By Michelle Celarier
In the premier issue of Absolute Return, March 2003, our
cover profile of Louis Bacon and Moore Capital Management
became the focus for a discussion of the critical topic of
hiring and retaining talent. Ever since, we've continued to
report in depth on the incredible story of the hedge fund
industry - its star managers, the many challenges that have
accompanied the huge growth and institutionalization of the
business, the industry's battles with Washington, the stunning
performance of many funds, the megalaunches and the big
It has been a wild ride. When we first began tracking U.S.
hedge fund assets, 100 firms with at least $1 billion each had
assets under management of $310 billion. Although assets fell
by a third last year - the worst-ever for the industry - our
Billion Dollar Club still counted 212 members managing a total
of $1.134 trillion. Even in their darkest days, hedge funds
outperformed the market, and they are coming back strong. In
May, hedge funds were up a median of nearly 3%, one of the best
months for the industry in more than a decade.
Now a sea change is under way. Hedge funds are going through
a period of consolidation as they rethink their strategies and
ways of doing business. They face more government intrusion and
increased demands from investors. Fees and terms are starting
to bend, and we are reporting on these changes every step of
This new world led us to profile Sweden's Brummer &
Partners, this month. Why? We think Patrik Brummer has a few
things to teach U.S. managers. Whereas American funds fended
off regulation for years, Brummer embraced it from the start.
He has kept his funds' fees modest and the process transparent,
and guess what? Swedish investors have jumped into the local
onshore hedge fund market in a big way. Brummer's performance
has excelled and he is no small fry either. Now the firm boasts
$5.6 billion in assets.
Back in the United States, we are also finding some
surprises from Elliott Associates' Paul Singer, known as much
for his extremely conservative political views as his shrewd
maneuverings in distressed debt around the world. Many were
surprised by the position he took on the Chrysler restructuring
(he was one of the first senior creditors to agree to the Obama
administration's plan) and his support of tighter regulations
and lower leverage in the banking industry. That's the type of
conservatism we like to see - one that actually protects the
financial industry instead of fleecing it.
Like the hedge funds we cover, we are not standing still.
Beginning with the next issue, Absolute Return will be merged
with sister publication Alpha to create a brand new product,
AR: Absolute Return + Alpha. Both magazines are part of the
Euromoney Institutional Investor family, with Alpha published
by Institutional Investor and Absolute Return by HedgeFund
Intelligence. Together, II and HFI are creating a magazine and
online service that will offer readers everything they're used
to seeing in Alpha and Absolute Return - and much, much more.
As the editor of this exciting new venture, I want to thank
Alpha editor Mike Peltz and his team for the great work they've
done and their support of our joint effort. I will continue to
update you on the progress of our new magazine, which will be
published in September, along with a revitalized web