“There is no doubt that we are in the first innings of a washout in hedge funds,” said Dan Loeb of Third Point LLC in a quarterly letter dated April 26.
$15 billion has been withdrawn from hedge funds in the first quarter and a lot more is headed that way. Why? The 2 and 20 game seems to have rubbed investors the wrong way—an arrangement where they collect a 2% management fee and 20% of the profits leaving you with the letters e, t, and s of your assets. Then you pay taxes.
What’s the word on the street as this dreadful group gathers in Las Vegas for the SkyBridge Alternatives conference (SALT) being held at the Bellagio hotel? “Tips at the shoe-shining station a few feet from the main ballroom were down more than 50%, to $5 or under in most instances, from as much as $20 one year earlier, a shoe shine employee said,” reports Rob Copeland and Timothy Martin in the WSJ.
Oh and some clients will have to do without the limos to the club.