It is the worst of times in much of the hedge fund industry right now.
Once again, hedge fund managers are being blamed for the evils that have caused economic havoc from Wall Street to Main Street. On a daily basis, the popular press is littered with articles about why these so-called “swashbucklers” of the securities markets are the main reason for all that is wrong with the economy and the financial world. My only comment is don’t believe all that you read, see or hear. Think for yourself and do your own due diligence. You will find out rather quickly how truly uneducated and ill-informed most of the press is about the workings of the hedge fund industry.
The theme of the questions that have been coming in to the blog seems to be about getting started and budgets for year one of operation. I also received a number of questions asking how long it takes to get a fund up and running. I think that it is safe to say that you should plan to spend between $45,000 and $75,000 depending on which law firm you use to complete the fund documents and then have them reviewed by an accountant and administrator. As for ongoing year one operating budgets, think about the $100,000 number. This amount of course will vary depending on your physical location and technical requirements but it is probably a fair number. You should also plan to have funds for living expenses to cover life as you like it. This is an amount that only you will be able to come up with but it cannot be overlooked as you put your business plan together. In terms of time frames, I believe the right answer is ninety days – some firms can get it done sooner others will take longer. You need to get a commitment from your service providers at the outset of the engagement so you have a reasonable expectation of when things will be complete.
HedgeAnswers closed out the 2007 season with our event last week in Chicago. The end of the tour went up in smoke, literally, as a few of the panelists, some participants and yours truly, indulged in a nice cigar at the bar at the Peninsula hotel. It seems that of the three places we hit in the 2007 tour, Chi-town is the only one where you can still smoke indoors. (This too will come to an end when a city-wide smoking ban goes into the effect on January 1, 2008.) I guess that all good things must come to an end!
The Chicago event focused on providing answers to participants interested in setting up a hedge fund or expanding their existing business. The HedgeAnswers conference tour will roll on in 2008 — look for the email alerts. It is going to be great and even better than 2007. If you are interested in learning more about the series or have some ideas how we can make it better, please get in touch.
Right now the Red Sox have a magic number of 13 – things are looking good for the boys from Beantown!
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