This thread needs an auto-responder for everyone that missed the satire.
How to Start a Hedge Fund
21–30 of 42 posts
Re: How to Start a Hedge Fund
#22Earlier quoted context omitted.
I'm the technical guy behind SumZero and I'd have to say that your comments are spot on. It can be very difficult to get a good rating on the site, those ideas that do tend to be exceptional and get a significant amount of attention.
Do you know about any other of those types of clubs?
The biggest difference between VIC and SZ is that VIC requires members to stay anonymous whereas SZ posts your full name and where you work whenever you post an idea. You can often figure out the identity of a VIC member because you'll see them post the exact same idea on SumZero at the same time. So that's eroded a bit of the anonymity.
Some people disagree with the lack of anonymity, they think that without it people will be influenced when it comes to rate ideas. It's been my experience so far that this is actually not the case. Well rated ideas mostly get there on their own merit.
Re: How to Start a Hedge Fund
#23I think the internet is helping change how hedge funds are started and people are hired, possibly for the better. I'll give a couple observations: 1. It's becoming easier to find people with good track records. No, I am not talking about KaChing or Covestor. There are actually two sites that exist where you can apply for entry. They are heavily populated by people who already work at hedge funds, so the process is pr…
This makes a lot of sense. Investing seems to be a specialized skill, and finding talent isn't the same as hiring "generally bright people" (the top ivy league kids).
I think I'm paraphrasing Burry, who said if any one school had figured out how to pump out great investors, it would be the most expensive school in the world.
I really hope other industries consider this type of approach, cherry picking standout/non-traditional talent, that independently build some type of track record. Actually, I believe YouTube eventually hired the student who created instant, so it might already be happening.
Do you know how things look on the operational side? For a fund with $1M AUM, how much of the costs are legal or for getting the business up and running? It would be interesting to see a breakdown of the process involved in starting a hedge fund and how similar it might be to starting a startup YC-style.
Re: How to Start a Hedge Fund
#24Earlier quoted context omitted.
Do you know about any other of those types of clubs?
The biggest difference between VIC and SZ is that VIC requires members to stay anonymous whereas SZ posts your full name and where you work whenever you post an idea. You can often figure out the identity of a VIC member because you'll see them post the exact same idea on SumZero at the same time. So that's eroded a bit of the anonymity. Some people disagree with the lack of anonymity, they think that without it peop…
Great insights, thanks! What I personally struggle with is learning all the necessary knowledge and lingo, coming from a different field - it's so much harder to even get to the point where you might come up with an investment idea of your own when you're not doing it professionally (yet).
Re: How to Start a Hedge Fund
#25I think the internet is helping change how hedge funds are started and people are hired, possibly for the better. I'll give a couple observations: 1. It's becoming easier to find people with good track records. No, I am not talking about KaChing or Covestor. There are actually two sites that exist where you can apply for entry. They are heavily populated by people who already work at hedge funds, so the process is pr…
This makes a lot of sense. Investing seems to be a specialized skill, and finding talent isn't the same as hiring "generally bright people" (the top ivy league kids). I think I'm paraphrasing Burry, who said if any one school had figured out how to pump out great investors, it would be the most expensive school in the world. I really hope other industries consider this type of approach, cherry picking standout/non-tr…
It depends on how much back office work you want to do yourself. A lot of young fund managers get enamored by the prospect of being able to spend all their time looking for investments that they forget about the administrative work required to run a fund.
A friend runs a $3M fund where audit, legal, book-keeping/accounting costs about 0.8% of assets. This guy does A LOT of the back office work himself. You can actually hire other firms to do stuff like cut checks, client contact, etc. It just raises your costs.
Also, what some young guys will do is sell a percentage of the hedge fund business up front, in order to secure capital that will pay for initial start up costs, compliance, a living salary for the first year. So maybe you will sell 20-30% of equity in the fund up front to get that.
Re: How to Start a Hedge Fund
#26Earlier quoted context omitted.
The biggest difference between VIC and SZ is that VIC requires members to stay anonymous whereas SZ posts your full name and where you work whenever you post an idea. You can often figure out the identity of a VIC member because you'll see them post the exact same idea on SumZero at the same time. So that's eroded a bit of the anonymity. Some people disagree with the lack of anonymity, they think that without it peop…
Great insights, thanks! What I personally struggle with is learning all the necessary knowledge and lingo, coming from a different field - it's so much harder to even get to the point where you might come up with an investment idea of your own when you're not doing it professionally (yet).
On sites like VIC, you can grab a guest account where you see ideas that are 45 days old. SumZero also has their weekly idea e-mail which Conor mentioned above. From there, I think you can get a really good understanding of how to lay out your investment thesis and what kinds of factors are relevant.
I spent a good amount of time reverse engineering ideas on VIC before submitting my own. You'll pick up all kinds of relevant metrics/industry lingo by doing that.
Re: How to Start a Hedge Fund
#27I think the internet is helping change how hedge funds are started and people are hired, possibly for the better. I'll give a couple observations: 1. It's becoming easier to find people with good track records. No, I am not talking about KaChing or Covestor. There are actually two sites that exist where you can apply for entry. They are heavily populated by people who already work at hedge funds, so the process is pr…
> you post investment ideas which are then rated by the community. Because the community consists mostly of hedge fund analysts
With the premise that I know pretty much zero about that industry, posting good ideas to people with the talent and connections to execute them seems like a good way to get ripped off. What's the "yeah, however ..." or "well, in reality ..." ?
Re: How to Start a Hedge Fund
#28Earlier quoted context omitted.
I'm the technical guy behind SumZero and I'd have to say that your comments are spot on. It can be very difficult to get a good rating on the site, those ideas that do tend to be exceptional and get a significant amount of attention.
Also, and sorry for the plug, but I think it is relevant here. If you are interested in seeing the quality of ideas that come through SumZero you should sign up for our individual investor mailing list - http://sumzero.com/retail/users . Each week we send out a top idea to the members on the list. edit: There are some sample ideas on that page.
Do you have an example mail or two from that to see if it's at all something that is relevant to me?
Re: How to Start a Hedge Fund
#29If this author was to write a similar article on, say, "How to play the flute" it would probably read: - Buy a flute - Blow into one end - Press the various buttons and levers - Make sure you perform at least once at Carnegie Hall
Did you miss the point that this is more a satirical commentary about hedge funds (with some genuine information for the curious thrown in) rather than a serious how-to guide?
Of course not. It was clearly not intended to be informational.
Neither was my comment.
Re: How to Start a Hedge Fund
#30The author seems to think that financial reform has done anything to harm the ability of big banks to extract dollars from productive humans. It has not. Among other things, it has granted FOIA-immunity to the SEC, so that in addition to failing to regulate the industry, it can now ensure that nobody knows for certain that it fails to regulate the industry.