A detailed, step-by-step book covering the entire hedge fund evaluation process Investing in hedge funds is different from investing in other asset classes. There is much less publicly available information about hedge funds performance than there is about mutual funds or individual stocks. Consequently, investing in this class requires more sophisticated investment knowledge, greater due diligence, and, in many cases, a better-developed ability to evaluate investment managers. Hedge Fund Analysis provides a broad framework of how to approach this endeavor, from initial screening to analytical techniques, interviewing skills, and legal and contract negotiations. Along the way, it demonstrates a variety of mechanisms for monitoring and tracking hedge funds and the underlying hedge fund portfolios--explaining each stage of the process in minute detail and providing specific examples which fully explain the opportunities and challenges you'll face each step of the way. Provides a detailed look at how to source hedge funds, screen through them, and rank their strengths and weaknesses Lays out a thorough process for evaluating funds, from initial interviews to performance analysis to onsite meetings Reveals what questions to ask by strategy in order to understand the underlying risk factors associated with each Highlights non-investment analysis, including operational due diligence and risk management, as integral elements in the process Written by a financial professional with over twenty years of experience conducting investment manager due diligence, this book will put you in a position to make more informed decisions when investing in hedge funds.
Introduction xi PART ONE Background CHAPTER 1 Hedge Fund History 3 So Who Invented the Hedge Fund? 4 The Samurai 4 The Academic 5 The Legend 14 The Innovator 17 CHAPTER 2 Hedge Fund Asset Class 29 Definition 29 Hedge Fund Structure 31 Hedge Fund Strategies 32 Advantages of Allocating to Hedge Funds 43 Hedge Fund Size and Age Impacts Performance 52 PART TWO Hedge Fund Due Diligence CHAPTER 3 Due Diligence Process 57 Key Areas of Focus within Each Component of Due Diligence 57 The Due Diligence Process Highlighted in This Book 60 Putting It All Together 67 Some Initial Thoughts 70 CHAPTER 4 Initial Data Collection 77 Data Collection 78 Due Diligence Questionnaire (DDQ) 80 Fictional Capital Management 80 Other Materials 106 Further Analysis 108 13F Analysis 116 Hedge Fund Journal 119 CHAPTER 5 Initial Interview 121 Initial Call or Meeting 121 Phone Interviews 122 Meeting Notes 139 CHAPTER 6 Quantitative Analysis 145 Performance Measures 146 Absolute Return Measures 146 Absolute Risk Measures 154 Regression-Based Statistics 164 Peer Group Analysis 168 CHAPTER 7 Portfolio Analysis 173 Attribution Analysis 174 Fundamental Analysis 189 Evaluating Portfolio Data 193 CHAPTER 8 Onsite Interviews 217 Onsite Meeting Strategies 219 One-on-One Meetings 219 Meeting with More Than One Person 222 Different Perspectives 223 Meeting Notes 224 Onsite Interviews at Fictional Capital Management (FCM) 228 CHAPTER 9 Operational Due Diligence 259 Case Study: Bayou Fund 259 Definition 261 Importance of Operational Due Diligence 263 Categorization of Operational Due Diligence 267 Interview with FCM Operational Staff 301 CHAPTER 10 Risk Due Diligence 309 Graphical Depiction of Hedge Fund Risks 312 Risk Due Diligence 314 Factor Decomposition Analysis 330 Interview with FCM Risk Manager 333 CHAPTER 11 Reference and Background Checks 339 Onlist and Offlist References 340 Internet and Social Media 341 Contacting References 343 Problematic References 346 Whose References Should You Check? 349 How Many Reference Calls Are Enough? 350 Background Checks 352 Summary of Reference Calls for FCM 353 CHAPTER 12 Hedge Fund Scoring Model and Decision Making 357 Hedge Fund Scoring Model 358 Putting It All Together 374 About the Author 379 Index 381
(0 Comentarios)
