Worried About Insider Trading?

We’ve noticed an increased appetite for anything related to hedge fund due diligence and compliance.

Today’s headlines are filled with stories of hedge fund managers accused of insider trading.

The question is how should investors react to the increasing number of insider trading cases splashing the front of the Wall Street Journal?

Some experts, including some of the fine folks we have lined up to speak for GAIM Ops Cayman, say you may not need to react at all.

Clearly insider trading is an important issue and should be on everyone’s mind, especially when you are evaluating a new investment.  However, if you are currently invested in a fund that is going through an investigation, remember –innocent until proven guilty.

The SEC has beefed up their enforcement team and is on high alert for high profile cases.  In FY 2012, the SEC opened 734 enforcement actions, flat with the735 that were opened in FY 2012, with only 58 of these cases for insider trading, according to the SEC.

In actuality, most SEC enforcement actions do not end with a conviction, but that is not what the media and court of public opinion would have you believe.  So, why is the media obsessed with hedge funds?

You can find out more this April at GAIM Ops Cayman, where  Dan McCrumfrom the Financial Times and Maneet Ahuja from CNBC  and Author of The Alpha Masters will examine this topic further and provide insight into insider trading.

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It’s all about the money…

In the wake of continued market volatility, the fear of the fiscal cliff, regulatory uncertainty and incredibly low yields; investors are asking how much more can they take.

(Photo: 401(K) 2012)

The answer is a lot. The reason is because they have to. Over the last six months, we have been speaking with investors of all shapes and sizes and one theme that carries through all the conversations, regardless of the size of their portfolio, is they want to put money to work. 

And while there is significant consensus among investors about getting into the markets, there is clearly no consensus as to how to access the markets. 

Some investors, like large wheel heeled managers with significant assets under management, others are focused on emerging managers, while others don’t seem to know what they want only that they want something that will earn them a return.

However, returns, it seems, may be tough to come by. We searched the web and found few articles that illustrate just how hard it is to put up returns today:

Apple: A hedge fund liability?

Eurekahedge: Hedge Funds Up Marginally In Nov.

US Hedge Funds Struggle to Get Ahead

The only way to get in the game is to start playing the game. What better way to get involved then by attending GAIM USA in January. To learn more about the conference and how attending can help you make better decisions click here.

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Forget About the Heartland – Agriculture Investing Is Hot in Asia

Thanks to historically high barriers of entry, such as low liquidity, institutional investors only own roughly 3% of the agricultural farmland market, according to Bloomberg estimates. And as U.S. investments, such as farmland, fetch ever-escalating prices, investors are looking toward other markets to put their money to work.

 (Photo: PlanetObserver)

Many are eyeing Asia, a continent with rapidly changing consumer tastes, nutritional cognizance and discretionary spending as the place to be. Asia’s been touted not only for its non-traditional ag investment opportunities – but the region’s huge number of consumers impacts many non-Asian ag investments.

Take, for example, Deutsche Bank’s pitch to investors for Fonterra Cooperative, a New Zealand dairy. Investment analysts say Asia’s growing taste for dairy could provide an upside for investors. The demand also creates an optimal M&A climate, according to this WSJ story.

Last month, Victor Lean, managing partner of Singapore-based Caudex Asia shared his thoughts on Asia-focused private equity opportunities at AgReturn Global Investments, an investing conference in Chicago.

While investments in other emerging markets, such as Latin America, tend to focus on the perennial favorite – farmland – he focused on opportunities in extricating value in other links of the Asia supply chain, including fertilizer, post-harvest technology and processing. Whether it is dairy or farmland, Ag is clearly a place to extract profits in the near and long term.  Our next Ag Return event will be in June of 2013 stay tuned for updates and information on this sector of the market.

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Never a dull moment…

Just when we thought things were settling down for the Thanksgiving break, the hedge fund industry is rocked with another insider trading scandal. Once again, hedge funds are on the hot seat.

 Here is a quick round up of the news over the last few days that will make for some interesting reading during the next few days:

• From the Wall Street Journal: Hedge Fund Manager Had His Finger on the Pulse of Elan 
• From Bloomberg: Brevan Howard on Hiring Spree as Hedge Fund Rebuilds in New York 
• From Reuters: Worries on U.S. taxes drive hedge fund exits to near 3-year high 
• From Associated Press: Ex-hedge fund trader charged in $276 million insider ploy 
• From Barron’s: Investors in Hedge Fund Credit Strategies Get Worried 

Take a look. Each story provides a bit of light reading that is sure to keep you occupied over the next few days to prepare you for the last month of the year. However to get a clear and focused understanding of the impact of another insider trading scandal, increased taxes, questions about yields and hiring trends will affect the industry in the weeks, months and years ahead, you need to come to GAIM USA in January.

This year’s program provides real insight and debate on these issues and more. So don’t delay, register today in order to make sure you and your organization are prepared for what lies ahead. Click here to download the brochure - Click here to register.

 Have a happy and meaningful Thanksgiving!
-The IIR Alternatives Team

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What’s Next … Growth all Around!

In the wake of last week’s election it seems that the hedge fund industry is poised for great growth in both new fund launches and assets under management in 2013. Now that we know who will be residing in the White House for the next four years, the industry has clear picture on which way regulation will be heading in the short and long term.

(Photo: 401(K) 2012)

The rules of the game have become clearer and Wall Street and the powers that be are in a better position to play. Next up is a ruling by the SEC on the Jobs Act.

Our research says look for this final determination before year-end. The wild card of course remains the uncertainty around returns. As the fiscal cliff looms and volatility around the world continues, managers are having a difficult time putting up returns.

That being said investors regardless of the size of their portfolios continue to want to invest in funds that make money no matter which way the markets are moving.

This we believe will be the driver of new fund launches and asset growth in 2013.

GAIM USA’s agenda is focused on understanding policy challenges, the impact of regulation, asset allocation trends and new fund launches; making it the must attend event for investors, managers and solution providers. We look forward to seeing you in Boca this January.

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Stormy Tweets Start Sensation…

Hedge fund analyst, Shashank Tripathi, wins Twitter’s Frankenstein of the week award.  According to Buzzfeed,  Tripathi, through his handle @ComfortablySmug, posted a series of blatantly false tweets:

BREAKING:CON EDISON SHUTTING OFF ALL POWER IN NEW YORK CITY AT 3AM IN ANTICIPATION OF POWER SURGES FROM HURRICANE SANDY
— ComfortablySmug (@ComfortablySmug) October 28, 2012

BREAKING:Governor Cuomo is trapped in Manhattan.Has been taken to a secure shelter
— ComfortablySmug (@ComfortablySmug) October 30, 2012

BREAKING:Confirmed flooding on NYSE.The trading floor is flooded under more than 3 feet of water.
— ComfortablySmug (@ComfortablySmug) October 30, 2012

 Net net, pretty harmless, right?  Well here’s the scary part.  He has over 6,500 followers.

Tripathi’s actions are predicated on the perfect storm of emotions that define the broader economic and political sentiments we have been experiencing as a nation since the crises of 2008.   People are scared. Hungry for information. Vulnerable.  And we think it is safe to say that vulnerability is one of the biggest feeders to gullibility.

The result? There’s an overt and terrifying willingness to believe the unbelievable.  As investors start to revisit mortgage back securities, as dark pools continue to thrive, as even the middle hanging fruit has been plucked, one thing is certain - in an attempt not to follow the lemmings over one cliff, the contrarians might just be lemmings in sheeps’ clothing jumping over another one.  How do you know what to believe anymore?  How do you know who to believe?

In order to sift through the lightning bolts of misinformation, investors, managers and information providers to the finance community must commit to hearing myriad perspectives, opposing viewpoints, and conflicting information.  That’s why our events at IIR are dedicated to providing the whole picture.

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What Does Alex Rodriguez Have to do with IIR USA?

Commitments, contracts, guarantees, if only the Yankees had an extra $240 Million, who knows, maybe Albert Pujols would be wearing pinstripes right now. The Yankees superstar 3^rd baseman Alex Rodriguez went 3 for 25 at .120 in the post season this year. If this wasn’t bad enough since joining the Bronx Bombers, Rodriguez  has just one World Series win in pinstripes.  His most recent deal signed back in 2007 was for $275 million over 10 years according to ESPN.  After this year, the front office needs to be thinking about its R.O.I.

Alex Rodriguez #13 of the New York Yankees. (Image: Getty Images via @daylife)

How does the richest Major League Baseball team relieve itself from this burden? The answer is simple look to the secondary market.  One thing we know, that there is always a buyer and a seller – it comes down to price.  The Yankees made an investment in Rodriguez and while they may have received some return, perhaps it is time to head for the exit. 

Looking to the secondary market for relief is something that many investors do on a regular basis. Investors privately seek out their peers to take over their commitments in funds and relieve them of the “burdens” on their portfolios. Exiting the fund or perhaps in this case making a trade allows the capital to be deployed to better investment opportunities.

Views from the desk of the IIR production staff: The secondaries market will continue to grow throughout 2013. And as for the Yanks, number 28 coming in 2013.

Whatever the future may hold for Alex Rodriquez, one thing is for sure, Market Leaders in Secondaries, taking place December 4^th in NYC is going to be a homerun!  

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Innovations in Ag are Making Headlines

Earlier this week the Wall Street Journal had a special report on innovations in agriculture. The report outlined a series of fascinating advances in agriculture technology, farming, irrigation and biotechnology – some of the very topics, we've been researching here at the Institute for International Research.

Water Scarcity (Photo: Alejandro Peters)

With the risk of food and resource scarcity ever-looming, many entrepreneurs and multinationals are innovating to solve food-related issues, running the gamut from solving water scarcity to improving the taste of a tomato.

Scarcity can often lead to invention and innovation, and agriculture is no exception.

At IIR’s AgReturn Global Investments conference next month, you’ll be able to take it a step further by getting on-the-ground insight into investing in agriculture innovations, what links in the food chain are ripe for opportunity and how to best diversify your portfolio – without worrying if agriculture is the next cleantech.

The Journal report details how environmental issues like the recent drought are impacting farmers – and at events like Agreturn, you’ll be able to dive into how that impacts your portfolio or your targeted investments in farmland with experts on the ground.

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Size Does Matter…

It turns out that when looking at funds over the long term, it may make sense to go bigger. It seems that smaller funds just aren't able to put up the numbers when compared to their larger peers according to study of small, medium and large funds.

The study by fund analytics firm, Pertrac, suggests that larger funds perform better than smaller funds in down markets.

The study, which is in its sixth year, took a look at performance trends of funds of all shapes, sizes and strategies during the period stretching back from 1996 to 2011.

On average, the study found that the “average large” fund outperformed the “average small fund”.

The study used fifteen hedge fund databases that took into account funds that have gone out of business during the period.

Pertrac said the study defined small funds as those with assets under management of less than $100 million,mid-size funds as those with assets of between $100 and $500 million and large as those having assets north of $500 million. To learn more about the study, click here.

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Investors Seeking Aggressive Hedge Fund Managers With Exotic Strategies

Structured credit strategies continue to beckon investors all over the globe according to a recent research report from Deutsche Bank.  Investors, it seems, like the return streams these folks are providing. According to London-based research outfit Hedge Fund Intelligence, funds employing credit strategies recorded a median return of 7.54 percent, more than double the return for all funds combined that are tracked by the company.

With investors earning a pittance on yields in the Treasury market, it’s no wonder they are seeking out savvy fund managers who are getting aggressive with more exotic credit strategies.  

The Deutsche Bank report, click here to read, recounts a recent visit to several Midwestern fund managers who discussed their best ideas.  More than a few mentioned structured credit instruments.

One manager recently told Reuters, ‘If you're willing to go out more into more illiquid, structured or complex trades, there's more opportunity, and potentially mid-teen returns’. Read the story here.

Photo: s_falkow

So how far are these managers going out on the risk scale? 

Many are betting on collateralized loan obligations (CLOs), bank loans, and even some mortgage-backed securities that have been out of favor since the financial crisis hit.

Some say, that this time it’s different – both Deutsche Bank and Reuters point out that, unlike before the financial crisis, funds for the most part are not boosting returns with borrowed money.

The jury is still out. Stay tuned.

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How Does Agribusiness Consolidation Create Opportunities for Investors?

Investors considering agriculture plays have many investment opportunities and vehicles to choose from – and these days, it seems as though investments in everything from seeds to farmland to technology are in play. One of the biggest activity drivers in the agriculture market will be industry and agribusiness consolidation, according to industry insiders.

Harvest Begins (Photo: TumblingRun)

As many multinationals become more aggressive with their own investing arms, there’s an increasing blurriness between R&D and M&A – creating a huge opportunity for those considering PE or VC plays in the space.

At AgReturn Global Investments this November, agriculture investing heavyweights will dissect this market activity and discuss their strategies and investments, from idea to exit. Entrepreneurs and investors will get a look into what the investing arms of Syngenta and BASF are looking for, and managers can get the inside scoop on sales to multinationals, such as the deal between MCN BioProducts and Bunge.

If you want to grow your agriculture portfolio’s value and make a splash in this burgeoning asset class, there’s just one place to be: AgReturn Global Investments. Register now to secure your spot.

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Where, Oh, Where Is the Hedge Fund Industry Headed?

There has been quite a bit of talk these days about where the hedge fund industry is heading in the fourth quarter of 2012 and beyond. Many recent news reports have cited massive withdrawals by investors because they are not happy with the numbers that managers are putting up.

Time will tell what happens to the industry but right now it seems that are sitting on the sidelines waiting to see how these managers who are supposed to zig when the markets zag fair in the fourth quarter.

Now that we are back to work and the post summer euphoria is winding down, our programming for GAIM USA 2013 is in full swing. This year’s program includes a new series called Hedge Fund Immersion. It is a series of highly focused sessions led by industry experts that cover topic ranging from compliance and custody to technology and operational due diligence.

To learn more about these unique sessions read our press release about Hedge Fund Immersion by clicking here. To learn more about GAIM USA 2013 and to register click here.

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Two Things Agriculture Investors Can’t Miss

The researchers at IIR have spent the summer working closely with investors to gauge and measure the best investment strategies in untested sectors. Agriculture is one of the most fascinating alternative asset classes there – and because ag is so multi-faceted, deploying the right strategy is critical.

We have two exciting opportunities for agriculture investors.

New AgReturn Webinar: Aquaculture Stewardship Council (ASC): Adding Value & Transforming the Market

• Sharpen your aquaculture strategy. Aquaculture is a blossoming industry that is ripe for investment, thanks to the global appetite for responsibly farmed seafood and new certification programs and standards managed by the Aquaculture Stewardship Council (ASC). We’ll be hosting an exclusive Webinar on Tuesday, Sept. 25, 2012 at 10:00 AM EST with Chris Ninnes, CEO of ASC. He’ll be walking participants through the ASC standards and how they create value for agriculture investors. Register to participate in this complimentary live Webinar here.

The AgReturn Innovators Award

• Thrust agriculture innovation into the spotlight. We’re honoring agricultural entrepreneurs with the AgReturn Innovators Award on November13, 2012, during a ceremony at the Renaissance Chicago Downtown. The winner will be chosen by a panel of prestigious investor and industry judges, including Edward Shonsey, CEO of L1 Agrosciences Inc. and Paul Zorner, Operating Partner at Pegasus Capital Advisors L.P. 

The award honors an individual or company that is focused on making an impact in the agriculture food chain, with the winner receiving a speaking slot at AgReturn San Francisco, slated for May 2013.  Click here to see the awards criteria and nominate a company.

To get a truly in-depth look at the best agriculture investing strategies, you’ve got to be at AgReturn Global Investments this November in Chicago. The price for attending goes up on Sept. 21, 2012 – so save your seat for the lowest rate today. 

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GAIM USA 2013 Slated for January 21-24, 2013, in Boca Raton

GAIM USA 2013 will be held January 21-24, 2013, in Boca Raton, FL. The New Year Kick-Off Event brings investors and hedge fund managers together to focus on returns and build assets under management.

GAIM announced the first group of speakers for the event:

• Lee Partridge, CIO, Salient Partners/CIO, San Diego County Employees Retirement Association
• Marc Katz, Deputy Director, Investment Administration for the Teachers’ Retirement System of the City of New York
• Bill Michaelcheck, Founder, Mariner Investment Group
• Tim Garry, CFA, Portfolio Manager and Chief Risk Officer, Passport Capital
• Guy Wyser-Pratte, President, Wyser-Pratte & Co.
• Daniel Zwirn, Zwirn Family Interests, LLC, in a one-on-one interview with William Cohan, contributing editor for Bloomberg TV and author of leading business books including Money and Power: How Goldman Sachs Came to Rule the World         
• Marcus Luttrell, retired US Navy SEAL, received Navy Cross for his actions facing Taliban fighters during Operation Red Wing; author of The New York Times best-seller Lone Survivor
• Scott Patterson, The Wall Street Journal, author of Dark Pools: High-Speed Traders, A.I. Bandits, and the Threat to the Global Financial System

Additional speakers will be announced in the coming weeks.

GAIM USA 2013 has been created to answer investors’ questions about where returns will come from in the New Year and deliver an organic networking environment for managers to build relationships with the world’s leading and largest investors.

“GAIM USA 2013 features a speaker roster of leading investors and managers who will provide real insight into the most critical issues in the hedge fund industry,” said Daniel Strachman, Director of Research and Strategy at GAIM, and Managing Director of The Institute for International Research. “Our participants past and present tell us they start their year with us. We have enhanced networking opportunities by creating dedicated space and time throughout the program for participants to interact and get business done.”

For more than a decade, GAIM USA conferences have attracted thousands of asset allocators, investors, asset managers and the professional and technology solution providers who service them. Speakers and attendees actively participate in discussions regarding today’s most important topics, including: performance, regulation, fee models, JOBS Act, high frequency trading, new strategies, activist investing, technology, accessing new capital pools, economic trends, the next generation of managers, and management skills.

The event will be held at the Boca Raton Resort & Club. Registration and details at www.gaimusa.com.

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One Game Ends, The Next GAIM Begins

The Olympic Games ended with a bang on Sunday, culminating in one of the greatest music shows of all time, thanks to the Spice Girls, Pet Shop Boys, Ray Davies, The Who and One Direction. It was great to see this celebration of sport end with such fanfare and excitement.

With the 30th Olympiad games over and done with, it is now time to focus on the next meaningful GAIM – GAIM USA. We are singularly focused on putting on a great event for delegates, speakers and sponsors at our event in Boca Raton, Florida in January 2013.

This year’s program will satisfy intellectual curiosity and feature great debates, intelligent information and opportunities to network in a relaxed but intensely focused environment.

To see the most recent agenda and learn more about the kick-off hedge fund event of the year, download the agenda and register today.

Speakers are being added daily, and the program is being updated regularly to ensure the content is the most relevant to those who matter most – you.

 Don’t delay, register for GAIM USA today!

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The Impact of Global Crop Yields on Private Investment

As agriculture as an asset class grows in popularity, questions abound about the best strategies to enter the market. However, a confluence of environmental changes are posing potential slowdowns in crop yields worldwide.

How will this impact investment – particularly since farmland is such a hot-ticket item?

 (Photo: « Jonny Boy »)

At IIR, we’re constantly kicking the tires with industry experts to analyze investment opportunities.

In this exclusive Q&A with Dr. Paul West, Chief Collaboration Officer, Global Landscapes Initiative, at the University of Minnesota, we got the inside track into his research on crop yields, and why agriculture investors should care.

For full information on which countries are missed opportunities, why global crop inventories are at historic lows, and private investment’s role in reducing food scarcity, click here.

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Finding the Needle in the Haystack

Hedge fund managers are a rare breed – they zig when the markets zag; they go long when the rest of the market goes short – they find the diamonds in the rough when others just see dirt. However, what really sets them apart is that sometimes the opportunities are staring investors, regardless of their expertise, right in the face and they see it, while others do not.

Marc Lasry of Avenue Capital has been looking at the Euro Zone and seems to like what he sees. Both, he and Richard Furst, a senior portfolio manager at Avenue, have done the work and believe that the continued uncertainty in Europe provides them with a unique opportunity to make money for their investors. Read the story in Monday’s New York Times here.

Clock in Trafalgar Square in London displaying a countdown to the opening of the 2012 Summer Olympics: from top, days, hours, minutes, seconds. (Photo Wikipedia)

Lasry does not seem to be the only one looking at opportunities in Europe. Firms like Blackstone, Apollo Global Management and Kohlberg, Kravis Roberts are also seeing green in Europe while the rest of the world sees red. It is not a quick hit for these folks – Lasry sees a three to five-year time horizon for his efforts. Patience, he expects will pay off. Perhaps, it is a lesson for all of us?

Our post is short, this week as we remain blanketed in dogs days of August in the middle of July and are preparing to watch the London Olympics. We will be back next week. In the meantime, stay cool and drink lots of fluids.

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It’s the Volatility and Uncertainty

Volatility here, volatility there, no returns anywhere.

That seems to be the rallying cry from the media these days and how hedge funds are performing amongst all of the current and potential economic uncertainty.

Its seems from recent reports in the popular press that Mr. Buffett was correct when he said, “it is only when the tide goes out do you see who is swimming naked.”

 (Photo: Wikipedia)

Earlier this week, Reuters posted and article quoting a manager saying that there was too much political and economic uncertainty for them to do much of anything other than operate in a mode of capital preservation. Read the story here.

If the political and economic uncertainty wasn’t enough, the news last week about the fraud at Peregrine Financial Group Inc. helped push more people into cash. The reports by the Journal and Bloomberg picture paint a very bleak picture of the firm’s Chairman and Chief Executive Office Russell Wasendorf Sr. who like Mr. Madoff seems to have admitted to the fraud and taken full responsibly for stealing over $200 million.  Here is an update on the story.

Maybe it is a good thing that the Olympics are starting in a week or so.  Hopefully, the Games of the XXX Olympiad will offer a much needed distraction from the uncertainty.  We are looking forward to watching the games and marveling in the athletic achievement that takes place.

In the meantime, we are staying out of the heat and working hard on researching and developing a number of programs for the fall and early part of 2013. As always, we welcome your comments and suggestions.

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Fifty Shades of Ag Investing

Agriculture as an asset class has gained major traction with investors of shapes and sizes in the last few years. Institutional investors’ allocations to agriculture are expected to grow from 1% of portfolios to 5% in the next five years according to industry estimates. That increase in investment is sorely needed. According to UN estimates, by 2030, the world will need at least 50% more food, 45% more energy and 30% more water. In short, the population of the planet is growing faster than its food and water supply. To learn more about the coming shortage click here.

(Photo: thegreenpages)

The metrics alone are cause for urgency, and our research shows that investors are paying attention. But with so many entry points into agriculture investing, investors are still forming their strategies.

Many institutional investor players have entered the game with farmland investments, although some are turned off by lofty valuations in the U.S. or lagging yields abroad. Others are pondering agribusiness private equity plays, both domestic and in emerging markets poised for growth.

The research is clear – there is an abundance of investment opportunities in ag across the food chain, from inputs to row crops; farms or packaged goods; grain elevators or disruptive technologies. In a relatively untested industry, investors are hungry for tried-and-true agriculture investing strategies.

Our AgReturn series, which released its agenda this week, gives investors the inside scoop on the myriad opportunities in agriculture, including commodities, farmland, biotech, crop protection and many others. This is a comprehensive view of an overwhelming space that highlights true success stories in an industry some have worried is the new cleantech.

This year’s AgReturn speakers have accomplished a lot in ag recently. They’ve debuted the hottest non-Facebook IPO of the year; sold portfolio companies to major corporate agribusinesses; or set the stage for governmental agriculture policy.

It’s a feast for investors who are hungry for opportunity. Click here to see a bit more about the November program.

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Smile, It’s Not All That Bad

It’s not the end of the world as we know it and we do feel fine. There has been a lot of interesting news this week about hedge funds and those who manage them and frankly a lot of it has not been positive.

 (Photo: jvdalton)

But fear not, dear reader, our research shows that the industry is poised for great things in the second half of 2012 and beyond. Investors are looking to allocate to enhance beta, create alpha and most importantly protect their portfolios.

However, before they write the check or send the wire, they are spending a lot of time on due diligence. They are kicking tires, and looking under the hood to make sure the engines they fuel run properly. Our Investor Ops Series kicked off today, this is a first event of its kind allowing investors to get together and discuss: the who, what, where, why and how to complete operational due diligence on alternative investments.

The investor-only summit is a deep dive into the ops side of investing.  Our next program in the series will be later this fall so be on the look-out for because if you are an institutional investor you are not going to want to miss it. Click here to see a bit more about the program.

The InAlternatives blog will not publish next week. We are going to take an extra day off for July 4th. We will be back on the 11th.

Happy 4th!

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Investors: Guess What? The Sky Is Not Falling!

Contrary to a number of recent articles about negative investor sentiment and hedge fund manager comments about how bad the economy is going to become, we believe that the hedge fund industry is poised for growth in the second half of 2012 and beyond. The 2012 Citi Prime Finance survey  provides the foundation for this belief.

 (Photo credit: Wikipedia)

The survey of asset managers, consultants and investors found that despite poor performance over the last year, assets allocated to hedge funds are expected to double over the next five years.  The reason is simple, investor need alpha generators and right or wrong, they believe that hedge funds can and will provide alpha. Structures may change, strategies may evolve but nonetheless, hedge fund managers will provide alpha. The study  provides solid insight into where the industry is headed. To learn more, click here to read the survey results.

Here on the front lines, we are hearing from institutional investors daily about their increased appetite for hedge funds. Next week in New York, we are running an investor-only program on Operational Due Diligence for Endowments and Foundations. The first in our Investor Ops Series offers investors a peer-to-peer learning environment to exchange ideas and gain insight on how to look at managers from the inside out. There are still a few spots left. To sign up for this program click here.

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It Is All about Managing Risk

JPMorgan Chase & Co. chairman and CEO Jamie Dimon (Image credit: Getty Images via @daylife)

The hedge fund industry seems primed for the pump as we settle into the beginnings of what looks to be a great summer. It's clear that many folks both in and out of the industry are waiting with baited breath for the news out of the SEC on how funds can or cannot advertise in the wake of the passage of the JOBS act.

Our research shows that going forward investors, regardless of the amount of capital that they plan on putting to work, are focused now more than ever on dotting I’s and crossing T’s before they invest dollar one with a fund.

To this end, one topic on everyone’s mind continues to be risk management. It seems that this is the story that just will not go away. Yesterday, Jamie Dimon, the Chairman and CEO of J.P. Morgan testified before the Senate Banking Committee. It was his first appearance on the Hill since the bank revealed massive trading losses in May. To read excerpts from his testimony, click here.

Later this month, the first Investor Ops program will take in New York City. During this investor only program, delegates will learn from and meet with peers to discuss the best practices in operational due diligence. Investor Ops is a new series we created to help investors learn the tools of the trade to make better decisions.

To learn more about this event, click here.

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On Their Minds…

Its officially summer – at least according to those in the business of selling summer – however, as we enter a time of the year that typically consists of relaxation, reflection, preparation and the obligatory barbecues, questions about the future of the hedge fund industry are on managers, investors, service providers and regulators’ minds alike.

At IIR, the summer is a time for research, planning and strategizing, we work hard during this time to develop and create programs to make sure they are hitting on the subjects that matter to delegates in the second half of the year and the early part of 2013.

Our goal is simple, provide delegates and sponsors with objective programs that help them grow and expand their businesses. As such we are interested in talking to you and your colleagues, if you want to get involved or believe you have something to add, please get in touch with us at ait@iirusa.com. We want to hear from you. Don’t be shy.

Recently, we came across an interesting survey of the hedge fund industry conducted by the good folks at KPMG and AIMA. The report, titled “The Evolution of An Industry” was generated from surveys and interviews of managers around the world during the period of October 2011 to February 2012.

The goal of the exercise was to provide information on what is on the minds of hedge fund managers on issues ranging from transparency and asset flows to regulatory matters and due diligence.

Approximately 150 managers with assets ranging from under $100 million to $10 billion responded to the request for information. We think you will find the survey quite interesting. This is real insight into what is on the minds of folks shaping the hedge fund industry.

To download and read the survey results click here.

Thanks again for your continued support of IIR's alternative investment events.  We look forward to welcoming you to one of our programs in the future. If you would like more information about a program, or have questions comments or concerns, feel free to email us at ait@iirusa.com any time. Your insight is important to us.

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The Evolving Hedge Fund Industry

USA flag at half-mast during Memorial Day. The flag is located at the National World War 2 Memorial in Washington, D.C. (Photo credit: Wikipedia)

This week like most others in the first five months of year, the news about the future of the hedge fund industry has been, well a bit confusing.

There are stories of consolidation and closures as well as comments about the need for more regulation as hedge funds were blamed for the losses amassed by the London Whale.

Good bad and indifferent were elements found in many if not all of the coverage about the hedge fund industry in the last seven days.

Well here is what we think; the industry is in transition. As we conduct our research into where the industry is headed in an effort to provide the most relevant and thought provoking programs, we continue to here both positive and negative comments about the hedge fund industry.

Our view is that many, both in and outside of the hedge fund industry, are working hard to find answers that will generate returns in these extremely volatile markets while working within the ever changing parameters set out by the powers that be.

Over the next few months it’s sure bet that the changes will continue during this time, it’s very important to stay focused on where the industry is heading. Our programs will deal with these issues head on - missing them is something you don’t want to do. To learn more about what we are doing in alternatives click here .

As the Memorial Day holiday weekend approaches, we wanted to remind all of you to enjoy the time away from the office with family and friends – the things that matter most. Stay tuned because the coverage is only getting better.

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Dot your I’s and cross your T’s because it is all about risk

The lesson coming about the latest round in the battle for Yahoo is simple; tell the truth the whole truth and nothing but the truth because if you don’t well, be prepared to make an exit. However Third Point’s assault on Yahoo is just one example of how investors are taking a more active role in how their companies are being managed.

Incorrect information on a resume is not the only thing that is important to investors – showing up – well that counts too. Just last month, Ricardo Salgado was forced to resign from the board of NYSE Euronext because he failed to attend enough board meetings. That being said, corporate governance or the lack thereof is clearly on the mind of investors and managers around the globe. Rarely a day goes by when an article does not appear in the popular press about what the board is doing however what we have not seen is many stories on what board members are thinking.

When we did some digging, we found the folks at EisnerAmper LLP just released the results of the third annual survey of corporate directors – which took the temperature of board members around the country. The study which is downloadable through this link provides real insight into the minds of those tasked with overseeing Corporate America. We hope you enjoy it.

As always if you questions comments or concerns please get in touch.

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It's All About JOBS

The hedge fund industry is alive and well despite some reports of its demise. And while performance year to date does not seem to be all that strong, investors regardless of the size of their wallets are still allocating to Wall Street’s forbidden fruit.

Performance or lack thereof may be what’s on the minds of many outside the industry, however what seems to be on the minds on those in the industry is the JOBS bill.

The Jobs bill or the Jumpstart Our Business Startups Act, was signed into law by the President on April 5, 2012, is intended to help small business in attracting capital to grow and expand its business and reduce some of the burdensome regulations placed on privately held companies by Sarbanes Oxley. There are specific provisions regarding crowd funding and the rules regarding solicitation and advertising for “specific kinds of private placements” of securities. Enter the hedge fund and private equity industry.

As you know our goal at IIR is to have our fingers on the pulse of the industry and well let’s just say the blood is pumping with material on how this law is going to affect the industry.

We thought it'd be valuable for you, our fearless readers, to provide you with a summary of what the jobs bill is all about and also provide you with some commentary on how it is expected to affect the way funds raise money. Now we are not lawyers so instead of going to law school and coming up with our own conclusions, we went to the web and sourced material from firms we know are active in the industry. To be clear we are not providing legal advice nor are we endorsing any of the firms whose links you will find below but rather providing you with an entry point to access the information. With apologies to any firms that we left off the links list– there was many – please click below to access the information:

• Alston & Bird LLP
• Bingham McCutchen LLP
• Cadwalader, Wickersham & Taft LLP
• Seward & Kissel LLP
• Tannenbaum Helpern Syracuse & Hirschtritt LLP
• Ropes and Gray LLP

As always, if you have any questions, comments or concerns please feel free to email any member of the IIR alternative investment team. Thanks again for reading what we have to say and enjoy.

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