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There are several things that give away that he is unlikely to have been a real hedge fund manager (oh well, maybe he managed $5mm of friends and family money,
by matco11 10y ago
There are several things that give away that he is unlikely to have been a real hedge fund manager (oh well, maybe he managed $5mm of friends and family money, but that does not make him a pro!), but what he says on the fee structure is not one of them: several hedge funds would have the standing to claim 2/20 (or even more) without hurdle rates.
A tiny fraction of hedge fund managers would be infringing any laws, if at all.
Excluding the over-the-counter markets(!), the better you are as a hedge fund manager, the more you know what can make you money, what can lose you money and which of your decisions were wrong and which were right: there is no room to blame it on other people doing insider trading.
- leroy_masochist 10y agoInteresting, I'm not familiar with any funds that have no hurdle rate whatsoever. I've heard of some that have what people in the industry describe as arrogantly low hurdle rates (like in the 3-4% range), but have never heard of a situation where there is none at all. I agree with you that there might be a few funds that are considered so hot that their GPs could get away with not having a hurdle rate; do you know of any by name? FWIW, my understanding is that if you're a super-in-demand fund, the power move is keeping the same hurdle rate in place (maybe even raising it as a demonstration of confidence in your skills as a money manager) and also raising the carry rate. In other words, going from a 2/20 structure with an 8% hurdle rate to something like a 2/33 structure with a 10% hurdle rate. I believe a few of the Tiger baby funds have done this.