Felix Salmon

Felix TV: The Ira Sohn conference

By Felix Salmon
May 24, 2011

It’s the Ira Sohn conference tomorrow, with well over a thousand people paying four-digit sums, and sometimes more, for the privilege of listening to boldface fund managers talk about their investment ideas. The conference gets a lot of press, not least from Reuters, but these presentations are not the kind of thing that individual investors — or even financial journalists — are really qualified to judge.

Hedge funds — and venture capitalist funds, and private-equity funds — have a certain mystique which rubs onto their managers, especially when those managers have posted impressive investment returns over the past few years. The Ira Sohn conference has even more mystique, since with many of these fund managers it’s the only time they speak in public, and as a result the audience is primed to expect something very special.

But as with any investment, it’s important not to get caught up in hype. Precisely because the Ira Sohn conference has so much hype and mystique, everything coming out of it should be treated with extreme prejudice. If you find a great investment idea in an improbable and unexpected place, that’s likely to be a much better bet than if you think you’ve found a great investment idea coming from a professional fund salesman in a highly-artificial context.

Investing in hedge funds is hard enough; investing in individual hedgies’ ideas is pretty much impossible. The only people who should even try are other hedgies, or possibly endowment managers who see a lot of idea flow and have significant experience of getting caught up in a story and then seeing how it plays out. Sometimes the highest-conviction ideas are also the worst ideas. Unless and until you’ve lived through those kind of experiences, you’re probably best off simply ignoring everything coming out of the Ira Sohn conference.

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