One year ago
»» Simon Lack, the founder and former chief executive of JPMorgan’s hedge fund seeding platform, J.P. Morgan Incubator Strategies, blasted the subpar performance of many hedge funds in an unhedged commentary for AR.
“Overall, the research suggests that all the money that’s ever been invested in hedge funds should have instead been put in Treasury bills,” Lack wrote. “An entire industry of investment professionals and $2 trillion in assets are dedicated to activities that historically have failed to generate any excess return.”
That article was the seed of a Lack’s upcoming book, “The Hedge Fund Mirage: The Illusion of Big Money and Why It’s Too Good to be True,” which is set to be released in January by Wiley. The book lays out Lack’s thesis for why the biggest funds are a bad deal for investors, and how to find effective, emerging strategies.
“I started out believing the villains were the hedge fund managers and all the advisers who had channeled substantially too much capital to them,” Lack writes in the afterward. “But my view shifted as I researched the book, and if there is a fault it lies squarely with many supposedly sophisticated investors who have applied far less critical analysis and cynicism to their allocation decisions. An industry has developed to meet demand, and the buyers have freely agreed to pay high prices for often mediocre results.”
See also: hedgefundmirage.com
Five years ago
»» The Managed Funds Association’s political action committee gave $76,000 to Congressional candidates in the 2006 midterm election, placing a heavy emphasis on financing the campaigns of members of the House Committee on Financial Services.
The hedge fund lobbying organization made contributions to 33 candidates, giving the most to Rep. Richard Baker (R-La.), who received $10,000 (In 2008, Baker became president and CEO of the MFA). Democrat Rep. Paul Kanjorski of Pennsylvania received the second-most at $3,000. One of note who did not get a handout: Rep. Barney Frank (D-Mass.), who was poised to be the chairman of the Financial Services committee.
In September of this year, Maverick Capital chief operating officer William Goodell, freshly elected as the MFA’s new two-year chairman, told AR he intended to be politically open because the organization’s members “cross the political spectrum.” But hedge funds have supported Republicans over Democrats, with 60% of more than $4 million in 2012 campaign contributions going to Democrats as of late last month, according to the Center for Responsive Politics.
