the weekend I got an email from a hedge fund professional working for a very well known bank in
London. He was looking for advice on getting into third party marketing or hedge fund sales. He
specifically asked if I knew of any great books on third party marketing or hedge fund sales and wanted
details on typical fee structures/compensation, etc. My response is pasted below as I thought it might
answer some other people's questions while looking for information on marketing hedge funds.
-
- Thanks for the email. There are no great books on third party marketing that I am aware of, everyone is
pretty close vested within the industry. I haven't found a great book on investment sales either, but I
know there are a few of those if you look around on Amazon. If you are looking for great books just on
sales I really like Jeffrey Gitomer's 3 books: The Sales Bible, The Little Red Book of Sales Answers,
and Yes! Attitude. Those books have changed my career.
-
- Hedge fund marketing & sales fee structures vary depending on the type, reputation, and abilities of the
third party marketing firm (3PM firm). Some retain only 2-3 clients at a time and charge retainers for this
focus of their attention while others might work with 10 money managers (clients) at once and only get
paid on commissions. Usually commissions is 20% of both the base fee and performance fee when
working with hedge funds.
-
- If you work for a hedge fund you will be restricted to their strategy(s) so if their performance dips or the
strategy goes out of favor you might not raise any money and it wouldn't be your fault. If you work for a
3PM firm you would probably get to market 2-3 different money managers in some capacity across
diverse distribution channels such as endowments & foundations, broker dealers, and direct to high net
worth individuals. If a strategy goes out of favor you just find a new money manager to market as a firm,

you avoid that downside of being a hedge fund sales professional. Common compensation for internal
hedge fund sales people is 80k-200k with some making 400-800k/year and maybe 3-10 commissions
that might trail off over time. Common compensation for a 3PM as I mentioned above is a retainer of
60k-150k (if they get one) and 20% of fees.
-
- I'm not even 30 years old yet so I'm going the third party marketing route because I want to be able to
have knowledge of the DNA and powerful relationships in every major distribution channel and I want
figure out where the real money and momentum is and be able to shift my focus to that point. I believe
it is harder to get a 3PM job because most want you to have a book of business or solid relationships,
but it can be done. To work in my first third party marketing position I worked for free for 3 weeks to
prove myself and took a big cut in pay coming in the door, but now I'm in my dream job getting
experience that I believe will continue to be more valuable each year.
- Interested in hedge fund marketing? Read dozens of more hedge fund marketing & sales articles along
with details on third party marketing within the Hedge Fund Marketing Guide.
Hedge Fund Public Relations Tips
Here is a guest article on public relations for hedge fund managers:

Why do hedge funds need to hire public relations experts to help protect and grow their fund?
Presently, most new hedge funds are launched with money from friends and family, while more established
players can launch new funds from a pool of existing investors. As mentioned previously, hedge funds are
prohibited from advertising and marketing. (Once contacted by a potential investor, a hedge fund can send out
marketing material.) Thus, in order to attract new investors, hedge funds need to find a way to get their name
out there. One way, of course, is through the media.
Most financial journalists have contact with a hedge fund manager or two. These managers are excellent
sources of information, though much of it is negatively directed towards companies. As such, much of the
back-and-forth between the media and hedge fund managers is off the record. The SEC's new rules, however,
are aimed at transparency, and with competition among hedge funds fierce, it certainly behooves hedge fund
managers to use their investment expertise to help the public, and drum up investors in the process.
I spoke to a number of hedge fund managers recently who, for the most part, agreed that the sole purpose a
hedge fund may engage a public relations firm is in an effort to market to new investors. I also spoke to
Richard Dukas, the president of New York-based Dukas Public Relations, a PR firm that has handled hedge
fund clients in the past and counts a handful of funds as current clients.
"Most hedge fund managers are still extremely reticent when it comes to speaking to the media," Dukas said.
"What I've found is that it's very difficult to solicit managers to work with you."
Dukas says that the reticence comes from a feeling that hedge fund managers should be secretive and not
share their ideas with anyone but their own investors. However, the new SEC regulations, combined with the
movement towards activist investing, may change that.
"Maybe [hedge fund managers will realize] that what they're doing is not so secretive after all," Dukas said.
For an example of a hedge fund that has embraced the concept of working with the media, look no further than
Dukas' client Haven Advisors, which has racked up considerable press over the past six months
(http://www.dukaspr.com/page.asp?ID=355).
I mentioned that competition among hedge fund managers is fierce, and it's not going to get easier. For
example, Janus Capital, one of the world's largest mutual fund mangers, recently launched a long-short mutual
fund with the goal of absolute return. In other words, Janus is offering investors access to a mutual fund that
acts in the same way that most hedge funds act, but without the stiff management fees. More mutual funds
such as the one launched by Janus should hit the market this year, opening up a whole new pool of investors
to the idea of hedge funds. The biggest reason, however, I feel that hedge fund managers need PR people is
the rise of activist investing.

Activist investing is not new, but for whatever reason, hedge funds ratcheted up what we call "cage rattling"
last year. The norm goes something like this: 1) A hedge fund builds up a large stake in a company by buying
stock on the open market because the fund feels the stock is undervalued; 2) The fund approaches
management and the board of the company and offers suggestions about how to "unlock" the value of the
stock; 3) Management and the board ignore the fund, though in a non-combative way; and, 4) The hedge fund
gets tired of being jerked away, and publicizes its "cage rattling" through an SEC filing (usually attaching letters
that it has sent the company's management and board).
In some cases, companies capitulate, mostly because other investors have latched onto the ideas put forth by
hedge funds and begun demanding change. In other cases, companies will battle hedge funds, hoping to
eventually shake them out as investors. Regardless of the eventual outcome, hedge funds need public
relations people because companies inherently have a public relations machine built into their organization.
While hedge fund managers complain in SEC filings and on conference calls, companies are utilizing their
public relations resources to work the media and investors. One good example of the company-versus-fund
public relations mentality is Time Warner.
Last year, billionaire corporate raider Carl Icahn built a more than three percent stake in Time Warner. In doing
so, Icahn began demanding a number of changes, including a massive stock buyback and a better
monetization of Time Warner's AOL asset. Time Warner gave in partly, announcing a $12.5 billion stock
repurchase. (FYI, stock repurchases help companies boost earnings by giving existing shareholders more
equity for their shares; i.e., existing shares become more valuable because there are less shares outstanding
when the company buys back stock.) Time Warner, however, didn't do everything that Icahn asked.
When Time Warner announced a wide-ranging pact with Google, Icahn was seemingly furious, warning the
company ahead of the deal that it was making a mistake. Time Warner, with its PR machine in full gear,
basically blew off Icahn, who was working the media in his own way. The end result was a deal that Time
Warner wanted and was generally hailed for, and a deal that Icahn apparently hates. At last check, Icahn was
having difficultly finding potential candidates for a reconstituted board that he wants to install at Time Warner.
Negative PR towards Icahn, no doubt, has contributed to this difficulty.
Attracting hedge fund clients is certainly not easy, but I believe a persuasive case can be made that hedge
funds need to begin exploring spending some money on PR. The best pitch is a simple one: You want to make
money, and we can help you do it. That's a proposition even the most secretive hedge fund manager should
listen to.
To contact Richard Dukas regarding hedge fund public relations services or to answer any questions
you may have you may email him at Richard@DukasPR.com or visit his website at http://DukasPR.com.

Press Release Contacts

One year ago I knew nothing about press releases. Realistically today I still couldn't hold a candle to the
knowledge of a public relations professional but I have learned a lot. One thing I learned was that it costs a lot
of money to obtain contact details for magazines, newspapers, and radio stations. I guess I should say it CAN
cost a lot of money, or you can get them for free. You can spreadsheets stuff with media contact details posted
on public websites all over the internet.
You can find these by searching for Excel spreadsheets using Google. Try typing in "pr media contacts
filetype:xls " within the Google search field. Your first result should be a list of media contacts for the state of
Washington.
I performed over 300 of these Google searches and compiled a database of over 20,000 potential press
release contacts at major newspapers, magazines, radio stations, and television stations.
Is this ethical? I always ask myself two questions to figure out if my actions are ethical or not.
1. Would I mind if my actions were put on display in the NY Times?
2. Would I mind if I was on the receiving end of the action I am about to take
In this case I would not mind if the NY Times wrote up an article on this tactic and I only intend to contact these
media stations and outlets if I have a relevant press release for them.
Why am I sharing this knowledge? Isn't having this list of 20,000 media contacts valuable to keep to
myself? Knowing how to do something is much different than going through the dozen hours of work it would
take to re-create this process. I hope I can help out a company I work for or a friend with a PR campaign some
day with the work I did to create the list. Let me know if you are potentially that person.
For the basics on writing a press release please see: http://www.publicityinsider.com/release.asp
For press release newswire services see http://www.PRNewsWire.com
To search for other filetypes simply add "filetype:txt" or "filetype:ppt" etc. into the search.
Hedge Fund PR
Quick Link: Hedge Fund Public Relations
I am currently looking for more guest article writers for my hedge fund blog. I am looking for concise advice, pr
advice, knowledge sharing, statistics, analytics, or strategy definitions. If it helps a financial planner, investor,
or consultant understand hedge funds better or identify a new trend then I am interested in publishing
something on the topic.
If you would like some free hedge fund PR exposure for your firm or an internship doing research on the hedge
fund industry please let me know by sending me an email.
If you are looking for a hedge fund public relations (PR) expert please also let me know. I know an experienced
and well connected professional in the hedge fund industry.
Financial PR Tips for Hedge Funds

I read a recent article by Bill Blasé within the Emerging Manager Monthly Newsletter. Here are the tips that I
gleaned from this article:
TV viewers and interviewers love contrarians, conflicting views make for interesting television
Take a pass on issues where you are not an expert and don’t have any value-added insight on the issue
Media appearances might not bring in a windfall of new business but a well coordinated PR plan combined
with grass roots relationship develop and an online presence can be very effective
Michael Barron who is the CEO of Knott Capital Management commented in the article, “Everyone knows
the Fidelitys, the Putnams and the rest of the larger firms in our industry. For some of the smaller firms,
this is aw ay you can build recognition and credibility
Ignore the monitor and the audience, imagine speaking to a single viewer
Maintain eye contact with the interviewer and not the camera
Speak slowly and match the interviewers tone and pace
Short brief 30 second sound bites are ideal for TV appearances
- Richard
Financial Public Relations

Guest Article: Financial Public Relations
Below is a guest article provided by Dukas Public Relations. It focuses on financial public relations and how
some hedge funds are using PR experts to help them navigate the waters of mainstream media outlets.
While it is illegal to promote hedge funds, there are ways to indirectly do so. And the SEC is considering new
rules that could allow financial PR groups more room to maneuver.

Hedge funds, one of the fastest-growing corners of the financial industry - one insider calls them the new dot-
coms - remain an elusive domain for Public Relations experts. Vaguely understood by the public, largely
unregulated by the Securities and Exchange Commission (SEC), and dabbled in by only wealthy or institutional
investors, the $850 billion hedge fund world does not lend itself easily to publicity.
For one thing, promoting hedge funds is illegal: Only investors accredited by the hedge funds are allowed to
get information about them. If a fund is promoted beyond accredited investors, the SEC can halt money going
into it and even level sanctions.
Hedge funds are the purview of large financial investors, like investment banks, and the well-connected
wealthy who can stomach sharp windfalls. Like mutual funds, their regulated cousins for the common man,
hedge funds pool investors' money and then invest in generally high-yield instruments.
Without much oversight, pretty much anything goes - financially speaking - when it comes to this investing,
according to the SEC, including speculative practices like leveraging that can amp up the risk of big losses. All
such funds have high investment minimums - at least $1 million in many cases - that keep them within the
domain of accredited investors legally allowed to play their investments close to the chest. Many now are
becoming part of retirement funds.
The SEC estimates that hedge fund assets have exploded 15-fold since 1993. A Factiva search of "hedge
funds" turned up 30,720 media mentions in the 36 months from January 2000 through December 2002, but
34,201 mentions in just the last 19 months. Still, hedge funds seem secretive to the public, says one financial
expert, and even to the business media.
"I think there's a perception by the general public that hedge funds are opaque, secretive, and mysterious,"
says George Lucaci, MD of capital markets at hedgefund.net, a web source for hedge fund news and
performance data. "And unfortunately, the media has propagated that myth."
"There are rules to how much you can say and when, so they have not traditionally done [Public Relations],"
says Howard Zar, IR partner at Porter Novelli, of hedge fund managers.
How, then, do the funds promote themselves? They do, in fact, find ways to use Public Relations - though
staying within the bounds of the law is tricky. And if proposed rules by the SEC are passed, they might be
using financial public relations firms even more.
Promotional tactics
The promotion of hedge funds is different from other financial public relations efforts and it demands one rule
of thumb, really: They can't advertise or engage in general solicitation. Because only accredited investors can
come on board, usually hedge fund managers seek out investors among people they know - family, friends,
colleagues - and wealthy people, as well as institutional investors.

Still, hedge funds can take two approaches to, in a roundabout way, promoting themselves.
Hedge funds can publicize the expertise of their portfolio managers if they also manage other registered
products. Those managers can talk up the company and the registered products - they just can't talk about any
hedge funds the company maintains. "One of the things you often find in hedge funds is people who have a lot
of expertise," says Zar. "So they can speak as experts and gain exposure for themselves."
A company also can promote registered products that are similar in management to the hedge funds - but,
again, it is not allowed to talk about the hedge funds themselves.
Richard Dukas, President of Richard Dukas Communications, a financial public relations firm that advises
hedge funds, gives an example of these promotional approaches in action. A hedge fund manager his firm
counsels, Keller DiLeo Cohen & Co., has about $500 million under management. It also handles M&A
arbitrage, and its CIO is an expert in M&A. When speculation over a merger between Disney and Comcast
swirled in June, Dukas' PR firm touted the CIO to the media for his expertise in M&A. Media reports involving
the CIO noted that he worked for a hedge fund manager, and the reports named the firm.
But the key, as Dukas and others point out, is that the hedge fund itself, such as its strategy and performance,
was never promoted - only the expertise of its CIO.
This promotion has a two-fold effect. The manager's name is out there, raising visibility and credibility for the
hedge fund, Dukas says, and it also bolsters the fund's reputation with existing and potential investors.
But one problem with this approach is the subjective nature of whether a company slides into promoting the
hedge fund. Promotion, in this case, is like the classic definition of obscenity: People know it when they see it.
The SEC does not define what it means by "general solicitation" or "advertising." And what those terms mean
to different hedge fund professionals seems to vary.
"There's no prohibition: Thou shalt not be quoted," says Michael Robinson, director of Levick Strategic
Communications in Washington, DC, and a former public affairs director at the SEC. "But you have to be
careful what you say."
Without clear guidelines, hedge funds must make their way carefully.
"There's not a uniformity of opinion here, but as a general rule, all of these interests and funds are privately
placed," says Eliot Raffkind, a partner at Akin Gump Strauss Hauer & Feld, a law firm based in Dallas and New
York that works with hedge funds. "There are no sort of black-line tests here under existing laws. So the
question is, at what point are you giving so much information to a reporter that you're engaging in general
solicitation or advertising? My view is you shouldn't be mentioning the name of your fund; you shouldn't give
any of the specifics of the fund."

Hedge Funds and Media Exposure
Hedge Fund Media Exposure & PR
Hedge funds are bared from advertising or marketing themselves to the

general public but they are often turning up in news stories. A report by Walek & Associates claimed that
hedge funds are mentioned in news articles over 100 times day, and over 39,000 times/year. This analysis was
using data from 2005 and it does not include electronic newsletters or blogs. With 2008 numbers and the
inclusion of blogs I would guess that hedge funds are mentioned in close to 1,200 articles each day.
 Armel Leslie from Walek & Associates recommends that hedge funds heed the following advice when it
comes to manging their PR exposure:  - Understand what the press wants and how they operate - Have your
own agenda and message every time you talk to a reporter - Build and maintain relationships with key media -
Try to avoid “no comment” - Assume everything is “on the record”  Most of that seems pretty Mickey Mouse
but it is good advice as most hedge fund professionals have no PR training or experience and it can be an
introduction to new investors or employees if managed right. Some people think that hedge funds are now
choosing strategies in part which have a natural ability to gain a lot of attention from the media, it helps them
build a brand and find new investors. Who hasn't heard of Citadel?  Third party marketing firms, hedge fund
sales professionals and PR consultants who have real proven expertise in hedge fund media relations are
worth more than they are usually paid. I would like to start a discussion around hedge fund pr strategies, trends
and research. Do you have a few great or painful experiences that others can learn from? If anyone has a
comment or question please share it by emailing me.
Hedge Fund Capital Guide Part I
Hedge Fund Seed capital is the money a hedge fund tries to raise to launch or within it's first year of operating
to try to get it off the ground" and hopefully raise enough assets to appear respectable to initial investors and
provide initial momentum towards breaking even as a business. Hedge fund seed capital is in high demand,
there are literally hundreds of investment groups looking for it right now and only three or four handfuls will
receive any significant amount of it. Some hedge funds are seeded with as little as $500,00 while others

receive up to $350M. From my experience I would guess that 68% of first year hedge fund seed capital levels
range from $3M to $25M.
Hedge Fund Seed Capital Sources

Hedge Fund Seed Capital Source #1: High Net Worth individuals (accredited investors) who are familiar with
your trading skills, past portfolio management experience, or clearly understand your competitive
advantage in the marketplace.
Hedge Fund Seed Capital Source #2: Family & Friends who are accredited investors.
Hedge Fund Seed Capital Source #3: Private Equity Firms. Many private equity funds have jumped into the
space of seeding hedge funds and many will in turn work on raising assets for your fund once it will
benefit both your fund and themselves.
Hedge Fund Seed Capital Source #3: Hedge Funds. Some hedge funds have huge amounts of free cash
flow and are looking for ways to re-invest it within strategies they understand and do not directly
compete with products that they plan to create on their own.
Hedge Fund Seed Capital Source #4: Associated banks or investment networks will often seed new hedge
fund products they are launching with significant levels of capital. Hedge Fund Seed Capital-Related
Trends
If you read hedge fund news every day you will notice several trends emerging in the area of hedge fund seed
capital. The most prominent is as mentioned above many private equity firms are aggressively placing seed
capital with emerging hedge fund managers. The second is that most of hedge fund seed capital is coming
from established hedge funds and private equity groups or investment banks. I believe that the banks are
succeeding in convincing a small fund to give up 20-40% of equity in return for the funds because they also
come with marketing and distribution resources that will make the total pie of available fees much higher. Many
hedge fund managers have become millionaires after accepting outside seed money or an equity investment.
Hedge Fund Capital Introduction
Quick Link: List of Hedge Fund Prime Brokers
Capital introduction is usually the phrase that refers to the introductions that prime brokerage houses will make
on behalf of their money managers to help raise their assets under management. Some prime brokerage
houses will have several capital introduction professionals in house or a whole team dedicated to the work.
The prime broker gets paid through trades made by the manager so the more assets they have under
management the more they will get paid each quarter on those larger trades.
Most capital introduction professionals are paid on salary and bonus on overall trading activity and not on
earning a percentage of fees from assets raised like a third party marketer. Capital introduction services have
came under some scrutiny lately and there are talks of it going away completely due to a conflict of interests.
Below are three links to help you learn more about capital introduction services in general.
(If you are looking for a prime broker, capital introduction, or third party marketing services let me know and I
can help you network and find a group that might work well for your situation.)
Raising New Capital

Raising New Capital During the Crisis
(http://HedgeFundBlogger.com) While many firms are hurting performance-wise I have spoken with over a
dozen in the past 3 weeks still pushing capital raising efforts forward and showing positive performance so far
for the year.
Many managers are referring to this as a Darwinian process of weeding out those funds which did not have
strong risk controls in place. To be fair I think most funds had consistently applied risk controls in place to
weather "regular" market volatility and fluctuations and not movements which associate the time with the great
depression.
The hedge fund industry is not going away. When Soros mentions that the industry could shrink by 50% he
fails to add in that most of that same capital will jump right back into other hedge funds or alternative
investments within 3-5 months. There are many funds which will come out of this very strong. For some hedge
fund managers this could be a great opportunity to move from the $300M-$500M range to the $1-2B under
management realm where they may be considered for more institutional allocations. Here is a short article
excerpt on a few hedge funds, which are still raising capital.
Like most of their hedge fund brethren, Steven Cohen, David Einhorn and Paul Singer are facing redemptions.
Unlike other hedge funds, however, they are able to replace it.
Faced with investors withdrawing big chunks of change, the high-profile hedge fund trio have reopened funds
long closed to new investors and have raised billions of new dollars to replace the unhappy investors heading
for the doors. Singer’s Elliott Management Corp. has raised $3 billion in the third quarter, and plans to raise
another $1 billion, Bloomberg News reports.
Of course, it’s easier to raise new money when you are making money, as is Elliott, which has returned about
6% this year. Likewise, Brevan Howard Asset Management’s Brevan Howard Macro Fund, which is up 17%
this year, has more inflows than outflows, according to Bloomberg. Read More...
Raising Capital
Why do most salespeople fail in hedge fund sales? Here's one take:
44% of all salespeople quit trying after the first call
24% quit after the second call
14% quit after the third call
12% quit trying to sell their prospect after the fourth call*
This means 94% of salespeople quit before the fifth phone call while 60% of all sales are made after the fourth
call. This means that the overwhelming majority of hedge fund salespeople probably don't even give
themselves a shot at selling their products.  *Data from Herbert True, a marketing researcher at Notre Dame
University
Mid-day Update: Funny story, I wrote this post at 6AM this morning. I just got back from lunch and caught a call
back from a financial advisor I have emailed once and left 5 voicemails for over the past 6 months. I had heard
nothing and now he is interested in investing in one of our products. Tenacity paid off this time around.

Seed Capital Funding
Many hedge fund managers open their business with one or two seed
capital investors, this funding could come through a formal seed capital
program with an established institution such as a bank or seeding
platform, a fund of fund or private source that likes to stay off most
people's radar screen. Many of you already know of the Hedge Fund
Group (HFG) and the connected hedge fund forum at
HedgeFundMessageBoard.com. Last week I had someone post a list
of hedge fund seed capital sources that I wanted to re-post here for
everyone's benefit.
Seed Capital Funding Sources

Asset Alliance http://www.assetalliance.com/
BRI Partners http://www.bripartners.com/
Capital Z Investment Partners http://www.capitalz.com/
Fairfield Greenwich Group http://www.fggus.com/
Focus Investment Group http://www.focusinvestmentgroup.com/
Fortune Asset Management http://www.fortune.co.uk/
FRM Capital Advisors http://www.frmcapitaladvisors.com/
FrontPoint Partners http://www.fppartners.com/
Hardt Group Advisors http://www.hardtgroup.com/
HedgeCo Investments http://www.hedgecoinvestments.com/
JPMorgan Incubator Strategies http://www.jpmorgan.com/
Larch Lane Advisors http://www.2100capital.com/
M.D. Sass-Macquarie http://www.mdsass.com/
Man Global Strategies http://www.maninvestments.com/
Protégé Partners http://www.protegepartners.com/
RMF Hedge Fund Strategies http://www.rmf.ch/
SkyBridge Capital http://www.skybridgecapital.com/
Weston Capital Management http://www.westoncapital.com/
Blackstone - http://www.blackstone.com/maam/fund_hedge/team.html
There are over 100 other threads un-related to seed capital on HedgeFundMessageBoard.com and many
consultants, analysts, hedge fund managers and academics visit the site frequently.
Hedge Fund Seeding

-Hedge Fund Seeding Capital
A recent study showed that hedge funds receiving seeding and operational assistance outperform broad hedge
fund indexes and average hedge fund performance figures. This study was completed by George Martin and
Joseph Pescatore from the University of Massachusetts and Jefferies Asset Management.  Pescatore makes
the point that in the past there was a somewhat negative connotation to discussing how a hedge fund may
have received seed capital or operational support during their firs 3-5 years of operation. Specifically he said,
“The question investors asked a hedge fund manager, ‘if you are any good, why do you need these guys?’ I
think not only has it changed, I think that has completely reversed.” It seems that Pescatore now believe that if
you are “that good” you should have money being thrown at you from multiple hedge fund seeders.  While
some people may not be as positive as Pescatore on seed capital being a good thing, I believe the general
feeling is if you aren’t tied down by stringent terms or pressure that impact your investment process as the
result of the seed capital or support than it is a positive thing and only bolsters your business showing a vote of
confidence by an outside firm.  - Richard
Raising Capital - Clues for Success

A recent article in the Investment Management Weekly discussed what hedge funds need to do to continue
raising capital from institutional investors. The general view of the whitepaper they produced suggested that
hedge funds will need to continue to adapt their business models and approach to communicating their
investment process to the interests and concern of institutional investors if their strong growth in raising capital
is to continue. Paul Schaeffer, the managing directory of strategy and innovation for SEI was quoted as saying,
“The hedge fund industry must recognize that the large institutions have a distinct set of demands concerning
issues such as the quality of infrastructure, transparency and risk.”
Some of the stated differences in raising capital from institutional investors instead of high net worth investors
included:
More attention is sometimes initially paid to strategy offered than the individual hedge fund managers
Longer hedge fund due diligenceprocesses and investment horizon
More heavy utilization of outside consultants to help evaluate hedge fund managers
Growing concern over hedge fund risk management and “headline risk”
Strong preferences for transparency of the hedge funds investment process and tools applied to it
More likely to invest in $100M+ or $500M+ hedge funds vs. smaller boutique shops
I think the most interesting part of this article was the fact that it reported that over 85% of those interviewed
said they would not invest in a strategy that they don’t full understand, and 80% said it was critical for
managers to focus on the fund’s original strategies.
Motivational Sales Quotes
I am creating this blog entry to capture all of the best sales quotes that I hear while reading books and having
discussions with other sales professionals. I will be updating this blog at least once a month with new
entries...let me know if you have any great ones. You might see a lot of quotes from Jeffrey Gitomer. He was
my inspiration in writing my first book and I will get to meet him this September when he comes to Boston for a
seminar workshop.
"The Harder I work the Luckier I get"
“Every morning in Africa a gazelle wakes up. It knows it must run faster than the fastest lion or it will be killed.
Every morning a lion wakes up. It knows it must outrun the slowest gazelle or it will starve to death. It doesn't
matter whether you are a lion or a gazelle -- when the sun comes up, you had better be running.”
The key is not to "call the decision maker." The key is to "have the decision maker call you."
- Jeffrey Gitomer
Psychology of Sales Call

Reluctance
It would be interesting to learn more about the psychology of sales call reluctance. There are some days where
I am just "on" and I can make 50 calls and initiate some great relationships and then there are days where I
make a decent amount of calls but I find myself drifting towards less productivity activities like cleaning out my
emails or organizing my past prospect research.
The four tips I can suggest to minimize sales call reluctance are:
1. Have a winning positive attitude as described in my post on positive psychology
2. Write out all of your goals on paper. Keep a running list of all 10, 50, or 500 of these on your computer
reviewing and adding to them each month.
3. Realize that most people do know what they want and even more do not want to pay the price of earning
what they want even if they do know what it is. If your job includes building relationships chances are
you need to be paying the price daily by jumping on the phone for a few hours.

4. Choose a moment of time where you felt completely confident, successful, and rewarded for something
that you accomplished and really earned. Picture this moment in your mind and re-live it as if it were
happening again right now, replay it in your mind. Now try bringing this picture to the forefront of your
thinking each morning before you start on your calls or whenever you are not motivated to jump on your
next call instead of searching for a pair of Red Sox tickets on Google.
Note: It has been brought to my attention that my title for this blog is also the title of a great book on the topic
written by George Dudley. This connection was not intended but I thought it was only fair to cite this book as a
resource for those how want more information.The Psychology of Sales Call Reluctance: Earning What You're
Worth in Sales
Cold Calling Tips
Cold Calling Tips and Advice
1. Don't ask the prospect "How are you doing." You don't care how they are doing. If you cared you would have
done some research on the company first and you would have something more intelligent to ask them. Might
sound harsh but it is true. Do your homework first.
2. Keep in mind that thousands of people cold call and several people are probably calling the same or very
similar prospects as the ones you are approaching. Everyone plays the number game and it is natural to not
have your calls or emails returned. The goal is to develop enough perceived value so they will take your call
the next time or call you when they are ready to buy your product or service.
3. Shoot for 30-80 phone calls a day. More is not always better but trying to do 6-10 calls an hour will keep you
on your toes and always dialing more prospects. Create a game out of the process.
4. Smile while you dial. The tone of your voice and word choice both change based on your own feelings and
facial expressions. Be happy and love your job and the people on the other end of the phone will take notice.
5. Call the CEO. Always call the CEO. They are the masters of every other department and if a call or email
gets forwarded from them down to a VP or Dept. manager it is much more likely to get responded to then
coming in through an analyst or associate with the firm.
6. Set the table. This is a point Brian Tracy makes in the book, "Eat That Frog." Sit down every night and take
20 minutes to plan out your work for the next day. Break the day into 30 minute sessions of complete focus
completing your most important tasks before most people even get to work in the morning.
7. Prepare a standard email that you send out before you call. Anyone can send a great follow up email to a
phone call, the trick is getting the prospect on the phone in the first place. Don't have them not take your call
because they do not know who you are. Email the prospect introducing yourself and why you would like to
have a 5 minute conversation in 3-5 sentences or less and call 10 minutes after sending the email out.
How to Have a Positive Attitude
Positive Attitude Tips
Today I had one of my best investment sales day ever. I found over a dozen strong leads and possibly landed
a couple of new investors for the fund that I am promoting. Why did this happen? Earlier this week my boss
had been traveling and my I felt like I wasn't getting anywhere. I completely changed my attitude and now the
opportunities in front of me at work are almost overwhelming.
I have studied in my Psychology of Influence class at Harvard that negative thoughts can block creative or
even mundane solutions to challenges we face every day. I have also discovered that the unconscious part of
our brain grinds away on problems that we are facing and know we have to conquer. Scientific studies have
shown that successful professional athletes use more positive self-talk than non-professional athletes. In one
of Jeffrey Gitomer's books he talks about seeking mentors early on in his sales career. One employee at his
company had only started working in the industry 1 year ago and was the company's #2 salesman out of a
group of over 200 people. Gitomer asked him how he did and he said that one thing he did differently from
everyone else was tell himself over 100 times a day "I am the best. I am the best. I am the best..." I don't
believe that simply saying these words will make you the top salesman at your company but I do believe that
having that strong of a positive attitude improves all of your relationships, your positive self-talk, and ability to
come up with creative win-win solutions on the fly.
Here is how I try to have a positive attitude:

I have several 3-4 minute motivational podcasts or audio book clips on my ipod that I can listen to on the

way to work
I Workout at least 3 times a week
I read 15 pages of attitude changing articles or books every morning while I am eating breakfast. (see Jeffrey
Gitomer's Little Yellow Book of YES!Attitude)
I have created a 1 page lamented page of the top 50 business and sales lessons I have learned and I have
posted it in my shower, on my bathroom mirror, and behind my desk at work. I do my best to read this
list twice a day to remind myself of what is important.
I set BHAGS for myself. BHAGS are Big Hairy Audacious Goals as described by Jim Collins in Good to
Great. My current BHAGS? I want to become THE expert in investment marketing and sales, run 50
investment websites that rank in the top 3 slots of Google search results, and become a best selling
author.
I try to find a lesson to be learned from each "negative experience." If nothing else a negative experience
should always tell you something about yourself.
I am always learning and exploring something new. It was getting into Harvard and moving to Boston, now it
is learning all I can about investment marketing and sales, the psychology of influence, and web
marketing. As soon as you stop being curious and challenged you become stale and un-motivated.
I cut off or drastically reduce communication with negative people.
I don't watch the local news. It is worthless. How often do you see a news story about a generous church
donation, a child winning a science project award, or a organ donor saving someone's life? Not nearly
as often as a plane crash, fire, or robbery. If you have to get the local news read it online for 5 minutes
and save yourself some time.
I am taking a four month course on Positive Psychology this spring that should be very interesting. I will be
updating this blog with those details as soon as I can. Let me know if you have any other great tips on keeping
positive attitude or using self-talk.
Sales Phone Call Tips

I make an average of 25 sales phone calls every day.
I often call 40-60 people but on other days I might only reach out to about 10.
What is interesting about making all of these phone calls is listening to how differently people sound and react
during these conversations.
I am writing this blog entry because today I called someone who was unqualified, it turned out that their
company didn't even provide the type of service I was hoping to discuss. I made a joke about sending him a
personal check or paypal payment to provide me with the type of contact I needed to connect with and it
worked. I was not trying to be manipulative by forcing myself to be funny to get information, I just made a dumb
joke. Even after this was obvious this individual asked me what I needed and ended up connecting me with a
very valuable contact. He also asked where I lived, where I grew up, and if I had a wife or any kids. I was
shocked, not while talking to him but after I hung up. In 8 months of making over 600 phone calls I have never

once had someone be so friendly and upfront like that. It was a refreshing change from the monotone burnt out
tone of voice I usually end up listening to. What is important is not what happened during this phone but after I
realized how valuable of a contact he had given me. I felt strongly obligated to thank him or re-pay him in some
way.
This has taught me to always see the humor in situations and give value away freely to those in need of help.
One un-related sales phone call lesson I have learned is that if you have highly qualified the END person that
you are trying to reach they will be happy to talk to you because your service is relevant to them and necessary
for their success.
Hedge Fund Tips:

Anyone who has the ability to successfully navigate the many channels of capital within the hedge fund
industry is worth their weight in gold (and that’s rising every day). There are two major components of
marketing and selling a hedge fund which each take constant attention and refining.
Understand the DNA of the many distinct distribution channels open to hedge funds for raising capital and
Having an electronic hedge fund of fund of hedge fund database of the right people to call on within those
channels.
While some people develop their own databases from scratch this is often a long painful road with many days
spent leaving voicemails with firms that have gone out of business, merged, switched investment focus or
charge too high of fees to work with. This has led to many hedge funds investing in fund hedge fund databases
that are automatically updated with half a dozen pages of information on fees, structure, management
information, etc. This trend with hedge fund databases goes along with the “outsource everything that is not
our core competence” model that many both emerging managers and $1B+ players have taken.
9 Fund of Hedge Fund Database Tips
If you need a list of hedge fund of funds or are thinking of purchasing a fund of hedge fund directory or
database here are my top 9 tips:
Take the time to call or at least email the firm who offers a fund of hedge fund database, these will
sometimes be referred to as fund of hedge fund or fof directories.
Only work with well known, reputable firms that specialize in providing hedge fund databases or hedge fund
of fund databases. Avoid small shop fly-by-nighters at all costs
Take the time to really get familiar with the information provided within the database, ask for a sample of
what the information will look like. It really is an investment that could save you literally thousands of
hours IF you pick the right hedge fund database for your business model. See a Hedge Fund of Fund of
Hedge Fund Database Sample.
Ensure that the database is updated at least once a quarter, contact details and firm information gets old
very quickly.
Expect to pay $750-$8,000 for a high quality hedge fund database, many cost around $2,800 while others
can cost up to $30,000/year. Be sure and know the trade-offs of buying a physical database versus
subscribing to one online. If you don't have a hard copy of the data in Excel or Access format you may
not be able to use it once a time-based subscription expires. For some firms this is fine, for others it
would be a costly mistake.
Make sure the hedge fund database you use is compatible with your systems. Do you use SalesForce? Act?
Goldmine? Excel? Word?(lord help you)
While you are kicking the tires of your potential new hedge fund database make sure it has complete
information on a firm. You don’t want to call a firm asking if you can send over your PowerPoint
presentation only to find out they are really a competitor or a division within another firm you called that
same day.
Don’t steal a database. This may sound obvious, but it is common for employees to copy parts of a database
for later use or use some other un-ethical means of obtaining database details. Don’t, it is not worth it.
Always take the high road and you can stand behind every action you have ever taken.
This list only contains 9 tips instead of 10 because this one is worth more than the rest combined. Ask hard
questions when you are buying fund of hedge fund database. Ask how often your database details will
be updated. Ask exactly how many hedge funds are updating their information. Some databases will
say that they have details on 9,000 hedge funds while the reality is that some of them haven't updated
their information in 4 years...make sure all of the data is being updated at least once a year.
Let me know if you have any extra tips you think I should add to this list. You may comment below, append this
list within your own blog or email me at Richard@RichardCWilson.com. If you are interested in buying a fund
of hedge fund database they are offered by Pinnacle, Brighton House and Barclays.
details on third party marketing within the Hedge Fund Marketing Guide. 

Hedge Fund Ethics
In the hedge fund industry you have one name and one reputation. If you ruin that you
could have influential people in the industry refusing to do business with you for 15-20
years after their initial opinion is formed. In such a competitive close vested industry
where large profits can be made the temptation to cut corners or look past fiduciary
duties is sometimes too much.  The FBI recently had agents posing as a Florida-
based hedge fund manager to nab 10 individuals in 5 kickback schemes connected to
securities sales. The SEC charged 10 individuals and the U.S. Attorneys office
charged six with criminal offenses.  In each case the posing hedge fund manager told
the targets that their actions must be kept secret because it violated his fiduciary
duties, making it explicitly known that what was going on was illegal and un-ethical. “This case illustrates the
Commission’s ability to work together with criminal authorities in creative ways to uncover fraudulent schemes
and to protect our markets,” Linda Chatman Thomas, the head of the SEC’s enforcement division, said.  
Bottom Line: If you are smart enough and hard working enough to be successful then you don't need to ever
cut corners and blatantly break securities laws. Innovation and relationships are the competitive advantage that
should make you extremely profitable, not cheating the system.
Using White Papers in Sale

Many sales books and prospects alike say that white papers can help engage potential customers and provide
value first while also positioning yourself as an expert in your field. If this is true why aren't there more white
papers on your industry?
Most people aren't great writers
Most people don't see the value in writing and sharing expertise.
Most people don't believe they have time to write.
Some people who are technically qualified on writing white papers aren't experts in marketing and sales so
they may not get their work widely distributed.
Maybe there are many white papers out there and you haven't seen them yet. Do some niche specific
searches on Google to check what your competitors have written first. Develop unique content and
insights for your white paper but steal the non-trademarked or copyrighted styling and organizational
best practices of the white papers you find for your own use.
This is great news for you. If you are willing to do the hard work you can stand out as an expert and you will in
fact become an expert learning more about specific niche topics than many of your competitors.
What is a White Paper?
White papers are opinion pieces that educate, state a position, suggest a solution to a problem, or introduce a
new technology or process.
Parts Of a White Paper
Abstract
Problem Description (2-3 paragraphs)
New class of products
Product's use in solving the problem
Conclusion
White Paper Writing Tips

If you don't engage the reader within the first paragraph they will never read the rest of your white paper.
Focus on pains of the reader, describe those pains and explain the further consequences of the current state
of business. This will help you connect with the qualified prospects who you are targeting.
Focus on education and not self-serving press release information
Write objectively use facts, quotes, statistics, and surveys where possible

Keep your white paper to between 3-4,000 words. 2,000 words seems too skimpy sometimes and anything
longer most people won't read.
Creativity & Marketing
This chapter presents concise practical methods to help you become more creative. It will cover the creative
process and while also suggesting 6.2 practical tools to increase your creative abilities. This chapter uses
scientific research studies and direct knowledge from marketing and sales professionals to help you
differentiate yourself and your product or service.
Why Study Creativity?

Psychology experts, innovation consultants, and sales professionals all agree on one thing, you can learn to be
creative. Most people would agree on a scale of 1-10 that the value of creativity would be rated as an 8, 9, or
10. If asked how creative you are how would you rate yourself? How would your co-workers rate you? (Gitomer,
2004). Research studies have noted that in a group of 20 people only 2-3 participants will say they are a
creative person yet this is a learnable skill that virtually everyone values. Around 10% of us see ourselves are
creative and even those few individuals report a general inability to be highly creative during the 9-5 workday
(Mostert, 2007). Part of this problem might be that the extrinsic demands and pace of work does not allow your
brain time to look at the big picture and ponder on large challenges at work. This chapter will help you come up
with more creative ideas and enable you to discover and refine those ideas faster than you could before.
Psychologists distinguish between two types of thinking, divergent and convergent. Divergent thinking is
generally thought of as being closely related to creativity with thoughts diverging into a wide variety of topics or
associations. Convergent thinking brings together information focusing on a problem that usually has only one
correct solution. The stages of creativity include preparation, incubation, illumination, evaluation, and
elaboration. You can see in Table 1 that the ability to think in both convergent and divergent fashions is
required to maximize the value of your new ideas (Carson, 2007). Switching between convergent and
divergent modes of thinking is not easy for most people, but creative aides such as the creative tools
suggested below can make the process easier (Parnes, 1975).
Creativity Tools
Highly creative people make more remote associations and come up with more unique solutions that the
average person (Gruszka, 2002). These creativity tools can help increase the number of remote associations
you make, direct your thinking, save you time, and add value to the final solution you choose to address a
challenge. This list of tools is not original or exhaustive but it is valuable as a starting point for increasing your
creative abilities as an investment marketing professional.
The tools in this chapter include:
1. Hiring and Managing for Creativity 2. Enhancing Creativity
3. SCAMPER 4. Idea Quota 5. Mind Mapping 6. Future Fruit 6.2 Sharpen Your Saw
Creativity Tool #1: Hiring and Managing for Creativity

One way to enhance creativity at your firm is hiring creative people. Common traits among highly creative
people include intelligence, intellectual curiosity and preference for complexity, novelty-seeking,
unconventionality, absorption in work, assertiveness, drive, self-assuredness, and perseverance. This list of
traits can be used to either identify people who are more likely to be creative than the average person.
Once hired, the most effective way to increase each employee’s creativity is to let them work on something
they love. Research has shown that intrinsic motivation seem to be highly correlated with a high creativity
output (Carson, 2007). Part of their job description should be written by the employee it governs and directs.
Allow them to seek out solutions to company or industry challenges that are intrinsically rewarding (Sternberg,
1998). A great example of this idea in practice is Google. This firm allows each and every employ spend 20%
of their work week on innovative product, customer service, and sales ideas. This has provided the company
with a hard to replicated competitive advantage.
Creativity Tool #2: Enhancing Creativity
There are 9 scientifically grounded factors in enhancing creative achievement. These include:
1) Purpose
2) Basic skills
3) Domain-specific-knowledge
4) Curiosity
5) Motivation
6) Self-confidence
7) Willingness to take risks
8) Self competition
9) Creativity aides
Not all of these must be present and they are not of equal importance but each usually plays a role and can
contribute to creative results (Sternberg, 1998)
Jeffrey Gitomer is an internationally recognized sales expert and author. His research and feedback does not
come from controlled scientific studies but from trial and error while toiling as a low level sales associate for

years before his hard work and creative selling techniques earned him millions of dollars as a sales executive
and eventually CEO. He has trained thousands of sales professionals on implementing his creative methods of
selling and believes the following 13.5 elements are important factors in your creative success*:
1) Brains
2) Positive Attitude
3) Observing
4) Collecting Ideas
5) Self Belief
6) Support Systems
7) Creative Environments
8) Creative Mentors and Associations
9) Studying Creativity
10) Studying the History of Creativity in your Industry
11) Using Creative Models
12) Open to Risking Failure
13) Seeing Your Creativity in Action
13.5) The Ridicule Factor
*(Gitomer, 2004)
All 13.5 of these elements directly tie into at least one of the 9 scientifically researched methods of creativity
enhancement; confirming that the scientific research on this subject is very relevant to investment marketing
and sales professionals in the field. Many of these factors of creativity mentioned by both Sternberg and
Gitomer can be changed and addressed individually to increase your creative potential.
Equally as important as enhancing creativity is identifying feelings or processes that may limit creative results.
Research shows that the following can block creativity: fear of failure, fear of success, guilt, shame,
overcoming fantasies, stubbornness, fear of loneliness, and identify issues (Bernard Golden, 2007 as

referenced by Carson, 2007).
“Seeing a great idea is one thing – HAVING a great idea is another. Big difference between the guy that
invented a pet rock and the guy that bought one. One (the inventor) is a lot more fulfilled (wealthier) than the
purchaser.”
Jeffrey Gitomer
Creativity Tool #3: SCAMPER
One of the most widely used creativity aides is SCAMPER. SCAMPER stands for Substitution, Combination,
Adaptation, Modification, Putting to other uses, Elimination, and Rearrangement. This is a list of different ways
you can think about a challenging problem in order to come up with new possible solutions. To use this tool
identify a significant problem that you are facing and apply SCAMPER questions to each step or small module
of the problem to see what new ideas you can come up with (Michalko, 2006).
Michael Michalko in his best selling book, “Thinkertoys,” provides a list of questions for investment marketing
professionals who want to use this technique. Consider the task for revamping your overall selling techniques.
First, you should break up the topic of selling techniques into 5-6 parts, one of which might be focused
exclusively on prospecting. Some SCAMPER questions that might help you come up with new prospecting
methods could include*:
What procedure can I Substitute for my current one?
How can I Combine prospecting with some other procedure?
What can I Adapt or copy from someone else’s prospecting methods?
What can I Modify or alter the way I prospect?
How can I put my Prospecting to other uses?
What can I Eliminate from the way I prospect?
What is the Reverse of prospecting?
What Rearrangement of prospecting procedures might be better?

* (Michalko, 2006)
Creativity Tool #4: Idea Quota
Use this tool to tackle your challenges and give your brain a workout every day. Thomas Edison and his
employees were always working with quotas. Thomas Edison held over 1,000 patents, his quota was to
register a new minor patent every 10 days and major patent every six months. Identify the one problem that
you would like to have solved in the next 3 weeks. Next, set a quota of writing down a minimum of three new
potential solutions to this challenge each day. This forces you to do three things. First it concentrates you on
what is most important on a daily basis. Second it forces you to come up with possible solutions while you are
in different moods, thought patterns, and possibly environments. Third, if you allow yourself to freely write
down ideas as they come it should produce potential solutions that build on previous ideas and would have
been difficult to discover without a structured process (Michalko, 2006).
Creativity Tool #5: Mind Mapping
Mind Mapping is a graphical technique that represents how your mind organizes information that relates to
problem solving. As a creativity tool it may allow you to see the where possible gaps or possible new
associations exist. The Mindmap is just for you so it doesn’t matter if the relationships between items are
confusing to others who view it. As long as you can make sense of it than it serves it purpose.
5 Steps to Mind Mapping:
Identify a problem you are facing and are having trouble solving.
Map out your thoughts and current insights on the problem. Focus only on keywords that will help you
remember the main ideas that your mind focuses on.
Take the point of a critic, analyze and study your map. If no ideas come to mind put it away for two days and
come back to it. If you do this a couple of times you will usually experience a moment of insight.
Focus on that piece of insight until it develops into a complete idea (Michalko, 2006)
Below is an example of a mind map that a Vice President of a light bulb company drew. He diagrammed the
system of 4,000 distributors that his firm worked with as it appeared in his head.

This map showed him where more information might be needed and also where opportunities might exist. This
led him to think about his business in many new ways and helped him form his breakthrough idea: energy
management. A new division of the company was created around this theme and it led to a huge increase in
sales. The Vice President later remarked, “The map led to a cascade of ideas that motivated us to act and
create a whole new division (Michalko, 2006).”
Creativity Tool #6: Future Fruit
“In peace prepare for war, in war prepare for peace.”
Sun Tsu
In Thinkertoys Michalko suggests thinking of future profits as future fruit. You should have several alternative
plans for the future based on a number of probable and improbable events. Having only one possible outcome
of events planned for is like planting only one strawberry. The weather could get too hot, someone could come
eat your strawberry, or your strawberry could become diseased. If you plant multiple fields of strawberries you
will reap a harvest.
6 Steps to Future Fruit:
Identify a particular problem in your investment marketing business

State a specific decision that you will have to make
Break down what forces will have an impact on the decision. These could include economic, technological,
product lines, competition, regulatory, etc.
Build five scenarios with drastically different outcomes by varying the effects of each of the major forces of
influence.
identify business opportunities within each scenario you create and explore the links of opportunities you
identify across different scenarios. (Michalko, 2006)
Creativity Tool #6.2: Sharpen Your Saw
Creativity can be learned, become a student of it. Create a one page cheat sheet for creativity tools and other

process improvement tips that describes each lesson in 1-2 sentences. This will help you integrate best
practices and new methods of thinking and acting into your daily life. Laminate 5 copies of this piece of paper
for your desk, bathroom mirror, shower, and anywhere else you consistently spend time so you will be
reminded of them.
Summary
“Imagination is more important than Knowledge”
Albert Einstein
The tools listed above attempt to maximize your creative abilities through sparking divergent thinking and
revealing remote associations that might lead to new valuable investment marketing ideas. To become more
creative identify which areas of creativity enhancement you should be working on, identify current blocks to
your creativity, try using a few of the tools and see which ones work well for you, and become a student of
creativity.
References
• Allocca, M. A., & Kessler, E. H. (2006). Innovation speed in small and medium-sized enterprises.
Creativity & Innovation Management, 15(3), 279-295.
• Carson, S. P. (2007). Psychology of creativity professorHarvard Extension School.
• Gitomer, J. (2004). Creativity and selling. The little red book of selling (1st Edition ed., pp. 150). Austin,
TX: Bard Press.
• Gruszka, A., & Necka, E. (2002). Priming and acceptance of close and remote associations by creative
and less creative people. Creativity Research Journal,
• Michalko, M. (Ed.). (2006). Thinkertoys. Berkeley, CA: Ten Speed Press.
• Mostert, N. M. (2007). Diversity of the mind as the key to successful creativity at unilever. Creativity &
Innovation Management, 16(1), 93-100.
• Napier, N. K., & Nilsson, M. (2006). The development of creative capabilities in and out of creative
organizations: Three case studies. Creativity & Innovation Management, 15(3), 268-278.
• Napier, N. K., & Nilsson, M. (2006). The development of creative capabilities in and out of creative
organizations: Three case studies. Creativity & Innovation Management, 15(3), 268-278.
• Parnes, S., & Bondi, A. (1975). Creative behavior: A delicate balance. Journal of Creative Behavior, 9,
149-158.
• Rickards, T., & Moger, S. (2006). Creative leaders: A decade of contributions from creativity and
innovation management journal. Creativity & Innovation Management, 15(1), 4-18.
• Sternberg, J. R. (Ed.). (1998). Handbook of creativity.
• Tassoul, M., & Buijs, J. (2007). Clustering: An essential step from diverging to converging. Creativity &
Innovation Management, 16(1), 16-26.
Investor Relations:
Hedge Fund Investors

Attracting Hedge Fund Investors
I recently received this email...  Richard, I am involved in the management of a new hedge fund that we
started last year. Our hedge fund's strategy is a combination of stock and derivatives. Our goal is 30%+ growth
per year, and thus far, we are right on track. What I wanted to ask you is this: Are these types of earnings
competitive within the hedge fund world? If we continue with this kind of performance, would this type of growth
be attractive to third party marketers?  John, If you could sustain 20%+ returns over 5,7 and 10 years and
show positive growth during quarters of negative equity market performance it will help. The incentives in the
hedge fund world favor those that are long-term greedy not quarter-to-quarter or year-by-year short term
greedy. The trick is consistency. It is better to have a 28% returns for 10 years than 100% returns for 3. You
will be attractive to many groups, including some third party marketing firms if you have a deeply experienced
team, understandable and repeatable investment process, solid returns, good portfolio risk controls and a
sound business behind all of this. A recent report showed that institutional investors look very closely at the risk
management controls in place for both the portfolios being managed and the hedge fund business itself. 
Hedge Fund Investors

Hedge Fund Investor Types
Interested in hedge fund marketing? Read dozens of more hedge
fund marketing & sales articles along with details on third party
marketing within the Hedge Fund Marketing Guide.
Sometimes I get to speak with other third party marketers and

hedge fund marketing professionals about their experiences in
working with hedge fund investors. What I find is that overall most
marketers experiences are very similar while each investor is
different just as each due diligence process within different firms
vary. Hedge fund investors typically fall into one of these four
categories:
The “Follow Me” Hedge Fund Investor
Most of these investors make up your pool of family, friends, co-workers, and people you interact with regularly.
Usually, these people don’t understand how to perform the necessary due diligence in making a decision to
invest. This group also tends to make assumptions. For example, if a manager holds a degree from Harvard or
has experience from a top financial firm, this aspect alone would persuade investors to follow suit ignoring the
probability of fraud. In addition, they heavily rely on personal acquaintance and recommendations from either
you or someone you may know. If you ask for a check, and they trust you, this group will most likely give one to
you.
The “Send Me a Prospectus” Hedge Fund Investor
This group is a bit more sophisticated by conducting a minimum amount of due diligence into the manager’s
performance. Once they are satisfied with the performance on paper, they will meet with and usually shower
the manager with questions regarding every aspect of the fund, including returns, performance, strategies, and
risks. What is written and spoken by the manager is taken into faith and the information is not properly verified
by the investor.
The “Investigating” Hedge Fund Investor
This type of investor is sometimes considered a nuisance by busy professionals who might caught off-guard by
their questions. Not only will the investor keep the manager’s number on speed dial, the investor will perform
the due diligence above and beyond the type mentioned above and also go far as to understanding the entire
operation of the fund as if he or she were the manager. This type would also interview members of the
manager’s staff. The investor would also look into the balance sheet, cash controls, reporting, and other
functions, not directly related to performance. Nuisance?
The “Independent” Hedge Fund Investor
The due diligence collected by this investor is thoroughly reviewed independently. Investors in this category
know that independent opinions are extremely important. They will contact the auditor, custodian and
administrator in addition to the SEC and/or state securities agency. They won’t sign on the dotted line until they
are satisfied independently verifying everything that matters, including, assets under management, returns,
and even a year end audit. They fully understand the risks that are involved.
Nobody likes to be put in a box, but it is important to realize that the types of investors can vary widely so the
array of marketing materials you have should include brief one pagers to very detailed institutional-quality
PowerPoint presentations and third party analysis for those most scrutinizing parties. My experience has been
that marketing material first built to the highest standard and then summarized into smaller "dumbed down"
pieces later can be very effective and versatile.
Read dozens of additional articles like this within the guide to Hedge Fund Terms and Definitions.
- John Lee & Richard Wilson
Gitomer Conference
Jeffrey Gitomer Sales Conference
I just came out of my first conference held by sales master Jeffrey Gitomer. His presentation was even better
than I expected, he was funny, quick witted and knew his stuff. While most of his speech focussed on his Little
Red Book of Selling the lessons contained within it are mostly the type of fundamental truths in sales that are
always good to refocus on and make sure you are completing. I own 6 of Jeffrey Gitomer's books and today I
bought his flash cards for the Sales Bible.
I got to speak to Jeffrey before and after the conference and he is like many corporate CEO's I have met.
Everyone is always asking him to meet or for a favor of some type so he is a little bit numb to people
complimenting him or asking to have lunch. I went up afterwards and said he made a real difference in my life
and I intend on recommending him for some broker dealer annual meetings.
One interesting point he made was that while he is now a best selling author and wildy successful now and
making millions of dollars a year his efforts have taken 15 years to come to bear fruit and there are many
moving parts. He does private seminars, online training, a weekly ezine, public seminars, writes books, and
creates audio video products. He is everywhere and it is paying off. It is an interesting lesson.
I would highly recommend his conference to anyone in the business of customer sales or selling. Which is
everyone.
Hedge Fund Outsourcing Trend

Hedge Fund Outsourcing is growing as competition in the field increases and smaller funds focus more
resources on creating a competitive investment process and growing their assets through sales and marketing
activities. Outsourcing their office space, operational, trading, accounting, IT, and compliance needs lets small
hedge funds act more nimbly and simply deliver results instead of having each employee wear 4 hats or
constantly hire consulting firms on an on-demand basis.
Hedge Fund Outsourcing Options
I know of one hedge fund outsourcing firm in New York that offers a full suite of trading, operational, and
compliance hedge fund outsourcing services. Let me know if connecting with them would be helpful for you.

Orienting Reflex
Influence Through Orienting Reflex
One way in which people are influenced everyday is through our orienting reflex. The orienting reflex is the
process we go through while reacting to something novel, new, or mysterious. It is what makes first dates,
roller coasters, and vacations to exotic islands so enjoyable.
When a loud alarm goes off we stop and ask ourselves why it is going off and if it has any effect on us. If you
are in the middle of a movie at your local theater and the fire alarm starts to go off everyone will look around for
a minute before taking action. Each person is orienting themselves to this new situation and combination of
variables and they are looking for instructions from other people's actions, their past experiences, or some sort
of authority such as a movie theater employee. This very moment while the movie audience is determining
what to do next is when they are most easily influenced. This same rule applies to changes in stock market
conditions and the reaction of wall street analysts and investment news broadcasters.
If you can be the person to suggest a strategy or provide additional credible evidence when others are still
orienting to a new environment you can be very influential very quickly.
Are Your Customers High?
Abstract
In a time where each consumer sees thousands of advertisements or corporate symbols every day this article
discusses several components of the highly researched area of drug addiction and draws parallels use in the
world of sales and networking. The bulk of this article is based on the knowledge and research of Dr. Scott
Lukas, Dr. Robert Cialdini, and Dr. Kevin Hogan who are experts in reward circuitry and the psychology of
influence and persuasion. By examining the way and reasons why we become addicted to substances and
activities we can discover truths about how the reward circuitry in our brain works and create actionable
product positioning and sales steps towards a more profitable business or successful career.
Introduction
Virtually everyone becomes addicted to something at some point in their lives. Many times it is to drugs like
nicotine or caffeine but it can also be to sex or the feelings experienced while shopping with a group of friends.
Our brains are wired to reward positive experiences that benefit us while minimizing those things that create a
negative impact or feelings on our life. This reward center pathology is at the core of what creates patterns of
use that are very reinforcing and sometimes lead to negative health consequences or even death. This is
because the brain can become conditioned into desiring a certain behavior or substance to the point where the
logical points of ceasing the activity are ignored(Kuhn 2003). A good analogy for this is imagining your
unconscious mind is a jet engine strapped to the back of your conscious mind, a minicooper. When your
unconscious mind fires it can be difficult to control the steering, or bring it to a halt. It is not often that experts in
sales and marketing look directly at addiction for clues on how to gain loyal customers. This means that while
most companies profit from our natural reward center pathology, few consciously apply an ethical yet
systematic application of these lessons in an attempt to tap the same reward circuits that creates addiction.
This article discusses four components of addiction; initiating use, the environment, a rapid high after use, and
the employment of cues. The goal is to introduce specific methods that a company as a whole or individual
sales person could use to create an addicting product or service without the use of any drugs. While the use of
these methods brings up several ethical issues, these warrant a lengthy discussion in itself and will not be
discussed in this piece.
Description of Key Findings
There are three types of drug (or product) users. Experimenters, Compulsive users, and Floaters.
Experimenters are usually defined as those individuals who use a drug from time to time but generally out of
peer pressure or curiosity. The equivalent to this might be the individual who only goes to the gym
when going along with a friend or to see what cardio classes are offered.
Floaters are those who use relatively sparingly and mostly when provided with the drug from someone else.
An example of this could be the individual who only goes to the gym for four weeks out of the year
during the times when his friends can get him the two week free gym trial memberships.
Compulsive Users focus a relatively large percentage of their energy to use of the drug. An example of this
is the individual who enjoys going to the gym 90 minutes everyday. In addition to the workouts this
person might also spend hundreds of dollars and dozens of hours a month on sports supplements and
research on how to increase their gains from working out (Dr. Lukas PSYCE-1410)
The point of describing these three types is that individuals can move between the groups. What’s important to
note however is that most people who become compulsive users cannot easily downgrade and maintain their
drug use at the experimenter or floater level. A parallel can be seen in product purchasing patterns. Sales
people should work towards converting the experimenters and floaters of their product up towards being a
compulsive user. The point is not to convince someone to do something that is unhealthy financially or
physiologically. In the example of the gym members the movement would be from slightly profitable customers
to extremely profitable customers.
Initiating Drug/Product Use
To get someone addicted to using your product or at least to have them experience some positive reinforcing
experiences they will have to at least try your product. Therefore the first step is finding an in-road to a new
customer. Dr. Lukas of Harvard University has detailed these two learning-based processes that can lead to
experimenting with a new drug or product:
Your peer group is 2nd only to your parents in their ability to influence your drug-taking behavior
If a drug is associated with gaining approval or affection it can be reinforcing (Dr. Lukas PSCYE-1410)
Do we have any reason to believe that this would be different for product purchasing behaviors? The success
of Avon, viral marketing firms, Mary K, and websites such as Myspace.com are great examples of peer groups
and families being used for commercial gains. Dr. Robert Cialdini of the Arizona State University has done a
significant amount of research on this subject of peer and social pressure. He calls it “social proof,” and
believes that one of the most powerful ways people make decisions is looking to see what others are doing or
believing in that arena. This is even more heavily relied upon in situations of uncertainty or when the individual
believes that the others being observed are similar to themselves. (Cialdini 2001)

Before you can create an environment to “addict” someone to your product, you will have to educate them. If
they don’t know you exist they cannot seek you out. Camel Cigarettes is an expert at making sure everyone
knows that they exist. In Fischer’s 1991 study on brand logo recognition his team found that 30% of 3-year-old
and 91.3% of 6-year-old children could match the Joe Camel logo with a picture of a cigarette. Starting a very
young age we are exposed to and remember advertisements. (P.M. Fischer 1991). Do 3 year olds recognize
your logo? Does it matter? The point is imagery is a very powerful way of raising familiarity with a product and
is the most popular reminder or cue (more on this later) that corporations use today.
Environmental Influence
How do most people act in the library? How about at a dance club? A Church? The meek and shy will sing out
in church and the overly extroverted vocal individuals will remain quiet in a library. These are direct effects of
the environment influencing how we act.
The environment an individual is in directly affects the likeliness and extent to which they will buy and use a
drug. There is strong evidence that individuals that have taken a certain dose of a drug in a comfortable
familiar environment later overdosed while taking the same amount of the drug in an unfamiliar environment
(Dr. Lukas PSYCE-1410). This shows how powerful our environment is on influencing our actions. Dr. Kevin
Hogan author of “The Science of Influence” believes that changing the environment is the single most powerful
way to influence someone’s behavior.
This has two important applications to accessing profitable reward circuits. The first is that you can increase
some immediate positive impressions or experiences by setting the right environment. In the same way you
can limit any immediate negative perceptions or feelings by being sensitive to what might set some of those off.
The environment can stimulate new behavior and almost instantly changes an individual’s actions when they
enter into it. The second important application is that in a new environment the brain is trying to interpret and
adapt so enters into what Hogan refers to as a “state of flux” and it becomes influenced much easier (Hogan
2005).
Smoke the competition
Smoking a drug is the quickest way for a user to feel a high. The active ingredients enter the lungs where the
alveoli capillaries absorb the substance and the blood is quickly pumped through the heart and directly to the
brain. Smoked substances are usually the most addictive because of the rapid onset of positive feelings
experienced after taking a hit.

One of the best pieces of evidence that something will become addicting is when there is an immediate
positive experience following the activity with a delayed or un-associated negative experience. The closer the
positive experience is to the action and the farther away the negative experience is, the more likely the drug is
to become addicting. Dr. Robert Cialdini and Dr. Kevin Hogan have both conducted extensive research on
influencing others by creating a positive initial experience for new customers.
Dr. Robert Cialdini has completed over 30 years of research in the psychology of influence. His most well
known book entitled, Influence: Science and Practice, details 6 tools of influence and was based on decades of
research focused on the logic and mechanics behind influencing others in the business world.
To gain an instant positive first impression Dr. Cialdini prescribes to use the influence tools of Liking and
Reciprocation. Below are descriptions of these tools that directly relate to and work with the immediate positive
experience components of addiction.
Liking: The Friendly Thief

People like to buy from other people they know and like. Physical attractiveness, similarity, and
familiarity are three levers that can be employed to increase this “liking” factor.
Reciprocation: The Old Give and TakeKand Take
This deeply imbedded social rule is what makes one feel obligated to repay someone who has
provided us with a gift, favor, or concession.
Dr. Cialdini does not research reward pathways or the process by which we become addicted to activities or
drugs. His research describes how you can gain a greater ability to influence others or defend yourself against
those who might be using these same tools of influence. This is an important distinction because his advice is
in line with the lessons that can be taken by looking at addiction and the reward pathways that fuel it.
If you follow Dr. Cialdini’s advice you successfully give something away that your customer believes is valuable
and come off as very friendly and likeable you would not only create an obligation on their behalf to repay you
with a purchase but you would be triggering their reward center pathways in the same fashion as a drug with a
high potential of being addicting. The quicker and more powerful the early positive experience the more
“addictive” your product or service becomes. (Cialdini 2001)
Dr. Kevin Hogan believes we are constantly undergoing 4 second evaluations. Every time somebody sees us
they are evaluating dozens of details about our clothes, body language, hair, facial expression, and

movements to categorize us into a general yes or no category. Do they generally like you and associate with
you or feel that you completely different or possibly someone with different values and morals? You are placing
everyone in buckets of Yes I would like to meet or do business with this person or No, I am not interested.
All of this happens very rapidly and almost completely unconsciously. It is part of how we are wired, relying
upon thousands of mini stereotypes that help us make decisions such as deciding whether to trust a company,
product, or sales person. One some level this is almost required of us so that we can process all of the
information we receive (Bodenhausen, Macrae, & Sherman, 1999, Fiske & Nueberg, 1990), it helps us make
sense of everything without having to start from scratch with each observation (Gigerenzer & Golstein, 1996) In
The Science of Influence Dr. Hogan discusses how your first impression is recorded and used again and again
later in time. Manage your four seconds. (Hogan 2005)
What does your logo, website, customer service reps, store, and product say within 4 seconds of looking at or
talking with them? It has been shown that we automatically assign traits such as talent, kindness, honestly, and
intelligence to attractive individuals (Eagly, Ashmore, Makhijani, & Longo 1991). While I have not found a
specific study on the same effect applying to products I believe that an attractively designed product would
create automatic judgments of the products quality, reliability, value, etc. This is a powerful piece of the puzzle
because all of these judgments occur so rapidly, if you can make them extremely positive you or your product
will be far more attractive. Four seconds happens to be very close to the amount of time it takes for a smoked
substance to enter the blood brain barrier and create a high. If you can get your customer to smoke your
drug(try your product), do you want them to feel nothing, get sick to their stomach, or really high
Bottom line: Create a rapid and powerful positive experience for your customer. Use the rule of reciprocity, be
likeable and friendly, be cognizant of the first 4 seconds, and avoid or delay any negative experiences or
feelings at all costs. Remember, once you have done the legwork to get them to “smoke” your product
experience you want to make sure that your product creates the most rapid positive experience possible to
create an initial advantage over your competitors.
Cues – Reinforcing Use/Purchases
One of the most commercially profitable lessons to take from the world of psychopharmacology is the role that
cues play in the process of addiction and drug use in general. Cues are triggers, reminders of a dug that
makes you think of feelings and experiences associated with a drug. Cues are often what reminds users to
continue use, immediately seek the drug, or relapse and begin use again. Cues are so powerful that after
months in a drug rehab program a single cue can set someone on edge and induce use. Cues can be odors,
symbolic objects, sounds, or people. Activity in several areas of the brain rapidly change after a cue is
observed. An example of a cue for someone who has quit smoking could be the simple smell of a lit cigarette
being held by someone walking 20 feet ahead of them on the sidewalk. Just the smell triggers activity in their
brain and brings back the old desire and feelings that led them to begin or constantly reinforced smoking in the
first place (PSYCE-1410). Cues are used in the business world all of the time. They are billboards, freshly
baked cinnamon rolls placed on a shelf, or life size Oscar Meyer Weiner waving you towards their hot dog
stand on the corner of the street. These are things that remind us of the positive experiences we associate with
a product.
The following is based on a true story and it provides examples of cues that can be and are commercially
employed.
Imagine a 30 year old woman who used to shop at Macy’s 3-4 days a week after work or during her lunch
break. It was comfortable, fun, and exciting. For years she continues this “use” of shopping on a weekly basis
enjoying new purses, shoes, and perfumes. While this was not going to put her into financial ruin, her husband
would like to buy a vacation home and they have been trying to save more money for one. At one point she
successfully reduced her shopping at Macy’s to one weekend a month when she would go out with her
husband. One day at lunch she eats in a food court and walks past the front of Macy’s on the way there. She
can smell all of the perfumes and lotions (Cue #1: Smell) that are just inside the open doors. Several areas of
her brain are activated by this cue and she begins thinking about how fun it would be to go shopping for some
new spring clothes. She goes to lunch and all she can think about is how her purse is looking a little out of style
and how she wishes she could buy the same shoes the lady is wearing (Cue #2: Symbolic Object) at the table
next to her. She resists the urge to shop and tries to forget about the whole thing. Two days later she gets a
Macy’s catalog (Cue #3: Image) in the mail, they have a 40% off sale. That same day she takes a two hour
break from work and heads to Macy’s. As she searches the racks and tries on each item her brain is being
flooded with dopamine and she remembers exactly why she used to shop 3-4 days a week. She ends up
spending over $1,000 on products she could have done with out.
The golden nugget to take from the use of cues is that through thorough analysis of each type of customer you
serve you can inject daily reminders of the high they experienced or could experience from purchasing your
product. Analyze your business practices and systematically tinker with using cues that other professionals in
your industry have ignored.
Conclusion

Hundreds of studies have been conducted on influence and persuasion and hundreds more on addiction. Very
few articles or live experiments have looked for a direct connection between these two areas. This article has
detailed four direct ways to learn from the thousands of research studies done on addiction and reward
circuitry in the brain and use it to create loyal customers who can’t get enough of your product. These include
Initiating Use, Environmental Influence, Smoking the Competition, and Employing cues. Using these in a
systematic fashion will uncover ethical avenues of creating a more profitable customer base.
References
• Bodenhausen, G.V. (1990). Stereotypes as judgmental heuristics: Evidence of circadian variations in

discrimination. Psychological Science, 1, 319-322.
• Cialdini, Robert B., “Influence: Science and Practice” 4th Edition Copyright 2001 by Allyn & Bacon. See
also www.influenceatwork.com.
• Eagly, A.H., Ashmore, R.D., Makhijani, M.G. & Longo, L. C. (1991) “What is beaitufl is good but[”: A
meta-analytic review of research on the physical attractiveness stereotype.
• Fiske, S.T., & Nueberg, S.L. (1990). A continuum of impression formation: Influences of information and
motivation on attention and interpretation. In M.P. Zanna (ed.), Advances in experimental social
psychology (Vol 23, pp. 1-75. New York: Academic Press.
• Gigerenzer, G., & Goldstein, D.G. (1996). Reasoning the fast and frugal way: Models of bounded
rationality. Psychological Review, 103, 650-669.
• Hogan, Kevin, “The Science of Influence.” Copyright 2005 by Kevin Hogan.
• Kuhn, Swartzwelder, Wilson, “Buzzed” Copyright 2003 by Cynthia Kuhn, Scott
• Lukas, Scott E., “Psychopharmacology lecture notes,” Harvard University. Copyright 2006 Harvard
University.
• P.M. Fischer, M. P. Schwartz, J. W. Richards Jr, A. O. Goldstein and T.H. Rojas “Brand logo
recognition by children aged 3 to 6 years. Mickey Mouse and Old Joe the Camel JAMA, Dec 1991; 266:
3145 – 314
CTA Database- Q&A Know of Any CTA Databases?

Thank for the tips, much appreciated. I was hoping you could help connect me with a list of CTA funds or point
me towards an online CTA database. Do you have one of these for free or know where I can purchase one
possibly?  Yes, I do know of one in-depth CTA database that you can download into your ACT,
Salesforce.com or Excel data management system at your firm. Click Here to get this database.
Question: Richard, from a capital raising perspective, what would you say is the time frame to raise money
(say $10+ million) for a small, start-up hedge fund with no name recognition and with principals who have no
name recognition and no pedigree in the alternative investment world? I would say 12 months at best. What do
you think?
Answer: Great question. I would say 16 - 20 months would be realistic if they keep their heads down, have a

great team and solid investment process. Those are big if's though - it is easy to get distracted or discouraged.
The first fund I marketed took 9 months straight of cold calling, emails and conferences to raise a single dollar
but after 18 months we were raising $1M/week in new assets.
NLP Certification
NeuraProgramming (NLP) Certification
One of my good friends just completed a full certification course on NLP. It included voice
pattern analysis, representational system identification, mapping, modeling, etc.

He really spoke highly of it and he has a masters in Psychology and has seen hundreds of patients for therapy
sessions.
I have always been very skeptical of the belief in NLP that you can identify the preferred representational
system of an individual by watching their eye movements but my friend is certain that it is accurate over 90% of
the time.
I'm not sure what my thesis is going to be on but maybe it will be based on NLP or some combination of
Chialdini and NLP methods of influence to look into these issues further. It would be fun to get certified in NLP
as part of my thesis project.
Email Newsletter Tool

Start A Hedge Fund Related Newsletter
Even though almost everyone uses email now not many firms in the hedge fund industry provide a consistent
weekly, monthly or even quarterly email newsletter. Why? Because it takes a little bit of trial and error and
some consistent work to produce the fresh content for each new issue.
Providing an email newsletter can provide a competitive advantage for your firm as you are able to keep on top
of minds of prospects, be seen as a thought leader in your space, have your newsletter forwarded on to other
prospects and show your level of niche expertise. I have found email newsletter by the best way to keep in
touch with everyone that I have met through this hedge fund blog, my Hedge Fund Blog Book downloads and
Hedge Fund Group (HFG).
One of the leading email newsletter management firms is Aweber. Aweber is used by over 1,000 firms
worldwide and I have been satisfied with their easy-to-use service and quick online customer service. It is
relatively easy to get started. After playing around with settings for 20-30 minutes most people would be ready
to test sending out their own email newsletter using one of their graphical templates or just using traditional
plain text formatting:
Click here now to see what they offer: Aweber Email Newsletter Services

Note: Certain restrictions apply to email advertisements or newsletters if you are a hedge fund manager or
offer certain types of investment advice, recommendations, etc. Please consult a legal expert or in-house
compliance counsel for advice before starting your email campaign.
University Endowment Funds List
Quick Link: Hedge Fund Marketing Guide

Yesterday a hedge fund sent me this list of university endowments from Wikipedia and I thought I would
share this with others involved in hedge fund marketing and sales.
Endowment Endowment Endowment

Institution (2005) (2006) (2007)
billion USD billion USD billion USD
Amherst College $ 1.155[1] $ 1.337[2] $ 1.662[3]
Baylor College of Medicine $ 1.008[1] $ 1.059[2] $ 1.278[3]
Baylor University $ 1.008[1] $ 0.870[2] $ 1.278[3]
Berea College $ 0.862[1] $ 0.949[2] $ 1.102[3]
Boston College $ 1.270[1] $ 1.448[2] $ 1.670[3]
Boston University $ 0.777[1] $ 0.916[2] $ 1.101[3]
Brown University $ 1.844[1] $ 2.167[2] $ 2.781[3]
California Institute of Technology $ 1.418[1] $ 1.581[2] $ 1.860[3]
Carnegie Mellon University $ 0.837[1] $ 0.939[2] $ 1.116[3]
Case Western Reserve University $ 1.516[1] $ 1.599[2] $ 1.841[3]
Columbia University $ 5.191[1] $ 5.938[2] $ 7.150[3]
Cornell University $ 3.777[1] $ 4.321[2] $ 5.425[3]
Dartmouth College $ 2.714[1] $ 3.092[2] $ 3.760[3]
Duke University $ 3.826[1] $ 4.498[2] $ 5.910[3]
Emory University $ 4.376[1] $ 4.870[2] $ 5.562[3]
George Washington University $ 0.823[1] $ 0.963[2] $ 1.147[3]
Georgetown University $ 0.741[1] $ 0.834[2] $ 1.059[3]
Georgia Institute of Technology $ 0.937[1] $ 1.047[2] $ 1.281[3]
Grinnell College $ 1.391[1] $ 1.472[2] $ 1.718[3]
Harvard University $ 25.473[1] $ 28.916[2] $ 34.635[3]
Indiana University (system-wide)[4] $ 1.107[1] $ 1.276[2] $ 1.557[3]
Johns Hopkins University $ 2.177[1] $ 2.351[2] $ 2.800[3]
Lehigh University $ 0.845[1] $ 0.939[2] $ 1.086[3]
Massachusetts Institute of Technology $ 6.712[1] $ 8.368[2] $ 9.980[3]
Michigan State University $ 0.906[1] $ 1.048[2] $ 1.248[3]
New York University $ 1.548[1] $ 1.775[2] $ 2.162[3]
Northwestern University $ 4.215[1] $ 5.141[2] $ 6.503[3]
Ohio State University $ 1.726[1] $ 1.997[2] $ 2.338[3]
Pennsylvania State University $ 1.175[1] $ 1.326[2] $ 1.590[3]
Pomona College $ 1.299[1] $ 1.457[2] $ 1.761[3]
Princeton University $ 11.207[1] $ 13.045[2] $ 15.787[3]
Princeton Theological Seminary $ 0.864[1] $ 0.945[2] $ 1.109[3]
Purdue University (system-wide)[4] $ 1.341[1] $ 1.494[2] $ 1.787[3]
Rice University $ 3.611[1] $ 3.986[2] $ 4.670[3]
Rockefeller University $ 1.557[1] $ 1.772[2] $ 2.145[3]
Smith College $ 1.036[1] $ 1.156[2] $ 1.361[3]
Southern Methodist University(SMU) $ 1.014[1] $ 1.122 [2] $ 1.328[3]
Stanford University $ 12.205[1] $ 14.085[2] $ 17.165[3]
Swarthmore College $ 1.164[1] $ 1.245[2] $ 1.441[3]
Syracuse University $ 0.818[1] $ 0.908 [2] $ 1.086[3]
Texas A&M University System (system-
$ 4.964[1] $ 5.643[2] $ 6.590[3]
wide)[4]
Texas Christian University $ 0.942[1] $ 1.016[2] $ 1.187[3]
Tufts University $ 0.845[1] $ 1.215[2] $ 1.452[3]
Tulane University $ 0.780[1] $ 0.858[2] $ 1.009[3]
University of California (system-wide)[4] $ 5.222[1] $ 5.734[2] $ 6.439[3]
University of Chicago $ 4.137[1] $ 4.867[2] $ 6.204[3]
University of Cincinnati $ 1.032[1] $ 1.101[2] $ 1.185[3]
University of Delaware $ 1.077[1] $ 1.223[2] $ 1.397[3]
University of Florida $ 0.836[1] $ 0.996[2] $ 1.219[3]
University of Illinois (system-wide)[4] $ 1.148[1] $ 1.252[2] $ 1.515[3]
University of Kansas (system-wide)[4] $ 0.955[1] $ 1.049[2] $ 1.239[3]
University of Michigan $ 4.931[1] $ 5.652[2] $ 7.090[3]
University of Minnesota $ 1.969[1] $ 2.224[2] $ 2.804[3]
University of Missouri (system-wide)[4] $ 0.849[1] $ 0.944[2] $ 1.098[3]
University of Nebraska (system-wide)[4] $ 1.042[1] $ 1.153[2] $ 1.277[3]
University of North Carolina at Chapel
$ 1.486[1] $ 1.149[2] $ 2.164[3]
Hill

University of Notre Dame $ 3.650[1] $ 4.437[2] $ 5.944[3]
University of Oklahoma $ 0.777[1] $ 0.960[2] $ 1.114[3]
University of Pennsylvania $ 4.370[1] $ 5.313[2] $ 6.635[3]
University of Pittsburgh $ 1.530[1] $ 1.803[2] $ 2.254[3]
University of Richmond $ 1.208[1] $ 1.388[2] $ 1.655[3]
University of Rochester $ 1.370[1] $ 1.491[2] $ 1.726[3]
University of Southern California $ 2.746[1] $ 3.066[2] $ 3.715[3]
University of Texas (system-wide)[4] $ 11.610[1] $ 13.235[2] $ 15.614[3]
University of Virginia $ 3.219[1] $ 3.618[2] $ 4.370[3]
University of Washington $ 1.490[1] $ 1.794[2] $ 2.184[3]
University of Wisconsin (UW
$ 1.125[1] $ 1.426[2] $ 1.645[3]
Foundation only)
Vanderbilt University $ 2.628[1] $ 2.946[2] $ 3.487[3]
Wake Forest University $ 0.907[1] $ 1.042[2] $ 1.249[3]
Washington University in St. Louis $ 4.268[1] $ 4.684[2] $ 5.658[3]
Wellesley College $ 1.276[1] $ 1.412[2] $ 1.657[3]
Williams College $ 1.348[1] $ 1.462[2] $ 1.892[3]
Yale University $ 15.224[1] $ 18.031[2] $ 22.530[3]
Yeshiva University $ 1.149[1] $ 1.273[2] $ 1.410[3]

Service Provider Listings

Please follow the links below for service providers who offer
various hedge fund services
• Hedge Fund Auditors | Hedge Fund Marketing Tools

• Hedge Fund Attorney | Prime Brokers
• Investment Consultants | Hedge Fund Administrators
• Commercial Real Estate Brokers | Hedge Fund Accountants
• Investment Research | Hedge Fund Recruiters
• Hedge Fund Compliance | Hedge Fund Software

Geographical Guides to Hedge Funds

Top 5 Most Popular Geo-Guides
1. California
2. Connecticut
3. London
4. New York
5. San Francisco
City Guides
• Boston
• Chicago
• London
• San Francisco
• Washington D.C.
Country / Region Guides
• Asia
• Australia
• Bermuda
• Brazil
• Canada
• Cayman Islands
• China
• Denmark
• Dubai
• European
• France
• Germany
• Hong Kong
• Indonesia
• Japan
• Mexico
• Russian
• Singapore
• Spain
• Switzerland
• South Africa

State by State Guides
• New York
• Connecticut
• Texas
• California
• New Jersey

Hedge Fund Tracker

Hedge Fund Tracker Tool
The Hedge Fund Tracker tool allows you to view recent publicly available
details and events affecting many of the top 1,000 largest hedge funds and
fund of hedge funds within the industry.
Hedge Fund Manager Tracker Profiles:
• Absolute Capital Management | Jonathan Treacher

• AguasClaras Investimentos
• Alternatives Derivatives & Investments (ADI)
• Anchor Point Capital LLC | Albert Hsu Case
• Andor Capital Management & Daniel Benton
• Angelo Gordon
• Appaloosa Management
• Artradis Fund Management LP |
• Asset Management Finance Corp
• Atticus Capital
• Autonomy Capital Research, LLP
• Babylon Fund LP | Hedge Fund Notes
• Balyasny Asset Management LP
• Barington Capital Group LP | Hedge Fund Notes
• Blue Mountain Capital Managment, LP
• Bonanza Master Fund LP | Hedge Fund Notes
• Bramdean Asset Management
• Brotman Capital Management Hedge Fund
• Brummer & Partners, LP
• Carlson Capital Management Partners LP | Hedge Fund Notes
• Cerberus Capital Management LP
• CF Partners | Carbon Hedge Fund |
• Chenavari Credit Partners LP |
• Children's Investment Fund Management TCI
• Citadel Investment Group LLC
• Clarium Capital Management | Peter Thiel
• Clinton Capital Management LP | Hedge Fund Notes
• Connexion Capital
• Creditor Liquidity Solutions LP
• CQS Capital
• Dalton Strategic Partnership
• Deephaven Capital Management, LLC
• Diapason Commodities Management SA | Commodity Management
• Drake Capital Management LLC | Hedge Fund Notes
• Drury Capital CTA Fund
• Durrant Capital Management, LP
• Epic Capital Management LP |
• Eurasia Capital Management
• ESL Investments | Edward Lampert | Hedge Fund Notes
• Farallon Capital Management Partners LP
• Financial Risk Management (FRM) Investment Management
• First State Investments | Media Works
• Fortelus Capital Management
• Fortis Investments Hedge Fund
• Fortress Investment Group LLC
• Four Elements Capital Management
• Four Elements Capital Management, LP
• Goldman Sachs Hedge Fund
• Goldman Sachs Hedge Fund Launch
• Gottex Fund Management
• Halcyon Asset Management
• Harbinger Capital Partners Hedge Fund
• Headline Investment Management
• Hedge Fund BullDog Fund Sues SEC
• Henderson Group PLC
• Highbridge Capital Management LLC
• Highland Capital Management | Hedge Fund Notes
• Jabre Capital Partners SA | Philippe Jabre | Hedge Fund Notes
• Jana Partners | Hedge Fund Notes
• JO Hambro Capital Management Ltd.
• Kenmar Group
• Lansdowne Partners | Paul Ruddock | Hedge Fund Notes
• Lasair Capital LP | Hedge Fund Tracker Notes
• Lawrence Asset Management LP
• L & G Investment Management | Hedge Fund
• Lucas Capital Management
• Man Investments Group
• Martin Asset Management
• Maverick Capital LP
• MedCap Management and Research | Charles Toney
• Millennium Partners
• Mitsui & Co.
• Moore Capital Management, LP
• OakRun Capital LLC
• Och Ziff Capital Management Group
• Oracle Evolution Oracle Services | Spiro Germenis
• Ospraie Management LLC
• Palatine Asset Management
• Paulson Invesment Company
• Pequot Capital Management Hedge Fund
• Perry Capital
• Pershing Square Capital Management
• Pharos Fund
• Platinum Grove Asset Management, LP
• Powe Capital Management LP | Rory Powe
• Priapus Investment Fund LLC
• Psigma Investment Management
• Pure Capital LP
• Quadrangle Group LLC
• R3 Capital Partners LP
• RAB Capital Plc
• Renaissance Technologies
• RMB Asset Management International | Tom Joy
• SAC Capital Advisors, LP
• SageCrest LLC
• Salida Capital | Hedge Fund Notes
• Sciens Capital Management LP
• Sellers Capital
• Sloan Robinson
• Sparx Group Co. Ltd
• Steelhead Partners LP
• System Absolute Return (SAR)
• Tantallon Capital | Hedge Fund Closure
• Temujin Global Asset Management
• Tenaska Capital Management LP | Hedge Fund Notes
• Thames River Capital
• The Blackstone Group | Kailix Advisors
• The NIR Group LLC | Alternative Investments Hedge Fund Notes
• The Spanish River Group
• Threadneedle Asset Management | Hedge Fund Notes
• Tontine Associates
• Traxis Partners LP
• Tremblant Capital Group | Bret Barakett
• Vallea Capital
• Viresco International Capital Management
• Vision Capital

Hedge Fund Contacts

Hedge Fund Industry Contacts | A Directory
The list below was put together from HedgeFundBlogger.com's directory of

hedge fund service providers. If you are a hedge fund startup or established hedge fund manager looking for
additional industry contacts these individuals might be able to help you build your business.
Disclaimer: These firms are listed below because they cater to the hedge fund industry and pay a small monthly
fee to promote their businesses on HedgeFundBlogger.com. Please email us to have your firm added to this list:
Hedge Fund Administrators
• Polina Tsikman - BGT Fund Administration PTsikman@BGTConsulting.com

• Nottingham Investment Administration http://NCFunds.com
• Learn more about these administrators by clicking here
Hedge Fund Auditors
• Maurice Berkower - ACSB, Maurice@acsbco.com

• Ron Niemaszyk ron.niemaszyk@jordanpatke.com
• Robert Castrao rcastro@BDO.com
• Learn more about these auditing firms by clicking here
Prime Brokers
• Lance Baraker - Saratoga Prime Services, LBaraker@Saratogaprime.com

• Larry Goldsmith - Triad Securities, Press@TriadSecurities.com
• Darren Day - Alaris Trading Partners, info@alaristrading.com
• Learn more about these prime brokerage firms by clicking here
Hedge Fund Attorneys and Law Firms
• Milal Balik - Malik Law Group bilal.malik@maliklawgroup.com

• Brent Gillett -Investment Law Group BGillett@investmentlawgroup.com
• Learn more about these two law firms by clicking here
Investment Consultants
• Gary Mair - FundAdvisor, LLC gmair@hfundadvisor.com

• Learn more about FundAdvisor's services by clicking here
Commercial Real Estate Brokers
• Robert Kluge - NAI Global, RKluge@nainyc.com

• Learn more about NAI Global by clicking here
Investment Research
• Jean McPhillips - The Merchant Forecast JMcPhillips@m4cast.com

• Sushant Gupta - SG Analytics sushant@sganalytics.com
• Learn more about The Merchant Forecast by clicking here
Hedge Fund Software Firms & Products
• Jaime Bean - Code Red jbean@coderedinc.com

• Maggie Sullivan - Starpoint Solutions MSullivan@Starpoint.com
• Dr. William Tasong - Azideriva wtasong@azideriva.com
• Learn more about each firm by clicking here
Hedge Fund Marketing & Public Relations
• Richard Dukas - Dukas PR, Richard@DukasPR.com

• Mitch Ackles - Hedge Fund PR, Mitch.Ackles@HedgeFundPR.net
• Learn more about these two PR firms by clicking here
Hedge Fund Databases, Directories & Tools
• Barclays Hedge Fund List/Database

• Capital Hedge Investor Databases
• Preqin Hedge Fund Investor Databases
• Fund of Hedge Fund Directory
• Aweber Email Newsletter Management Services
• CTA Database
• List of Hedge Funds in Massachusetts
• List of Hedge Funds In Connecticutt
• List of Hedge Funds in New York
• List of Hedge Funds in California

Hedge Fund Recruiters
• Marc Goormastic - Goormastic Executive Search, marcus@goormastic.com

• Sameer Vishwanathan - Mark Lewis Inc., Sameer@marklewisinc.com
• Anthony Solazzo - Masonboro Partners, anthony@masonboropartners.com

• Howard Ross - BOC Staffing Solutions, HRoss@BOCStaffing.com
• Ken Murray - Mercury Partners, kenmurray@mercurypartner.com
• Learn more about these recruiters by clicking here
HedgeFundBlogger.com has grown to be a top 3 website on hedge funds with over 1 million pageviews of
traffic every 4 months. If you would like your firm added to this list above and within our service provider
directory please email us at Richard@HedgeFundGroup.org.

Additional Websites & Resources
• Http://CHADesignation.org | Certification & Training
• http://HedgeFundGroup.org | Networking
• http://PrimeBrokerageGuide.com | Prime Brokerage
• http://FamilyOfficesGroup.com | Family Offices
• http://HedgFundsCareer.com | Career Guidance
• http://PrivateEquityBlogger.com | Private Equity

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Sponsors Notes & Disclaimers

Disclaimer: The content of this blog/book is in no way a means of financial

Date Founded: December 1st, 2007

Statistics: 15,350 Members

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Part 1: Due Diligence______________________________Page 6

Part 2: Hedge Fund Careers________________________Page 18

Part 3: Regulation & Compliance ____________________Page 65

Page 4: Hedge Fund Strategies______________________Page 83

Part 4: Starting a Hedge Fund_______________________Page 110

Part 6: Hedge Fund Marketing_______________________Page 126

Appendix A: Service Provider Listings__________________Page 194

Appendix B: Additional Hedge Fund Resources___________Page 197

Part 1: Due Diligence

HEDGE FUD DUE DILLIGECE GUIDE

1.Read a fund's prospectus or offering memorandum and related materials

Hedge Fund Risk Analysis

Hedge Fund Fraud

2. Make sure all appropriate disclosure relating to personnel are made.

3. Take care when going outside stated valuation policies.

II. Bogus Valuations

4. Do not engage in market manipulation.

5. Always produce accurate portfolio statements. Do not overstate earnings.

Hedge Fund Manager Due Diligence

Ongoing Hedge Fund Manager Due Diligence

- Gregory Schink & Richard Wilson

High Net Worth Clients

Hedge Funds + High Net Worth Clients

Investment Due Diligence Resource

Institutional Hedge Fund

Institutional Hedge Funds Trend

Due Diligence Questions

Hedge Fund Due Diligence Questions

FINRA Broker Check

Part 2: Hedge Fund Careers & Jobs

Hedge Fund Jobs

Looking for a Hedge Fund Job?

Hedge Fund Job Listings

Hedge Fund Job Websites:

The Chartered Hedge Fund Association (CHA)

Join The Hedge Fund Group Via Linkedin

Open Hedge Fund Positions

1.Legal & Compliance Jobs

If someone wanted to start a hedge fund career, what a re 4

pieces of advice you would give them?

Hedge Fund Internship

Hedge Fund Marketing Job

Hedge Fund Marketing Job Open

HedgeME Book Review

Hedge Me Claude Schwab

Best Price $39.00 or Buy New $39.00

Hedge Fund Forum - HedgeFundMessageBoard.com

HEDGE FUD DUE DILLIGECE GUIDE

Best Price $39.00  or Buy New $39.00