By Sarah Wood
One of the most important pillars supporting the hedge fund
industry in the United States is that, by making their
allocations, hedge fund investors sign on to funds as partners.
Why else would they agree to pay such huge fees? Or accept
minimal transparency or long lockups?
To be sure, the foremost requirement of any hedge fund
investor is performance. But the assumption has always been
that the limited partnership arrangement assured, at least in
practice, that managers would have an incentive to avoid
blowing up their funds and would provide explanations
when things went sideways.
This does not seem to have been the case with Ritchie
Capital Management. In fact, Ritchies relationship with
some investors has become adversarial, and the firm has become
a something of an instructive example in how to agitate your
The saga of Ritchie and its...