Hedge Fund Managers

“Natural selection doesn't work as fast as changes in society. So I always say this to golfers, your game, your brain did not evolve for you to be a PGA tech golfer or hedge fund manager. Your brain did not evolve with the intention of you being a professional …”

“And right around the time that started happening, the hedge fund products were pretty watered down. And the hedge fund managers saw that they were capacity constrained. They didn't want to give their best stuff. So I will give you the long book and we'll hedge…”

“The most successful hedge fund managers really start by thinking about how do you minimize your losses before you start thinking about maximizing your winners.”

“Venture guys make really good thematic bets about the next 10 years and are pretty horrible at assessing how the market's going to react to the next quarter's data. Hedge fund guys are the exact opposite.”

“I think that when I talk to managers, and I've talked to a lot of long only and hedge fund managers over the last couple weeks, they're all in their bottom quartile of exposures, Bill.”

“I believe really strongly that to perform at the level required to be successful requires it to be almost the only thing you do. The idea that you're going to do that part-time and succeed, I think is a bad assumption.”

“The idea here is that unconstrained talented hedge fund managers have a better chance of beating a risk-free rate than highly constrained long only managers have the probability of beating a benchmark.”

“The only way to get around some of that skew risk, some of that kurtosis risk, is to just increase the number of managers that you work with.”

“If you're paying 20% incentive on 40 beta, you got to be damn good at manager selection. Some people can do it. I can't. That eliminates a lot of the universe.”

“I would love to see cash hurdles for hedge fund managers. I would love to see that. I don't know that I'm going to get my wish, especially we've got a pretty impressive roster of managers. There's a supply-demand mismatch.”

“What we don't do is try to take out the betas underneath. Partly we haven't done it because operationally it's difficult, and then partly because if a manager tells us at the end of the month or even the end of the week that they're along something, by the tim…”

“What we do look, though, is over time, does anybody have a bias? And if they tend to have a beta bias, then they're probably a candidate to leave our portfolio.”

“It's also been, I think, enormously helpful for our team to watch what the managers are actually doing, because it's one thing, again, to see the pretty pages in the flipbook that say, this is our philosophy, this is our process, but then when you watch what t…”

“Everybody knows that if there are 20 hedge fund managers around the table and you want to sound the smartest, you do a really colorful short pitch. There's even, I think some psychological research that says like cynicism, negativity, those things actually sou…”

“Very few managers answer it anywhere beyond I own X amount of stocks long and this size, and I used to run this amount. Very few will actually talk about the liquidity on the short side. And I think going to Casey's point, that's where the trouble shows up fir…”

“We spent a lot of time looking at our IRR with hedge fund managers. We've been able to add a couple hundred basis points by taking money away when they're up and adding when they're down.”

“And in alpha space, average managers lose money. You don't make alpha unless you are exceptionally good. And people think as long as you're reasonable, you'll do all right. Good isn't good enough. You've got to be great.”

“I think the proportion of alpha that clients are happy to leave with a manager Has not really changed over years. You know, you can debate, and maybe it's something to do with the quality of the returns, some number between 25 and 30% of alpha that clients are…”

“What's difficult in finance is that the kind of personality that makes you a billionaire hedge fund manager is not the kind of personality that is likely to say, okay, that's enough.”

“The biggest issues for hedge fund managers, as far as I'm concerned, is a couple things. Number one, many of them like themselves way too much, and so they really need somebody that's willing to be honest with them. They're very powerful people, both financial…”

“What's gotten more and more difficult over the years is that there are many, many more people who fit into that set of criteria Then end up outperforming in what's become an incredibly competitive marketplace.”

“95% of managers, the bulk of their returns are some form of beta.”

“I think the averages are doomed. I think even 80th percentile is doomed. I think you have to be in the 99th percentile at this point, whereas 20 years ago you could have been in the sixtieth percentile and you were pretty good.”

“I mean, I often write that the essential skill of a hedge fund manager is continuing to run a hedge fund. There's some sort of Inherent storytelling element to the job where you'll have like a time series of returns and like, that's interesting, but what you m…”

“I think, by the way, the biggest thing you'd be helping the new funds with is marketing and helping them tell their story because a new hedge fund manager, they have to have a great first year in terms of their performance and they have to raise money and ther…”

“The people who actually have not done as well, in my view, in the last five years, have been some of the best investors and definitely some of the best risk managers in the world, period.”

“The fees are so high relative to the returns. You know, I do feel that there's only a very small handful. I believe that really earn those. It's very easy for everyone else to come up and have the same fee scale and not really deliver that value.”

“One of the things that we see in the hedge fund industry is that most investors are kind of skeptical of hedge funds as a whole, but they're very positive on the hedge fund managers that they've picked for their portfolio.”

“Some of the most successful people in, in this field have come from very little and endured some type of hardship in their lives and are probably the antithesis of entitlement.”

“We have about 1500 hedge fund managers that now give us their position Level transparency directly from administrators”

“Exposure management, on average, that tracks approximately 200 basis points a year from a manager's performance.”

“And some Managers generate something like 900 basis points a year of excess return to their equally weighted portfolio.”

“We know, for example, some managers that add two-thirds Of their value from a return perspective, intra-month.”

“If we could just let our managers run with twice as much of all, I think we'd probably get more than twice as much return.”

“You don't have to know all the answers before you do something. And that, I think that is a tough thing for a hedge fund manager, you know, because as a hedge fund manager, you try to know every single thing, especially the key risks that you need to underwrit…”

“What we found over the years is that, you know, the more folks are confident and have a handle on their own approach to portfolio construction, as opposed to kind of blowing in the wind on it, the much more likely they're going to be successful in it.”

“If you start to sense, boy, the mentality of the manager is changing or something about their strategy or something about their love for the business is kind of Changing for the worst. Even if they're going through a drawdown, you're still better off probably …”

“It is impossible to think objectively about a field that you reap, that you get your paycheck from. And I think that's really true for a lot of money, professional money managers, mutual fund managers, hedge fund managers, that no matter how hard they try, it'…”