The math is simple but sobering. A hedge fund that lost half
its assets last year needs to gain 100% before it reaches its
high-water mark and collects incentive fees again. In balmier
times, most hedge funds needn't pay mind to that reality,
because losses are usually contained. Today, lots of hedge
funds do need to pay attention. Some 28% of funds in the
HedgeFund Intelligence/Absolute Return database lost more last
year than they have ever produced in any 12-month period, which
means they need to have enough socked away to survive at least
a year - if not more - without performance fees.
Some of the industry's biggest guns lead the list. Citadel
Investment Group's Kensington...