Book Week: The Little Book of Hedge Funds
- Joshua M Brown
- August 5th, 2012
With one more month of summer to go, why not spend it catching up on some of the best financial books of the season? This is Book Week on TRB, a new one each day that you may have missed and should definitely buy/download.
Anthony Scaramucci has been involved with the hedge world for decades and he knows the industry cold. While clearly a proponent of hedge funds (his firm SkyBridge Capital allocates investor money to the industry), he's not afraid to look at some of the reasons why the game has grown more challenging and in some cases self-defeating.
One of the many benefits to being involved with financial media is that I get to meet people like Scaramucci and occasionally talk shop. Anthony and I have bumped into each other on the set of Fast Money a few times and we spoke about his book and the state of the hedge fund industry the other day.
I thought I'd relay some of what I came away with.
First, the most common knock on hedge funds - that they are struggling to even keep up with the major stock market indices, is a bit misleading. This is because in the total universe of hedge funds, the vast majority of players are the traditional long-short equity funds. And because the tape has been so trendless and choppy for so long, and because the global macro picture has mattered a lot more than individual company fundamentals, there is no doubt that these funds have struggled. And because there are so many of them in proportion to other strategies in the hedge fund aggregate, the misconception is that all hedge funds are struggling. Anthony walks me through why this isn't so, pointing to several strategies that are making the most of the moment right now. He says the challenge for SkyBridge, as it continues to monitor and re-weight the funds it is allocating to, is to make sure he's selecting not only the right managers but also the right mix of strategies for a given market environment. Not every flavor of fund is meant to shine in every environment.
My favorite chapter of his book is probably the one that most of my readers will like the best as well - Chapter 10 deals with Anthony's start in the business (after washing out as an i-banker at Goldman in the late 80's) as well as a guide to getting into the business for the smart and ambitious. The readers are told everything they need to know about identifying funds to interview at, getting the interview, landing the job and even setting up shop on their own. He makes it very clear that the rewards (entrepreneurialism, earnings potential, etc) come only for those who actually want to work.
The book is 220 pages or so, you'll find yourself breezing through it in an afternoon or two and picking up great information all along the way. Don't miss it, it's well-written and fun.
Buy it here:
And follow Anthony on Twitter here:
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The Reformed Broker is a blog about financial markets and the economy. Joshua Brown is a New York City-based investment advisor for high net worth individuals, charitable foundations, retirement plans and corporations... More.