Commentaries

Now raising intellectual capital

Galleon’s edge

-

The arrest of hedge fund millionaire Raj Rajaratnam on charges that he and his $7 billion Galleon Group hedge fund profited from illegal insider trading will no doubt feed suspicion in some corners about the way hedge funds generate fat profits.

But for anyone to assume that all hedge fund managers owe their success to getting information on the sly is unfair and wrong. The overwhelming majority of hedge funds are only as good as the quality of the research performed by their analysts and traders.

And the truth is the vast majority of hedge funds are rather ordinary. If the majority of hedge funds managers were so crafty, not so many funds would have gone bust last year–or lost bundles of money for their wealthy investors.

The true standouts in the industry are a real minority. Anyone can put together an offering statement, call themselves a hedge fund manager and go out and raise money. That’s one reason why wealthy people and pension funds who throw money blindly at hedge funds without doing adequate due diligence are being plain foolish.

Stella Artois becomes real hedge fund investor

Photo
-

HEDGEHOGSIt seems like a gutsy time to be advertising a hedge fund in newspapers and across billboards in London.

Until you realise at second glance that the adverts are a spoof by InBev-owned lager brand Stella Artois which is trying to boost its green and recycling credentials with some whacky marketing.

Stones and glass houses, offshore tax haven edition

-

One of the week’s more amusing stories takes us to the sun-kissed shores of the Cayman Islands, scuba diver’s paradise, magnet for hedge funds and – until very recently – world-beating tax haven.

The financial crisis has not been kind to the Caymans. Hundreds of hedge funds have collapsed and global banks have slashed jobs. As if this was not enough, President Barack Obama in the spring launched a crackdown on tax havens that forced a number of Caribbean islands, including the Caymans, to embrace greater transparency – after a fashion.

Eddie and the losers

-

Why are there financiers who think that they — and they alone — can run businesses where nearly everyone else who has tried has failed? There is Guy Hands with EMI and Cerberus Capital Mangement with Chrysler, but Exhibit A has to be hedge fund manager Eddie Lampert’s nearly four-year adventure with Sears.

One can admire the financiers’ ambition, the sheer audacity in going against conventional wisdom. Yet something obvious has been lacking in all their bold calculations: How to persuade consumers to buy their offerings. These have been companies that need leaders who are more like the late Billy Mays than financial wizards.

Insana the pitchman

-

Ron Insana once was one of the better journalists/personalities on CNBC, but then he decided to go into the hedge fund business and failed miserably. Now Dealbreaker.com reports he’s teamed up with TheStreet.com to produce a product that let’s you trade along with the former cable anchor and “make more money in the markets.”

Now, Wall Street is big on stories of people reinventing themselves. But this one just seems a bit too much. Insana’s offer is one investors clearly can refuse.

  •