11/18/2006

It's Always About the Little Guy

James Cramer notes that hedge fund disasters only happen because middle-class investors are allowed to invest (indirectly) in hedge funds. This is a striking departure from the populist tone of his first book, in which he argued that regulators were depriving investors of access to the best managers by setting onerous net-worth requirements for hedge fund investors. What's changed? The charitable answer is that Amaranth's collapse convinced him of what Long-Term Capital Management's didn't: That hedge funds are too risky for all but the most sophisticated investors (and that sophistication is directly correlated with wealth; Paris Hilton being a more qualified hedge fund analyst than your average finance professor). The uncharitable answer is that now that he's out of the hedge fund business, he wants to distance himself from the riskier, seedier side -- it's one thing to be associated with an industry that deprived a millionaire of a few spare millions, and another entirely to be the spokesman for the freewheeling traders who accidentally liquidated Grandpa's pension by betting the wrong way on a financial contract that Grandpa didn't even know existed.

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posted by Byrne Hobart at 1:59:00 PM

2 Comments:

Anonymous Anonymous said...

I am part of a strategic group in the area of Hedge Funds in my company (A leading IT consulting and outsourcing company with more than US$ 1 billion in revenue) This group has a mandate to design solutions for most pressing needs of Hedge Funds. We did a primary research in July 2006 and realized that "data aggregation and reporting" is one of the most prominent needs of the industry. Most of today's Hedge Funds operate in highly outsourced environment. Primes and fund administrators provide Hedge Funds with reports, but they may not match exact requirements of fund managers or COO's or Risk Officers of the fund. The situation becomes worse in a multi-prime scenario with no means of single view of the fund's overall portfolio. Hence need of the hour is light-weight, easy to install and customize, data aggregation and reporting solution for Hedge Funds.

We intend to work closely with leading Hedge Funds. Idea is to gather what industry needs, by talking to several hedge funds and baseline an aggregation and reporting product. Hedge Funds participating in this exercise would benefit from a reporting product that has their requirements built in.

If this is of interest to you, do send me an e-mail: sumeet_dhar@yahoo.com

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