There is such a thing as a free lunch…

It’s almost impossible in the city these days not to get a free lunch, and breakfast and dinner, too.

Come on, you say, you gotta be kidding. We all learned from the great Milton Freedman that you can’t get something for nothing.

Well, when you’re in New York or another of the world’s major financial centers, the food and drink are flowing like a pennant-winner’s profits. The trick is to be invited to a capital introduction event. You can have breakfast with Bear, lunch with Lehman and dinner at Deustche almost once a week, it seems. The people behind the capital introduction business at these and other prime brokers are cozying up to potential investors in hopes of making a match with them and the funds on their platforms.

I’m lucky enough to be invited to many of these events and find them, for the most part, to be a good first step in the process of learning about a manager and what he or she does to extract profits from the market. The seminars are succinct, to the point and, frankly, worthwhile. Besides being good places to meet potential new managers, these events are also good places to talk to other investors and hedge fund pros about industry trends, what’s happening in the markets, and where assets are flowing, not to mention which way. As a budding manager, you need to check out who is doing what in the capital intro area and make sure you get into your prime’s mix once you get up and running. While it may not get you any assets right out of the gate, you will surely get access to some of the right people and practice your presentation skills.

That being said, it seems that the noise surrounding the hedge fund industry has died down. Most of the major news outlets have moved hedge funds off the front page as volatility has slowed, the mortgage companies have hit stress factor nine and the Fed has taken care of interest rates, for the time being.

My thoughts are that once the fourth quarter ends in a few short weeks, hedge funds will once again return to the front page as performance numbers stay as un-sweet as they are and funds start to close because they can’t afford to stay in business. In short it will be survival of the fittest come January 1, 2008.

©DASP 2007 All Rights Reserved

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