Pine River Capital Management has just launched a new hedge fund. You’ll like the fee structure: there’s no incentive fee at all, which makes for a welcome change from the standard structure where the fund manager takes 20% of the profits. But you might not like the performance: it’s designed to lose between 12% and 18% per year playing in the options market.
Alex Edmans makes a very good point today: it makes a great deal of sense, especially in leveraged companies, to pay CEOs in debt rather than equity. What’s more, such compensation is already quite widespread: if a company has promised an executive a defined-benefit pension upon retirement, that’s essentially unsecured debt of the company, and can be substantial.
Remember when left-wing inside-the-Beltway pressure-group person Tom Matzzie started demonizing Steve Eisman for being a short seller, without actually engaging with any of his arguments about how for-profit colleges are causing a huge amount of damage and very little benefit? Well, it wasn’t long before another inside-the-Beltway pressure group joined in: this time it was Melanie Sloan, of something called Citizens for Responsibility and Ethics in Washington.
BusinessWeek has a big feature on the value of a college degree, and naturally has presented it in the format of a ranking. College rankings are profoundly silly things, and this one is no exception; it purports to calculate the extra amount of money that graduates of certain universities earn, compared to the amount that they would earn if they hadn’t gone to college, thereby coming up with some kind of dollar figure for value-for-money. It then ranks “30-year net return on investment”, which ranges from $1.69 million at MIT to just $998 at Black Hills State University in Spearfish, South Dakota.