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hedge funds

hedge funds questions and answers

Learn about how hedge funds work at the number one young investor website Teen Analyst.

Q: Hedge funds?
Can anyone tell me how many globally how many hedge funds are there? where can i get information about all of them? some web links please.............

A: The exact number of funds are not known since most are unregistered. The term "hedge fund" is actually not a registration term. They are generally structured as "limited partnerships" or "LLC's." But the term, 'hedge fund' is sexier. The phrase came from the notion that the private funds could go short, and use strategies to protect in down markets, hence the name, hedge fund. Not all hedge funds hedge. Look at BSC's 2 long only (real estate debt = CDO, CMO) funds that blew up in 2007. Also look at LTC where in 1998 bet the wrong way on the Russian Ruble. http://en.wikipedia.org/wiki/Long-Term_Capital_Management In order to legally obtain funds date, you generally have to meet the criteria to become an investor. Getting this information via other means may be a violation of the funds charter. Here is a couple of sites to work with http://www.hedgeworld.com/ http://www.hedgefund.net/ -- Former hedge fund manager

Q: What are hedge funds and what impact are they having on the stock market?
I keep hearing alot about hedge funds so what are they doing to the stock market? Thanks.

A: Hedge funds are mutual funds that are essentually unregulated. They require large initial investments, and they have special rules that prevent investors from withdrawling their money too often (usually investors are allowed to pull money out once a year). They are significant because they are allowed to borrow large sums of money in addition to the investor's money, and because they are allowed to invest in almost any type of security or derivative product. Many have become gigaantic gambling funds, making huge bets on currencies, stocks, commodities, interest rates, low quality bonds and mortgage backed securities, etc. I will give you an example. It is possible for a hedge fund manager to take a million dollars of investors' money, borrow another 3 million, and use that money to make bets on certain stocks, bond, currencies, commodites, etc. A few german hedge funds recently bet against volkswagen by shorting its stock (probably with a lot of borrowed money). When things did not go their way and they were in danger of going bust, they were forced to cut their losses by buying large ammounts of Volkswagen stock in the market. Other hedge funds who were doing the same thing and others who were short the stock were forced to do the same as the first hedge funds' buying drove up the price of the stock. The result was that volkswagen's stock went from 200 euros to 900 euros in a day and a half. This is why some people think that hedge funds are creating unnecessary volatility and endangering public confidence in the markets. Look up the long term capital hedge fund collapse, or the controversy over Geroge Sorros' hedge fund's behavior during the asian crisis.

Q: Is there a way in which hedge funds can bet on falling property prices?
If they can make a profit out of this how? UK property prices may be substantially over valued. Hedge funds apparently can make money out of falling share price by borrowing shares at a fee, selling them, and when it is time to return them rebuying them at a lower price. Apparently a lot of money was made on Northern Rock shares in this way by hedge funds betting on a price decline. I am interested to know whether money can be made out of a falling property price market and if so how?

A: They can short property companies and REITs However this is probably too long term to short sell (there are carrying costs with short selling). I think derivatives and CFDs are more likely to be used.

Q: Can hedge funds advertise to accredited investors?
I know hedge funds are banned from advertising to the public but can they advertise to accredited high net worth investors? If not then how do hedge funds raise money, through investment banks, word of mouth or what?

A: Hedge funds is a title given to a particular sector who manages other funds. By calling Hedge Funds, it does not denote a particular Agency or Corporate. When certain corporates are doing their business within the permissible law they cannot be banned either for Advertisement or for any other purposes. If any one does business illegal they will be banned from doing business altogther. Hedge funds normally manages Pension Funds, HNI (High networth Investors) and high profile financiers. they don't manage the funds from small investors. Normally Hedge funds don't require advertisement, as they manage few customers or customers prefer them. Hence advertisement is not required for them. other side of coin Hedge funds managers are high profile, influential, highly talented (specialised in Math, Computer programming, preparing specific model of investing for quick buck.-- fly overnight. they play all round cash market, F&O with hedging taking maximum amount of calculated risk. some times they go bankrupt and also make others also bankrupt. they are hated by investors society - But unfortunately, without them investors can not see the exiting valuation for their stock. Hedge funds are unavoidable devil - some times do good for the market, some time they creat havoc in the market.

Q: How does tax works on hedge funds?
My friend told me that when people invested in hedge funds, they don't pay taxs on the profits untill they cash the money out of the funds? Is that true? If so, how does it work? If friend is nuts, plz let me know too. How about specificly hedge funds that invest specifically on commodity/futures market? Eventhough investors of hedge funds doesn't cash out every yeat. Hedge funds does make profit (not just paper profit, real profit) on their investments. Doesn't the fund itself has to pay tax? Is there any reference/detail on tax for hedge funds under this kind situation that you can tell me about? thanks.

A: All hedge funds are different -- they are very diverse. Many produce K-1 income that is taxed on a yearly basis. However, like every other investment, unrealized gains aren't taxed until you cash out. So in many instances, your friend is right.

Q: What are the best hedge funds to approach for an independent film producer like myself? Direct contacts?
I have films in development with budgets ranging from $4.5 mil to 20 million and more. I need some direct connections to investors, private equity/venture capital firms, hedge funds or just ballers who want to be executive producers in this hollywood business.

A: For some reason I just don't think you personally have films in development with budgets in that range. If you did, I'm sure you would have no problem finding some investors and I'm positive you wouldn't be looking for "ballers" on yahoo answers

Q: Where can I get a list of hedge funds in california?
I am looking for a list of hedge funds in california and more specifically for the bay area. All the sites I've found charge thousands of dollars for the lists. Any ideas?

A: Most of the lists are really expensive I've found. In terms of free lists, you really have to spend a lot of time at the library searching business journals and you can go through public records, but that is very time consuming and for some reason I didn't get very many good listings. If you are looking for a cheap list of hedge funds for JUST the Bay Area, you can try here. It is a little over a hundred, though a portion of them are investment managers that might not be considered hedge funds by some, but definately a good start: http://www.optionsdecoded.com/BA_Hedge_Fund_Info.html

Q: Is a company required to report derivatives, options, mutual funds or hedge funds under FASB 115?
According to FASB, debt and equity securities such as long term fixed maturities, treasury bills, and stocks are to be reported under statement of 115. Is the company also required to report derivatives, options, mutual & hedge funds for FASB 115?

A: Yes they are.

Q: Where can I find and how do I contact hedge funds and buyers of large real estate portfolios?
I have been asked to help find a buyer for a large portfolio of commercial real estate in the southeastern states valued at over 100 million dollars. This is the first time that I have endeavored to do this, I am told that hedge funds purchase investment properties regularly. Where can I locate and what is the proper way to contact hedge funds and other purchasers of large portfolio's of property?

A: yellow book

Q: What do you have to study to get involved with hedge funds?
Are there any courses you could recommend that could give me an insight into Stocks/shares/hedge funds etc? i am a relative beginner to all this and am very interested in knowing more about these matters. So what would you need to study and how long would it take? do you know any place online within the UK where you could enrol for a short course? What are hedge funds all about? i know there are a lot of questions there, but i would be very grateful if someone could kindly take the time and post an answer for me. Thanks

A: arboriculture

Q: What is the definition of Hedge Funds and Private Equity Investments?
What is the premise of investing in- 1. Hedge Funds. 2. Private Equity Investments.

A: 1 - Hedge Funds - investment companies that uses techniques, such as borrowing money and selling short, in an effort to make extraordinary capital gains. 2 - Private Equity Investments - Private equity is a broad term that refers to any type of equity investment in an asset in which the equity is not freely tradable on a public stock market. Such as shares in Private Companies. Hedge funds may also do private Equity Deals but they do all sorts of other investments as well: Stocks, options, etc.

Q: How can I get into hedge funds?
I have a bachelors in computer engineering and have been working the patent law field for about 3 years now. I'm at a point where I'm trying to decide between law or business and I've talked with some people who work at some firms involved in hedge funds and the work sounds interesting and lucrative and was wondering what it would be like for me having an analytic background and work experience.

A: search for hedge funds online and then give one a call

Q: How do hedge funds operate? Do they invest long or short? What kind of returns do they generate?
What type of investors do hedge funds usually appeal to? Do they invest in high-risk type of investments? Is there a tax provision that allows them or enables them to operate differently than other types of investment vehicles?

A: Hedge funds are very risky they are entirely unregulated. This means they can invest in anything, anywhere. This risk is why you must make $200,000 a year or have 2 million in the bank. Often to reduce the risk the hedge-fund will hedge their investment, meaning they will buy a stock and short it at the same time. Shorting is betting the stock will go down. The small difference that they earn in this transaction can only be profitable with large amounts of money. This is why hedge funds are in major debt (leveraged). Management also takes a commission on average of 20%. If you want learn about hedge funds and risk, I suggest When Genius Failed. This book is about LTCM which just about went under in 1998 and took the whole banking industry with it. And LTCM was managed by winners of the Nobel prize in economics. Very, Very risky.

Q: How Do Hedge Funds Make Their Profits?
I know that it probably sounds like a silly question, but what I mean is that how and why is it that hedge funds accumulate a higher interest rate than other savings entities? Thanks

A: The term "hedge fund" has become used in so many different ways that there is no single answer to your question. Originally hedge funds were private capital pools designed to "hedge" the performance of their "long" portfolio (risk reduction) with short positions in other parts of the market. Their earnings would be the difference between the two gains or losses. Today the term "hedge fund" has come to be applied to many funds that do not actually hedge their investments. In fact it is applied to almost any private capital fund that doesn't invest in traditional "long" positions in stocks, bonds or other investments.

Q: Can Hedge Funds Charge Different Management and Performance Fees for Different investors?
Can Issuers who sell Unregisterd Private Placements of Securities such as Investment Funds or "Hedge Funds" negotiate different management fees and performance fees with each individual investor ?

A: Yes, concessions are given to larger investors or at times when the fund may need more capital infusions. I have written a couple article about hedge fund fees within my blog linked below if you want to take a look. - Richard http://richard-wilson.blogspot.com