Tom Bushey, founder of hedge fund Sunderland Capital, explains why hiring a dedicated marketing person to raise capital for an emerging manager generally fails.
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“And then marketing, I would say, whatever you want to call it, business development, marketing, the truth of the matter is in a small firm, it's next to impossible to have someone else sell marketing.”
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More from Tom Bushey
Insight
Bushey: Fund business risk stems from misaligned capital, not AUM size
“It's not necessarily size that's ever a part of the business risk. I think it's, if you have mismatch of expectations and your capital, that is what really creates business risk. It doesn't matter if you're five billion or ten billion or fifty billion or fifty…”
Tom BusheyDec 3, 2018▶ 46:35Tom Bushey – Launching a Hedge Fund (Capital Allocators EP.78)
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Bushey: Traditional private equity auctions are an inefficient capital allocation method
“When I was in private equity, I was the associate in charge of handling sort of the mail would come in and you get. 15 companies to look at and you'd pick one and you'd go bid and there'd be 50 other bidders on that. And that just never struck me as an efficie…”
Tom BusheyDec 3, 2018▶ 11:55Tom Bushey – Launching a Hedge Fund (Capital Allocators EP.78)
AssertionNot checkable as stated
Bushey: Quants at previous fund claimed losing over 5% was impossible
“At the firm I worked for, there were three Cambridge PhDs who would send me a spreadsheet saying it would be impossible to lose more than five percent of our portfolio.”
Tom BusheyDec 3, 2018▶ 14:31Tom Bushey – Launching a Hedge Fund (Capital Allocators EP.78)
Insight
Bushey: Hedge fund AUM lacks the stability of private equity commitments
“Three billion dollars of capital is not the same as a three billion dollar private equity fund. And so as quickly as that goes up, even if performance isn't bad, it was primarily European fund-to-funds money, and that, that was a piggy bank very quickly”
Tom BusheyDec 3, 2018▶ 15:06Tom Bushey – Launching a Hedge Fund (Capital Allocators EP.78)
Insight
Bushey: Mega-fund PMs have a distorted sense of raising outside capital
“I would say both of those experiences probably gave me a different sense of how hard it was to raise outside capital than it should have been. You didn't have to market. You just get a phone call being like, XYZ client wants to send you a large pile of money. …”
Tom BusheyDec 3, 2018▶ 16:32Tom Bushey – Launching a Hedge Fund (Capital Allocators EP.78)
Insight
Bushey: Public small-caps trade at a 50% discount to PE multiples
“But in the public markets, especially in months like we just had in October, you're able to buy really great long-term outcomes for half off of a multiple you'd be willing to pay for in the private markets.”
Tom BusheyDec 3, 2018▶ 18:41Tom Bushey – Launching a Hedge Fund (Capital Allocators EP.78)
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