Getting Started in Hedge Funds

210 Pages·2005·1.262 MB·English

by  Daniel A. Strachman

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Getting Started in
HEDGE
FUNDS
S E C O N D E D I T I O N
Daniel A. Strachman
John Wiley & Sons, Inc.
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Getting Started in
HEDGE
FUNDS
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The Getting Started In Series
Getting Started in Online Day Tradingby Kassandra Bentley
Getting Started in Investment Clubsby Marsha Bertrand
Getting Started in Asset Allocationby Bill Bresnan and Eric P. Gelb
Getting Started in Online Investingby David L. Brown and
Kassandra Bentley
Getting Started in Online Brokersby Kristine DeForge
Getting Started in Internet Auctionsby Alan Elliott
Getting Started in Stocksby Alvin D. Hall
Getting Started in Mutual Fundsby Alvin D. Hall
Getting Started in Estate Planningby Kerry Hannon
Getting Started in Online Personal Financeby Brad Hill
Getting Started in 401(k) Investingby Paul Katzeff
Getting Started in Internet Investingby Paul Katzeff
Getting Started in Security Analysisby Peter J. Klein
Getting Started in Global Investingby Robert P. Kreitler
Getting Started in Futuresby Todd Lofton
Getting Started in Project Managementby Paula Martin and Karen Tate
Getting Started in Financial Informationby Daniel Moreau and
Tracey Longo
Getting Started in Emerging Marketsby Christopher Poillon
Getting Started in Technical Analysisby Jack D. Schwager
Getting Started in Hedge Fundsby Daniel A. Strachman
Getting Started in Optionsby Michael C. Thomsett
Getting Started in Six Sigmaby Michael C. Thomsett
Getting Started in Real Estate Investingby Michael C. Thomsett and
Jean Freestone Thomsett
Getting Started in Tax-Savvy Investingby Andrew Westham and
Don Korn
Getting Started in Annuitiesby Gordon M. Williamson
Getting Started in Bondsby Sharon Saltzgiver Wright
Getting Started in Retirement Planningby Ronald M. Yolles and
Murray Yolles
Getting Started in Currency Tradingby Michael D. Archer and
Jim L. Bickford
Getting Started in Rental Incomeby Michael C. Thomsett
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Getting Started in
HEDGE
FUNDS
S E C O N D E D I T I O N
Daniel A. Strachman
John Wiley & Sons, Inc.
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Copyright © 2005 by Daniel A. Strachman. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
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ISBN-13 978-0-471-71544-3
ISBN-10 0-471-71544-1
Printed in the United States of America
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To My Wife, Felice,
and My Daughter, Leah
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Contents
Acknowledgments ix
Introduction
Why Hedge Funds? 1
Chapter 1
Hedge Fund Basics 9
The Near Collapse of Long-Term
Capital Management 13
A Brief History of Hedge Funds 25
The Current State of the Hedge Fund Industry 31
Alfred Winslow Jones—The Original Hedge
Fund Manager 33
Chapter 2
How Hedge Funds Operate 45
Starting a Hedge Fund 48
Hedge Fund Regulations and Structures 67
How Hedge Funds Use Leverage 78
Patriarchs of the Hedge Fund World 80
Hedge Funds Take All the Heat 85
George Soros—The World’s Greatest Investor 90
Chapter 3
The Managers 93
Judy Finger and Doug Topkis—Haystack Capital LP 96
David Taylor and Mike Williams—Cover Asset
Management LLC 102
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viii CONTENTS
Paul Reiferson and Jeff Lopatin—Americus
Partners LP 108
Guy Wyser-Pratte—Wyser-Pratte 113
Bill Michaelcheck—Mariner Investment Group 123
Nancy Havens-Hasty—Havens Advisors LLC 131
Steve Cohen—SAC Capital 138
Chapter 4
Hedge Fund Investing 145
An Investment Adviser 147
An Institutional Investor 151
Third-Party Marketers 156
An Individual Investor 161
A Consulting Firm 165
A Manager of Managers 168
Conclusion 175
Appendix
Hedge Fund Strategies 179
Glossary 187
Notes 189
Index 193