It only takes a moment to gauge performance in the broader financial markets; a quick glimpse at the ubiquitous S&P 500 readings at any point in the trading day provides a window into the health of the stock market.
Keeping tabs on hedge fund performance, however, can prove much more ambiguous, despite the various attempts by several outfits to make it easier.
Hedge fund researchers, including *Hedge Fund Research Inc.* (HFR), *HedgeCo.Net*, *Credit Suisse Tremont*, *BarclayHedge*, *Hennessee Group* and *EDHEC Risk*, all maintain extensive hedge fund databases and continue to develop exotic mathematical formulas to provide some level of transparency about hedge funds. ...
Since hedge funds remain unregulated for now, they are not obligated to report their monthly performance numbers to anybody, although it's common practice to disclose returns to current and prospective investors in the most liquid of hedge fund strategies.
But the *Securities and Exchange Commission* has placed limits on the marketing efforts that hedge fund managers can employ, which makes marketing on a research firm's platform all the more valuable. And while hedge fund transparency has grown leaps and bounds from where it was before, hedge fund managers still maintain a level of control in what's disclosed. "Hedge fund reporting is very biased. If you have a good month, you want to share that on all of the Web sites. What happens if you have a bad month? You don't disclose that," says *Andrew Schneider*, managing partner at HedgeCo.Net.
When Schneider founded HedgeCo.Net in 2001, he set out to bridge a divide he saw between hedge fund managers and investors. Since then, the company has grown to 25,000 registered members, including more than 8,500 hedge funds. Even throughout the financial market turmoil, demand from new subscribers has not abated. "Every day, the HedgeCo.Net Web site receives an average of three to five new hedge funds and 30 investors," Schneider says.
Fund managers report their monthly performance on the HedgeCo.Net database and the company makes individual fund performance available to accredited investors on the site. "Every hedge fund that is listed on the Web site must pass through me. I have to speak with each fund manager," Schneider says. "I also require that the hedge fund provides me with offering documents. I have to monitor numbers." This approach has helped to keep fraudsters at bay. *Arthur Nadel*, former investment adviser in the hedge fund *Scoop Capital* who is in prison for securities and wire fraud, was listed on HedgeCo.Net until five years ago when Schneider pressed him about 30% returns.
"I thought the numbers looked fake. I said, 'I want to see proof.' He said 'no,' so I kicked him off [the site]. I saved a lot of people money," Schneider recalls.
Two traders who recently left Ross Perot's troubled investment firm Parkcentral Capital Management are seeking money to start their own hedge fund.
The two money managers, Michael Presley and John Sawyer, left Parkcentral in January, a few months after the firm's $2.5 billion debt fund, Parkcentral Global Hub Ltd., went bust.
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The two say their new fund can manage up to $2 billion. It comes with a one-year lockup and management fees of 1.5 percent, plus a 20 percent cut of profits. Andrew Schneider of hedge fund services firm HedgeCo Networks said the two recently contacted him about working together, but he, too, hasn't been getting calls back since news broke about the lawsuit from Southern Avenue Partners.
24 March, 2009 - Some hedge fund managers are certain to see opportunity in the plan, said Andrew Schneider, managing partner and founder of HedgeCo Networks, consultants for hedge fund services, in Manhattan. "I think this is a step in the right direction," he said. "There's going to be some incredible opportunity that the smarter hedge fund managers that know the product and know the asset class and the marketplace for it will see. Hedge funds historically have been known for making money in marketplaces that are inefficient."
10 February, 2009 - A hedge fund database website raised serious doubts about funds managed by accused Florida Ponzi schemer Arthur Nadel in 2005. According to the Sarasota Herald Tribune, when the founders of the HedgeCo.net database then called Nadel’s firm, Scoop Management Inc., to obtain audited financials for the funds, they were rebuffed.
10 February, 2009 - Andrew Schneider, managing partner and founder of HedgeCo Networks, consultants for hedge fund services in Manhattan, said he believed Geithner's plan would be beneficial for both banks and investors. "The banks need to get rid of these things to clean up their balance sheets," Schneider said. "The buyers would be able to get these assets at such discounts that eventually they're going to make a nice profit from it."
10 February, 2009 - But what seems mysterious to them raised red flags in 2005 for the founders of HedgeCo.Net, a West Palm Beach hedge fund database site. HedgeCo dropped three funds run by Nadel's Scoop Management Inc. -- Valhalla Investment Partners LP, Viking Fund LLC and Viking IRA LLC.
23 January, 2009 - Andrew Schneider, managing partner of hedge fund Internet forum HedgeCo.Net, said he tossed Nadel's funds from his Web service in 2005 after Nadel failed to produce up-to-date audit records. Schneider said he asked for the audit records after noticing that Nadel's performance figures looked "too good to be true." Schneider was also uncomfortable that Nadel's firm acted as its own administrator, giving itself control over things like daily fund accounting, he said.
23 January, 2009 - On the night of December 3, about 650 guests piled on to Nikki Beach on the east side of Manhattan drinking dirty martinis and grooving into the early hours of the morning. Not an unusual sight in New York, except that the party was hosted for the much-battered hedge fund industry. "For months, all you hear about is lagging numbers, layoffs and huge bailouts. Just for a night, I wanted everyone to forget all that. I think everyone was long overdue for a good time," says Evan Rapoport, co-founder of HedgeCo Networks and organiser of the event.
16 November, 2008 - Wall Street is braced for a wave of fund redemptions that is unlikely to be as as large as feared... There are other sides to the hedge-fund redemption tale. The funds count many endowments and pension funds among their investors. Many of these investors have cash-flow needs that they meet either from new contributions -- pinched in these tough times -- or by selling investments. Andrew Schneider, founder of hedge fund data tracking firm HedgeCo. Networks, downplayed the impact on these kinds of organizations, noting that most have only a small percentage of their monies tied up in hedge funds, and are able to draw on other investments for liquidity.
We are proud to showcase the talents of IPA member and HedgeCo Networks principle, Evan Rapoport
Evan Rapoport is the son of IPA founder Len Rapoport. He is a principal and co-founder of the West Palm Beach based internet and hedge fund consulting company, HedgeCo Networks.
Then there’s the talent hunt being run by HedgeCo Investments, a JV between HedgeCo and Holding Capital Group. According to an article in SmartMoney that I can’t seem to find online, the “American Idol”-esque hunt is a result of the difficulty in finding talent these days. Managers may be paid “north of six figures,” says Andrew Schneider, principal at HedgeCo Investments. A posting on HedgeCo.Net provides the contact info — “HedgeCo is currently looking for new and existing hedge fund managers who are looking to grow their business for our seeding and incubation programs. Please send your fund peformance and contact details to erapp@hedgeco.net for review.”
Palm Beach, Florida: HedgeCo.Net, 4 April, 2007 - As domicile for approximately 80% of the world’s hedge funds, the Cayman Islands have now implemented a mechanism for the electronic submission of annual returns for all funds licensed, registered and administered in the Cayman Islands.
The time is ripe for looking at funds of funds, says Evan Rapoport, a principal with hedge fund research and services firm HedgeCo.Net. "It's important for investment advisors to start lookng at hedge funds or funds of funds as part of their asset allocation because if they don't, an investment manager who does will end up taking business away from them." According to Rapoport, the more than 9,000 hedge funds managing around $1.5 trillion in assets pursue a wide range of investment strategies.
Hedge funds are sitting on about $1.7 trillion in cash according to one estimate, and fund managers are searching for places to invest. Funds have invested about $5 billion in films over the past several years and that figure is expected to rise to $50 billion in the next five years or so, said Andrew Schneider of HedgeCo Networks, which tracks hedge funds.
"There are very low barriers to entry but very high barriers to staying in the business," notes Evan Rapoport, principal of HedgeCo Networks, a hedge fund information and consulting firm in West Palm Beach, Fla. Competition is treacherous and lots of start-up funds don't survive. "While the high-profile start-ups command great attention," he says, "many established managers are busy broadening their product offering and expanding their footprint," in turn "raising the bar on what it takes to be successful as a new manager.".
Hollywood has had outside investors in the past and many of them have been burned. But the new crew have logical motives for getting into business with Hollywood. Consulting firm Hedgeco Networks has had six requests over the past year to start up Hollywood film funds. It had none the previous year, according to principal Evan Rappaport.
In Florida, there are approximately 150 funds and a host of businesses and professionals to serve them — even a business founded by two young entrepreneurs that tracks hedge funds. HedgeCo.Net, a 5-year-old West Palm Beach firm founded by New Yorkers Evan Rapoport, 32, a University of Florida grad, and Andrew Schneider, 31, gathers information on hedge funds and disseminates it to investors who meet the SEC’s $1.5-million minimum net worth definition of qualified investors. HedgeCo also consults for startup funds such as Levy’s.
Until this past September, Jeffrey Glusman was a financial advisor at Merrill Lynch, a rising star sharing a book worth more than $250 million with a partner, a book truly to be envied. But after five successful years as an advisor, he's calling it quits - leaving his clients with his partner to start a hedge fund with a longtime friend. Glusman says the biggest surprise in starting up has been how cheap it is. In a package provided by hedgfundtools.com, the consulting arm of HedgeCo Networks, an industry information source, he got everything he needed to start Mogul - including legal and accounting services, auditors, prime broker introductions, Web site construction, database membership with Hedgeco.net and hedge fund software. And all that for $35,000. "If you go a la carte it's very expensive - buffet-style is cheap," he says.
HedgeCo Networks plans to charge customers $995 per year to use its Hedgefundcalculator program, undercutting the $5,000/year charge that the West Palm Beach, Fla., firm maintains is the going rate among its rivals.The program computes quantitative statistics, converts gross returns into net figures and generates monthly data for marketing materials. It also allows fund-of-fund managers to calculate their performance. However, the program isn’t as comprehensive as some other products on the market, such as Strategic Financial Solutions’ PerTrac software package. But HedgeCo says that small fund operators generally can’t afford such extensive programs anyway, creating a niche for Hedgefundcalculator.
Investors still dream of striking it rich in risky stocks, but in practice they're on the cusp of turning conservative. Financial reality is slowly sinking in. Next month, the oldest baby boomers reach 59 1/2--the age when they can tap a retirement account without paying a penalty. But after adjusting for inflation, the average retirement plan is only 3 percent higher than it was back in 1993. Younger investors have plenty of time to right themselves, but the boomer bulge will soon be up against the wall. A new little voice, at the back of their minds, whispers, "what do I do for income at 65 if I'm retired with no pension, and chose lousy stocks?"
The program computes quantitative statistics, converts gross returns into net figures and generates monthly data for marketing materials. It also allows fund-of-fund managers to calculate their performance. However, the program isn’t as comprehensive as some other products on the market, such as Strategic Financial Solutions’ PerTrac software package. But HedgeCo says that small fund operators generally can’t afford such extensive programs anyway, creating a niche for Hedgefundcalculator.
Evan Rapoport, president of HedgeCo.Net, a Web-based consulting firm, will host a Live Talk on investing on Thursday, June 16, at noon ET.
Wonder where the money's going? Hedge funds. These privately managed, loosely regulated investment pools pulled in $24 billion last quarter. TIP SHEET's Linda Stern asked Rapoport for some perspective.
Andrew Schneider, principal at HedgeCo. Networks, the leading free online hedge fund information portal, says that fund of funds started becoming popular a few years ago because “they diversify and spread out the risk, therefore investors prefer this type of investment over single strategies…their growth has been tremendous.” He adds that institutions have been attracted to fund of funds due to “lacklustre”returns in the equity markets and what he calls a mutual funds industry “going up in shambles.”
After 17 years of quietly establishing an investment empire, D. Scott Luttrell wants to share the wealth with others in the Bay area. Luttrell's LCM Group, an investment firm in New Tampa, founded in 1988, has opened its hedge fund to outside investors for the first time since the fund was established in 1995. The hedge fund industry has grown dramatically since 1990, when there were about 300 funds, to more than 8,000 funds now with an estimated $1 trillion under management, according to HedgeCo.Net, a West Palm Beach-based hedge fund research firm.
A rule requiring hedge fund managers to register with the SEC or state regulators is coming too late for investors who lost millions in now-closed West Palm Beach-based KL Group. But the new rule, effective next Feb. 1, will help regulators detect hedge fund problems more quickly, according to officials in the SEC's Miami office. HedgeCo Networks, a West Palm Beach-based research firm, reports that 67 hedge funds with Florida offices have registered for its data base. Palm Beach, North Palm Beach, Boca Raton, Miami Beach and Miami all have at least several hedge funds, said Evan Rapoport, a HedgeCo Networks principal.
Hedge funds aren't just for the Porsche and Rolls-Royce set anymore, a fact that's catching the eye of regulators. The SEC is concerned about growing risks as some hedge funds allow in investors with income as little as $200,000 - $300,000 for a couple - or net worth as low as $1 million. There are indications that a growing number of Americans in the $200,000 income range are investing in hedge funds. HedgeCo principal Evan Rapoport is concerned that cost of compliance for SEC registration could lead some hedge funds to raise fees for investors and, in a few cases, possibly close U.S. offices.
