Money managers under the microscope
The fledgling market for hedge fund secondaries may be becoming barbell-shaped, according to Hedgebay.
The firm, which provides a market for those wishing to buy and sell illiquid hedge fund stakes, said there is growing evidence that trades are happening either at very high or at very low prices.
In November, for instance, the highest trade took place at 97 pct or net asset value, while the lowest was at 29 pct.
It seems that some investors are willing to pay close to NAV for higher-quality funds that are difficult to get hold of.
The due diligence, or lack of it, undertaken by investors has been one of the big talking points following the alleged fraud by U.S. financier Bernard Madoff.
But according to risk management firm Riskdata, the scandal could potentially have been spotted by (fairly complicated) statistical analysis.
Back when the hedge fund industry was barely into its 20s, numbered just 150 funds and managed all of $1 billion, you might have thought times were simpler; untroubled by the kinds of questions and concerns that now dominate after a turbulent year.
Browsing through a 1969 article in Fortune magazine by Carol J Loomis you could be forgiven for concluding the industry has barely moved on. If the last year has seen the painful payback from a frantic pursuit of returns, then so it was 1969.