One of the nicest things about the Amaranth case, if the term is appropriate in a situation where so many people lost money, was the absence of any litigation in the case. Here was an example of an honest hedge fund debacle, it seemed, with no fraud involved, just a good, honest, over-concentration of risk. Investors were getting some of their money back, and while it obviously reflected the hedge fund industry in a negative light, it could be spun the other way, exemplifying the growing maturity of the industry and the relative speed at which it was sorted.
San Diego County retirement fund ruined all that when it sued Amaranth for securities fraud, seeking damages of $150m. It will deprive other investors of some of the money they had coming to them, and delay what reimbursement they still get. There is still $630m, or about 23%, assets to be returned to investors, according to Bloomberg.
San Diego accused Amaranth of lying about its trading strategies and of making "excessively risky and volatile investments," according to a complaint filed last week by the San Diego County Employees Retirement Association. The complaint alleges that Amaranth built up excessively concentrated positions in natural-gas futures. As those investments grew, Amaranth told investors that it was decreasing allocations to energy trades, according to the complaint.
I don’t want to criticise anyone for making this claim if it is fair, and without knowing the intimate details of the case it is impossible for me to ascertain that. Pension funds in particular should do everything in their power to recoup losses made through impropriety: their investments can evoke strong feelings because they are the route through which pensioners, or any segment of the retail population, can unwittingly gain exposure to this industry. And these types of investor- those that want security and low risk investments- should not be exposed to a fund like Amaranth.
Yet despite all that, in this particular case my initial reaction was to question the motives of San Diego. Is the move to sue Amaranth designed to shift the blame away from itself and onto the manager? After all, Amaranth’s returns prior to its reversal, while being very impressive were clearly the result of some significant risk-taking. In that case, why was a pension fund investing in it anyway? There are plenty of funds out there delivering modest, but steady returns, which are not likely to suffer $6bn losses when markets move against them.
Put another way: even if Amaranth did say it had reduced exposure, but didn’t, it would still be an enormous exposure to have had in the first place for a pension fund. The size of Amaranth’s position was known, and they could have redeemed as exposure built up, (excluding themselves from months of impressive results, isn’t it funny that they didn’t?) That makes San Diego’s pension fund allocators irresponsible.
Perhaps less litigation has surrounded the Amaranth case because people have realised the more lawyers fees have been paid out the less money there is to go back to investors. In this instance there could have been a lot of out of court settling going on behind closed doors, which is good in the sense that it gets investors more money back, although it makes it easier for the manager to do the same thing again elsewhere.
It would be nicer to believe there has been no litigation because there was no fraud, and only time will tell if this is the case.

After going off on one yesterday about The San Diego Retirement Fund taking Amaranth to court, I thought it only fair I comment today on litigation being imposed by Amaranth’s former executives in the new guise of Solengo Capital Advisors.
The circumstances are quite different. In this instance we are not talking about an investor trying to alleviate his regret at making an excessively risky investment by blaming others.
The problem here is DealBreaker, the Wall Street Tabloid website, published a Solengo marketing document. On Monday it signalled its intent to sue the website after it refused to take it down, along with its publisher, two editors and other employees for copyright infringement.
DealBreaker rejects the claim that it has broken the law. "Writing 'confidential' on a document does not obligate DealBreaker or anyone else to keep your secrets secret," it retorted on the website, while Reuters reports John Carney, DealBreaker’s editor, as saying: "We think it's valuable to our readers and the public to be able to see the information in it.”
I have to agree, especially with the latter. I am sure there are many out there, including fund managers, bankers and lawyers, who will have read the document with great interest, which is surely a result for DealBreaker.
Investors have been suing managers, advisors and bankers for a long time. But the idea of a newspaper being sued by an organisation for publishing sensitive material, be it "extremely sensitive, proprietary information" as in this case, libel or for disclosing material that was off the record, is as old as time itself.
There is no point in getting too far into my own views on this, which, as a journalist, are probably rather predictable. It is businesses prerogative to keep sensitive material out of the hands of journalists. It is journalists’ prerogative to balance public interest and sales on one hand with maintaining relations with contacts on the other. Where the interests are not aligned it often ends in litigation and it always has.
Somehow I am not as sad about this news, but that is probably just because the idea that Amaranth has not been a case of fraud was so appealing. The idea of the press and the finance industry having impeccable relations without any flair-ups is a little fanciful to say the least, although it is always nice when both sides do get along.

Life is constantly evolving. It is one of the myriad joys of being human. In recent years I have heard: black is the new white; Saturday night is the new Friday night; staying in is the new going out; and wine is the new beer.
Now, it seems, Citadel is to be the new Goldman Sachs, according to Fortune Magazine. And why not? The key to it is returns. As Goldman Sachs achieved among the best performance of the world’s multinational banks, so Citadel is among the very best hedge funds. Goldman Sachs has always been known as The World’s Biggest Hedge Fund, so it stands to reason its successor should be a top tier hedge fund, and what better than one managed by Kenneth Griffin.
“What sets him apart from his fellow nouveau zillionaires is the scale of his ambition,” Fortune says. “Griffin, say people who know him, doesn't want a reputation merely as a hedge fund legend like Tiger Management's Julian Robertson or SAC Capital's Steve Cohen. What he really seems to want is to build an edifice for the ages: a diversified, large-scale financial institution on the order of Goldman Sachs or Morgan Stanley.”
As a former Citadel employee put it: "Suddenly it seems like Ken wants to be a J.P. Morgan or John D. Rockefeller." Thus his rejection of the mysterious, reclusive existence of many hedge fund managers, who hide in their castles, protected from the masses by moats full of cash, and his donations to high profile arts charities and his presence on the Chicago 2016 Olympics organising committee.
It is nice to think you will go down in history in the way JP Morgan has, to think your name will be familiar around the world hundreds of years after your death. Who can begrudge this fund manager his crack at immortality? After all, it is the desire for this recognition that makes journalism in the field of hedge funds a possibility. Many fund managers have little or no interest in talking to the press, and often like to keep their strategies secret.
Journalists are occasionally able to get the successful, celebrity hedge fund manager on the phone or, if they are lucky, in the same room, is the human desire of people to influence their peers. The desire to see their names in print, their faces on the television, and, hopefully, a belief they will be remembered after they are gone.
Of course there are also those wishing to raise their profile and reach new investors for purely financial reasons. Once they have become successful though, the method that assisted them in raising their capital might also assist them in reaching the ears of those who will not be fortunate enough to be granted allocations. But those same people knowing your name brings you a step closer to immortality.
So, if you are reading this, Mr. Griffin: give me a call and an exclusive, and I will help you in your quest as best I can. I think we could probably work something out for the front page of the May issue.

One of my oft-repeated messages is the warning not to see the hedge fund industry as homogenous, not to see hedge funds as trading closely related strategies and not to see the attitudes of managers as the same.
One email exchange sums up the whole warning better than I could in one thousand words. Many will have seen the email exchange between Daniel Loeb of Third Point and employee-hopeful Alan Lewis, which occurred in 2005 and has now been send to millions as an email chain. It just came into my inbox, not for the first time, and brought a smile to my lips I thought I would share.
The problem starts when Lewis takes exception to an invitation to share his “three best current European ideas?”
“I am sorry but it does not interest me to move forward in this way. If you wish to have a proper discussion about what you are looking to accomplish in Europe, and see how I might fit in, fine. Lesson One of dealing in Europe: Business is not conducted in the same informal manner as in the US,” he replies.
At this point you can see the interview is not going to reach any sort of useful conclusion. I can only assume Lewis did not want the job that much. As a refined Englishman of good schooling I can safely say it is possible to make this (perfectly valid) point in a way less likely to effectively terminate the interview.
From here it quickly degenerates into a slanging match, with Loeb scoring most points for amusing and derogatory remarks, while Lewis’ exasperation at the downright Americanness of his opposite number grows.
“We find most Brits are a bit set in their ways and prefer to knock back a pint at the pub and go shooting on weekends rather than work hard,” sneers Loeb.
Here Lewis resists the temptation to give him both barrels in an assault on the American character. Fair play to him for not launching into a self-righteous and tedious diatribe about cultural imperialism and the traits that can lead a people to democratically elect George Bush. Twice.
Instead Lewis attempted to deflect some of Loeb’s remarks by pointing out he was in fact half French, half American, but this cuts no ice with Loeb who continues the email referring to him as French/ English, while continuing his assault on Englishness: “You will have plenty of time to discuss your "place in society" with the other fellows at the club. I love the idea of a French/English unemployed guy, whose fund just blew up, telling me that I am going to fail.”
My own personal favourite. Loeb: At Third Point… we are a bunch of scrappy guys from diverse backgrounds (Jewish, Muslim, Hindu etc.) who enjoy outwitting pompous asses, like yourself, in financial markets globally.”
This is not just the difference between a curt, no-nonsense money manager and a more refined people-person. The fault-line here is in fact clearly the Atlantic Ocean, a much more easily identified and simplistic difference than most which define the industry.

Successful hedge fund managers are filthy, stinking rich. This is the astonishing finding of the Trader Monthly 100 list, compiled by Rich Blake, Robert LaFranco and Leah McGrath Goodman. They found more hedge fund managers have been elevated into the rich list and, especially, the billionaires club.
There are actually some very poor hedge fund managers about. Spare a thought for them. When you launch a hedge fund and do not have a track record, you have to plough all your own money, and often that of your friends and family, into the venture to get it off the ground. All well and good if you are one of the funds that goes on to deliver good returns and attract investors. The next thing you know you are collecting 2% management fees on $100m before you have even done any work and life is good. All that is left then, beyond making sure you keep on delivering the performance, is to brush up on your golf.
But it is not easy street for the ones that do not deliver great performance at the start. Consider the fund manager who might be very talented but through bad luck gets a hammering in the early days, taking all the inertia out of the fund’s progress. All his personal wealth, acquired from his days as the head of equity trading at whatever investment bank he has been at, has been wiped out by his fund’s misfortune. His Connecticut/ Mayfair home has to be sold, with the family left to slum it with the rest of us in the modest postcodes of London and New York. The children are forced to brave the rigours of a state school. The manager might even have to go back to a bank or an asset management company with his tail between his legs, assuming there is a job there for him.
The moral is: there are two sides to every coin. If you could magically earn $1m in a year by becoming a hedge fund manager we would all be doing it.
By the way, if anyone wants to invest in my new fund, please get in touch, my contact details are available on the website. It’s going to be great, honest. I’m a brilliant stock-picker.
See you at the golf course.

100 Women in Hedge Funds. What organisation could have a more promising sounding name for a man in this industry? News they are honouring Gay Huey Evans of Tribeca Global Management and Michael Hintze of CQS has filled me with intense jealousy. I want to be honoured by 100 women, of hedge funds or any other professional persuasion, to be honest.
That is not to say the hedge fund element is irrelevant. Being honoured by 100 women in hedge funds would be a fantastic testament to my journalistic ability, one far beyond anything I ever anticipate actually receiving. Getting that honour from 100 women with no specific employment affiliations might be a compliment on something other than my writing ability… which probably makes it even more far fetched.
What would be better? To be honoured by 100 women, or 100 hedge fund people? What comes first? My professional life or my personal vanity? I refuse to make the choice. I would rather be honoured by 100 women in hedge funds. That is my final answer.
My jealousy is not so blind that I put myself anywhere near the two esteemed honourees, of course. Huey Evans, president of Tribeca, has reached the top of an industry still dominated by men by any measurement. Hintze, CEO of CQS which manages over $6bn, receives the Women in Hedge Funds' European Effecting Change award for his philanthropic activity. The Hintze Family Charitable Foundation has made awards to numerous educational and health programmes and the Arts.
Congratulations to the two winners and good luck to the organisation as it continues its good work.

It is the modern day alchemy, the Holy Grail for the student of investment: how do you select the right managers to ensure the fees you pay are reflected in the performance- alpha performance- you receive?
The latest study attempting to reveal the secrets of manager selection was published in The Journal of Finance by Marcin Kacperczyk of the University of British Columbia and Amit Seru of the University of Michigan. They have invented the “Reliance of Public Information” (RPI) measure to ascertain the extent to which a manager’s performance is correlated with public information via sell-side analysis. The paper finds manager returns are negatively correlated with their reliance on their RPI, essentially their use of public information.
It is usually the market itself from which alpha is measured but this approach in a sense goes a step deeper, by looking through the market itself at one factor which itself displays significant correlation with the market, being one of the biggest drivers of it.
“In a sense, the researchers are assuming the ultimate passive portfolio is not based on the market, as CAPM suggests, or on fundamentals as Rob Arnott would suggest, but rather on the predictions given by sell-side analysts,” explains All About Alpha. “This alone is an interesting take on alpha.”
It does have the disadvantage of elevating on factor in market psychology at the exclusion of all others. Sometimes markets move not because of any real underlying information but purely through momentum. Does that mean momentum funds are inherently different in their relationship with alpha to discretionary funds? Surely the point with alpha is delivering performance over and above that of the market, but not how you achieve this?
As All About Alpha notes, “it raises fundamental questions about the value of sell-side research.” These questions have been there for the asking for some time. Hedge fund managers have distinguished themselves by having superior resources dedicated to either researching different (for example smaller or less liquid) stocks to a greater depth, or doing a better job of researching the ones everyone else is looking at. Most seem to accept the former approach is likely to bear more fruit. This does not seem to be a particularly earth-shattering discovery. Anyone paying hedge fund fees to someone basing his stock picking decisions on investment bank reports has displayed about as much sophistication as a Tom and Jerry cartoon.
The findings do fall short of turning lead into gold, however, or coming up with a formula for manager selection. Basing allocations on non-correlation to public information is not going to deliver the ultimate portfolio.
The search for the Holy Grail continues.

The FT’s Paul Temperton, in this week’s FT Fund Management supplement, has warned investors the Nirvana that is the world of a hedge fund investor may in fact be a mirage in an article whose point, in a nutshell, is that hedge fund investing is most appropriate for a bear market.
This is not a contentious statement. In meetings with hedge or fund of hedge fund managers I constantly hear admissions that their products will capture, say, 80% of the upside of a bull market but protect on the downside. Temperton has not exposed a hidden truth here, or blown a debate wide open with an incisive piece of insight. What he might have done, however, was to bring a fact almost universally accepted amongst those in the know and passed it on to FT readers that might still have some pre-conceived and somewhat sensationalistic views of what hedge funds are.
The points made in the article seem to ring true, (as you might expect from the director of the Financial Times Portfolio Management Academy, who you would imagine would know a thing or two about portfolio management.)
“For those willing to ride out short-term volatility, long-only exposure may well produce superior long-run returns,” the article concludes. A fair comment: hedge funds are currently most interested in currying favour with institutional investors who do not like short term volatility.
“Active asset allocation- that is, the selection of the hedge fund style and manager- has been the key to successful exposure,” the article also says. This glosses over another quite significant debate: top down or bottom up? What is more important? Getting the correct stock/ manager or getting the right sector/ style? For the purposes of Templeton’s article, both. Most managers argue it is the former, (and that they are the right manager to make your money grow, of course), while much academic research suggests the latter is more important. But what do professors know anyway? Those who can, do. Those who can’t, teach. (Those who can’t teach, write articles.)
The point is manager and style selection are almost as complicated as stock selection, especially if you are benchmarking yourself against the equity markets during a bull run. And this is where the article has not communicated the hedge fund philosophy of the ‘sophisticated’ investor. Hedge funds are not about MSCI benchmarks. They are about volatility reduction and absolute returns. As Temperton says: if you are not concerned about short term volatility, you might be better off in the long-only markets.

Funds of funds of hedge funds.
My initial reaction to this is: diversification overkill; fee fest; and cumbersome phraseology.
Having just had a conversation with a FoFoHF manager about the benefits of his fund and the rationale behind providing this product, I would moderate my reaction a little.
Diversification: it is not necessarily overkill to have allocations to around 15 funds of hedge funds, as this particular fund does. If you treat the fund as a one stop shop, satisfying yourself with thorough due diligence that this fund itself is a safe bet, then you could have a very broadly diversified hedge fund allocation with a single investment of just $2m. This does nothing about the highly concentrated operational risk of having your hedge fund allocation made to a single house.
Fees: apparently, through sideletter agreements, you can get some rebates on some of the fees on the underlying, so the extra fees are offset to some extent, though there will most certainly be higher fees than would be expected on a single FoHF allocation, let alone a single manager. The main FoFoHF defence is that they add alpha. I tend to believe the best alpha you can get is a well constructed FoHF portfolio, where at least you will know you wont have allocations to the same hedge fund through two different FoHFs.
Cumbersome phraseology: not much more to say on this one, except that we may look back on this as churlish in ten years time if every pension fund has allocations to at least five funds of funds of funds of funds of funds of hedge funds. Now THAT would be a safe product.
The bottom line: I can’t see the point in a FoFoHFs myself. If I wanted a hedge fund allocation and I was that concerned about diversification I would be more tempted by an investable hedge fund index. Time will tell how the net returns of those two compare.

Fashions ebb and flow. Shoes that were the height of style on year look passé the next. And it is not just clothes, but hedge funds, whose fortunes fluctuate in this mildly irrational manner. (Mildly irrational because it would be too strong to say there was not even a hint, a suggestion if you will, of rationality in the changing fortunes of the hedge fund industry. Which is not to say that because something is rational it is correct. Rather, that there is a logical thought process at work.)
Put crudely: hedge funds are amassing cash at around twice the rate in 2007 as they did in 2006, overall. More accurately, Q1 this year has seen nearly half the level of assets flow into hedge funds as occurred in the whole of 2006. Time will tell whether the rate is maintained at anything like these levels for the remainder of the year.
There are numerous reasons this could be, one of which being that trustees talk, and are renowned for their ‘safety in numbers’ attitude to investing. It is rare to find a trustee that will make an allocation to something innovative, perhaps perceived as risky (whether or not it actually is), unless other trustees are doing the same. The fear of underperformance outweighs the lure of outperformance. This is a well documented phenomenon amongst financial behavioural psychologists- not just amongst trustees but any investor, but particularly sensitive are those investing on behalf of others.
All this is a long winded way of saying it is not surprising that when there is a change in the rate of allocations to hedge funds, it is not surprising that the change is dramatic.
It could also be evidence of an increasing concern about the prospects for financial markets. Hedge funds perform best (relatively) in bear markets. This point can apply not just to the equity markets but to others. People want to put their money somewhere. If other asset classes are looking less attractive then hedge funds could be one of the beneficiaries of this.
Perhaps as the industry matures we will see hedge funds develop their fashion consciousness in the way clothes have. I personally would not be averse to seeing attractive ladies prancing around on stage sporting hedge fund prospectuses for various different funds and strategies. As more and more hedge funds come to market it would be a good way of helping investors to make their minds up about who to invest in, especially as returns cluster around the high single digits mark and compete to offer products with minimum volatility. As with shampoo adverts, where the lady in the shower expresses her (rather astonishingly profound) approval of the product with which she is washing herself, the ultimate symbol of having attained mainstream appeal is the exposure of a little female flesh.

A problem shared is a problem halved, they say.
The old wives who coined this one hadn’t envisaged the credit derivatives markets, agues Wolfgang Munchau in the FT today. We could call it the exception that proves the rule. In this instance the sharing of risk does not, necessarily, mean less risk, he says. Offsetting risk, he would have us believe, is like changing a light bulb, in the sense bringing more people in to help complete the task is only liable to complicate matters.
Risk sharing makes a lot of sense in one way, to which Munchau refers: risk is being offloaded in places where it is not being properly understood, by people who are not necessarily in the best place to deal with it. Junk mortgages are his first example, a topical one for many.
Is this a bit like saying shell fish is bad for you because if you happen to be allergic to it you might die? Or paracetamol, because if you take 50 of them it might do a little more than cure your headache? Is it not patently obvious that some people are not well equipped to handle certain risks?
Probably it isn’t. After all, paracetamol packets do have warnings for those not au fait with sensible dosage. Food packaging is usually labelled with extensive information for those with allergies, So it makes sense financial products have equivalent warnings.
The problem with credit derivatives as I see it is the risks involved are so complex that you don’t have to be a retail investor to be perplexed by the whole thing. The real problem here may be there are very few people, at a very exclusive bracket of institutions, who really understand the risks involved in some derivatives products, allowing them to offload toxic risk they do not wish to hold to other institutions, who may not fully appreciate the time-bomb they have acquired. I heard some time ago investment banks have been palming off risk just like this to insurance companies whose risk measurement capabilities were nowhere near as sophisticated. Since then there has been no major crisis to suggest this is, in fact, a major problem, but past performance does not imply future safety.
Perhaps the thing here is not so much about the danger of sharing per se, as the danger of a market so incomprehensible that the brainiest elements of the markets are able to smuggle risk they don’t want to people who don’t understand what they are taking.

The top 25 managers earn more than Jordan, eh?
Well, let’s face it, she was once quite sexy, and still has something about her, but it is hardly surprising 25 hedge fund managers can earn more….
Oh, that Jordan. That is certainly more of an achievement.
When they overtake Saudi Arabia we’ll have a decent story on our hands. For the meantime, this is just another milestone on a road we identified a long time ago. Successful hedge fund managers are stinking rich. This is the inevitable product of the financial system we live in.
Prepare yourself for the same story, churned out intermittently over the coming years with progressively more impressive companies. Because they are coming. It’ll save you from the moments of disarming surprise that tend to follow an interesting news story. You heard it here first.

Although closed ended fund structures are ideal for fund managers, one London-based investment banker told me this week he thinks they have failed to capture the imaginations of the investing public.
“Investment managers love it because they don’t have to share their fees (as they would with a company IPO) and they secure permanent capital, but the investor market is not deep and selling funds is difficult,” he told me. “There is an expectation mismatch between the issuers and the investors. They are not proving appealing to those investors that can already access hedge funds through other routes. Those who can are better off with limited partnerships.”
Although there have been more than 10 funds listed on exchanges in Europe, Marshall Wace Tops is the single example of an unqualified success, the banker said. Brevan Howard raised an impressive $1bn, he noted, which would qualify it to be considered successful, but that it had announced its intention to raised $1.5bn.
Unfortunately he was not willing to go on the record with these comments.
He did say he believed Marshall Wace was successful, where others failed, because of the rigors of its investment process. Very strong on the operational side and with capabilities in research, especially its quantitative strength, professional investors recognised MW Tops offered something as an investment vehicle they could not replicate in-house, which is not something they believe about all hedge funds, listed or otherwise.
Closed ended funds have mostly been overlooked by professional investors who tend to be disinclined to pay fees to another manager to effectively manage a chunk of their own portfolios. This contrasts with publicly listed hedge fund companies, in which asset managers are often keen to invest, being just another equity name on their portfolio like any other.
The lack of interest amongst professional fund managers has resulted in a significant reduction in the liquidity of closed ended funds. Insurance companies could use them as a way around regulation preventing them from investing in hedge funds but have so far typically stayed away. Only retail investors have flocked to the structures, providing the liquidity for the shares, though even the pessimistic expect listed funds to gradually gain popularity over time. This is partly because the amount of work in listing a fund for the first time is very high, keeping many funds from taking this route to financing, but once it has been done once the work required to list more funds is much smaller. This is likely to affect an acceleration of such launches over time.
IPOs of hedge fund companies have been increasing in frequency in recent years, to the extent that 10 of the last 11 investment management IPOs were done by hedge fund companies. This alone illustrates the demand out there for investors looking for this alternative means of exposure to hedge funds. If you factor in the number of banks either buying or forming strategic alliances with hedge fund groups, in order to better service their private clients looking for exposure to coveted funds, you get a picture of the depth of this demand.

The SEC and the US Treasury disagree fundamentally about hedge funds regulation. Robert Steel of the U.S. Treasury said he opposes stricter regulation of hedge funds because it would imply such investments have received an official green light. The SEC wanted to register all hedge funds, and must still wish it could, despite the fact it would almost certainly give this impression to the less sophisticated.
And costs: Steel, clearly lacking the can-do attitude endemic at the SEC, worries about the cost of training and overseeing the US hedge fund industry. What a contrast with the SEC which, far from wasting time with such concerns, fought for the right to oversee hedge funds based outside the US (where they had US investors.) No concern for the practicalities of this.
One view is about setting parameters of power which can be realistically exercised, the other is about gaining as much theoretical authority as possible and then seeing how close you can actually get, in practice.
In the latter instance, the SEC could at least have been safe in the knowledge it would not have run up against the boundaries of its jurisdiction. Following Steel’s logic, at least avoiding the creation of an illusion of safety keeps everyone involved in the industry on their guard.
In fact, it seems to be the latter view which is gaining most traction around the world. The FSA, one of the world’s most prominent hedge fund regulators, with its principles based approach, is the model most in the industry admire, and the UK can be proud of its track record of protecting investors from some of the problems that have occurred in the US. Even factoring in the greater number of hedge funds in the US, proportionally the UK should still have had more problems than it has, and must be doing something right.
It is interesting times for hedge fund regulation. Germany has taken the baton of regulatory fundamentalism, and wants all hedge fund managers to be forced to wear burqas, (with the US and UK, as ever, fighting the corner of freedom.)

Those who think hedge funds are all about vice and capitalist excess will have either choked on their cornflakes or nodded with grim resignation while reading their Telegraph this morning. “London hedge fund managers are being asked to consider striking it lucky by investing in a multi-billion pound Hungarian casino development alongside Australian media magnate James Packer and the philanthropic Guggenheim family,” one article reports.
So now, to supplement EuroDisney, we have EuroVegas. Forget the life-size Mickey Mice and the ludicrous queues. This holiday gives you a window-free week in a timeless, whiskey fuelled haze. Perhaps they should build it in Paris so people could drop their kids off for the week while they gamble away the savings. “If you get into trouble, talk to the giant duck, he will help you out. See you in a few days. Don’t spend all your money on sweets.”
The biggest regret I have, reading this, is that Europeans are so rubbish at coming up with original names. We always just take the US name and put “Euro” in front of it. How Canary Wharf escaped the name Euro Wall Street I still do not know.
The Telegraph makes London feel special, proud of its status as the capital of sin. Forget those New York-based hedge funds, the Hungarian bookies must have thought, especially after that whole business with online poker. That would probably attract the attentions of the SEC, never a good thing. Or those based in France- those guys are too quantitative, they would probably interfere with our models. “No, let’s ask the Brits,” they will have said. “That gives us more chance of attracting British tourists, without whom no holiday resort can be considered complete.”
Credit Suisse is calling around hedge funds and others on behalf of the venture, which will allegedly house five casinos plus all the hotels and restaurants required to service them, near Bezenye. Hedge fund money will be used to back the acquisition of the greenfield land site and to start development, The Telegraph said.
You can see how the project might be appealing at first glance, though whether the project will appeal from a due diligence perspective remains to be seen. It is another string in the bow of diversification, and a robust one at that: conventional wisdom holds that nothing withstands market fluctuations quite like vice, and a European Vegas, merging gambling, drinking and, one would hope, exotic dancing, would surely fall under that category.
It is yet another example of hedge funds moving into sectors traditionally dominated by other financial institutions. Banks would usually have dominated a project like this, with some help from venture capitalists and private investors. That hedge funds are the first port of call is more evidence of the importance they have attained in the global economy.