The moment that brought the most laughter at the Asian Venture Capital Journal conference in Hong Kong last week was when TPG’s David Bonderman explained the difference between a hedge fund investor relationship and a private equity investor relationship. He was trying to illustrate the point that while hedge funds are liquidating portfolios to pay back investors with a short term lock up, private equity firms can buy up those portfolios because they’re not getting hassled by investors. Their investors are, as they say, in it for the long haul. Let Bonderman explain it:
Click here the audio clip. As memory serves, the kissing sound was accompanied by a hugging motion.
“Private equity all has long term lock ups. So you may like our performance, you may not like our performance, but you’re my partner for the next 12 years (makes a smooching, kissy sound here). At a hedge fund, you’re my partner for the next 45 days until you can give me notice and get the
hell out. So you have a situation where a trillion dollars have come out of hedge funds, which is a third of all the capital they had, and virtually no money coming out of private equity.”
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[...] David Bonderman has nothing but kisses for his investors, writes Reuters
- Posted by Deal Journal - WSJ.com : Afternoon Reading: Oh, Good! More Yahoo-Microsoft SpeculationWhere does Bonderman get his stats that $1 trillion has been redeemed out of hedge funds and that this equals one third of hedge fund assets?
Do Bonderman’s numbers imply the following: The average hedge fund is down 25-30% in performance YTD. In addition, if (on average) the average fund has experienced 30% redemptions, then…Does that mean hedge funds’ AUM have been cut by 2/3 (if you include both redemptions and negative performance). Comments?
Karl Zachar
- Posted by Karl Zacharweighted by assets under mgt, the average HF is probably not -25-30% nor seeing 30% redemptions. Probably closer to 15-20% and 10-20% since much of largest funds still locked up.
- Posted by mickeyrivers_17Karl Zachar - if one third of HF AUM have been withdrawn, I don’t think that number is mathematically related to the one third drop in performance YTD…
If AUM is 100, and you take 33% out, that leaves you with 66. If that 66 has lost 33% of its value, that leaves you with 44. This is linear, though, and much of the withdrawl I bet occured after loss in value rather than before.
Taking mickeyrivers_17 statement at face value, that 30% wihtdrawl and 30% reduction in value is too high and its closer to half or 1/3 of that… then for certain there are still at least 50% of AUM in there, YTD.
Studying for my GMAT,
- Posted by JoMammaJoMamma
Hey Mike - your June 3 Macquarie piece has no place for comments… so, if Macquarie is doing so well in Asia IPOs, then where is Basil McIlhagga these days ? Give Macquarie in Hong Kong a call and see if they put you through or can give any comment.
- Posted by ObserverRebel without a cause…
I don’t know about you but I love making a statement…In these crazy economic times did ya ever want to send a message to the world about what’s really going on and what is wrong… I made a wish this morning and here is what it is… I am going to send this email to everybody I know cause it would really be funny to see this happen.
By now everyone knows that GM’s stock is worthless. It is trading as MTLQQ.. Liquidation is in process and this stock is linked to the air. I would love to see it make the news and go up to $6.00 a share.. We the little people who believe in American can really make a statement. If one person out of every 1000 who read this buy 1000 shares OH MY GOODNESS we will make the news… Wanna have laugh and make some money….try it and we can all say we did it. The lil people…
- Posted by just a name