Hedge funds are typically shrouded in secrecy. However, some hedge funds are just wrapped in a shroud.
The recent insolvency of Bayou Management LLC, the disappearance of hundreds of millions of dollars entrusted to it and the attempted suicide by its CFO, highlight the risks of investing in the secretive world of hedge funds.
My colleague, Richard Tullo, recently interviewed Steve McMenamin, the Executive Director of The Greenwich Roundtable. The focus of the interview was on ethics and conducting due diligence in investing in hedge funds. Much of the discussion revolved around scrutinizing the management team at hedge funds. Perhaps the most useful piece of advice rendered was that conducting due diligence on the management team should not be done in “speed dating” mode. Many funds purposely establish truncated opening and closing windows to raise fresh capital so as to limit the time in which investors can conduct their due diligence. Inaccessibility to management during the periods of their raising capital raises a red flag to avoid investing in such funds.
This interview will be included in our conference book which will be made available free of charge to attendees of our Hedge Fund – Due Diligence Conference which will take place on November 14 in New York City. This interview can be purchased by requesting it from firstname.lastname@example.org