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The Long and Short Of Hedge Funds: A Complete Guide to Hedge Fund Evaluation and Investing

ISBN: 978-0-470-46618-6
226 pages
December 2008
The Long and Short Of Hedge Funds: A Complete Guide to Hedge Fund Evaluation and Investing (0470466189) cover image


An innovative A to Z guide to the world of hedge funds

The Long and Short of Hedge Funds presents readers with a unique look at these investment vehicles, the people who run them, and those who provide services to them. This book is a detailed guide of the industry and offers rare access to hedge fund managers and industry participants. The book provides the reader with a real education about hedge funds, gaining a firm understanding of the industry.

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Table of Contents



Chapter 1: Hedge Funds Past, Present, and Future.

The Father of the Hedge Fund Industry.

Why Invest in Hedge Funds?

Understanding the Market.

What Happened at Bear, and Why.

Why This Book?

Chapter 2: Hedge Funds Today.

Hedge Funds In The News.

How Hedge Funds are Regulated.

Recent Calls for Regulation.

Hedge Fund Fees.

Commission Give-Up.

Continuing the Jones Legacy.

Chapter 3: The Men Who Made the Industry What it is Today.

A Force to Be Reckoned With.

Hedge Fund Legends.

George Soros.

How Soros Managed Money.

Michael Steinhardt.

How Steinhardt Managed Money.

Julian Robertson.

How Robertson Managed Money.

Standing on the Shoulders of Giants.

Chapter 4: Running Your Fund Transparently.

When Good Funds Go Bad.

What You Can Learn from the Credit Crisis.

What Went Wrong.

Perception versus Reality.


Information Exchange.

Giving Your Investors Their Due.

Explaining Your Strategy.

Keeping the Lines of Communication Flowing.

Communication During a Crisis.

Jumping on the Hedge Fund Bandwagon

The Year of the Hedge Fund.

Where the Industry is Heading.

Chapter 5: How Hedge Funds are Packaged.

Funds of Funds.

How a Fund of Funds Works.

Fund of Fund Economics.

The Costs of Running a Fund of Funds.

Fund of Funds Growth.

Fund of Fund Buyouts.

Managers of Managers.

MOM Knows Best.

The Pros and Cons of Transparency.

Diversifying Your Portfolio.

Avoiding Common Problems.

Chapter 6: How to Raise Money.

Friends and Family, Referrals, and Perfect Strangers.

Dialing for Dollars.

Making Connections.

Capital Introduction Services.

How Capital Services Work.

Third-Party Marketing.

Choosing a Third-Party Marketer.

When to Hire a Third-Party Marketer.

The Road to Wealth.

Conducting Reconnaissance

A Cautionary Tale.

If You Build It, They Won't Come.

Finding the Right Investors.

Taking Your Strategy to the Streets.

Vetting Your Investors.

Preparing the Pitch Book.

A Few Final Thoughts on the Essence of Successful Marketing.

Chapter 7: The Supporting Staff.

The Cardinal Rule of Choosing a Service Provider.

The Lawyers.

Choosing an Experienced Attorney.

What to Ask Your Attorney.

The Accountants.

Prime Brokers.

Third-Party Administration.

Calculating Net Asset Values.

Size Matters.

Finding a Third Party Administrator.

Using a Third-Party Administrator for Onshore Funds.

Using a Third-Party Administrator for Offshore Funds.

Insurance Companies.


Other Services.

Taking Advantage of Technology.

Parting Thoughts on Service Providers.

Chapter 8: Fraud, Collapse, and the Kitchen Sink.

Why Fraud Exists.

Is Fraud Really Rampant in the Hedge Fund Industry?

Why the Popular Press Has it Wrong.

Why Hedge Funds Implode.

In a Word: “Ego”.

Why Fraud Happens in the Hedge Fund Industry.

The KL Financial Debacle.

Manhattan Investment Fund.

Lake Shore Fund Complex.

Hedge Fund Mismanagement.

The Amaranth Story.

DB Zwirn & Company.

Bear Stearns.

What Went Wrong.

How to Protect Yourself.

Regulatory Moves to Stop Fraud and Mismanagement.

Investor Due Diligence.

Manager Due Diligence.

Making a Good First Impression.

Chapter 9: A Few Parting Thoughts.

Appendix A: Due Diligence Questionnaire.

Appendix B: Resource Guide.

Appendix C: Historic Performance of Hedge Funds.




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Author Information

Daniel A. Strachman has been working on Wall Street for more than ten years, providing services and advice to individuals and institutions. He is also Editor of the blog HedgeAnswers, which offers commentary and insight into the hedge fund industry. Strachman has worked in product development, marketing, and sales focusedaround the money management industry. He is also author of The Fundamentals of Hedge Fund Management, the first and second editions of GettingStarted in Hedge Funds, Essential Stock Picking Strategies, and Julian Robertson: A Tiger in the Land of Bulls and Bears, all of which are published by Wiley.
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