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“We Are in the First Innings of a Washout in Hedge Funds”

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The amazing fountains at night at the Bellagio Hotel & Casino. Located in Las Vegas, Nevada.

“There is no doubt that we are in the first innings of a washout in hedge funds,” said Dan Loeb of Third Point LLC in a quarterly letter dated April 26.

Life Comes at You Fast. Slow It Down with My Friday Email. It’s Free.

$15 billion has been withdrawn from hedge funds in the first quarter and a lot more is headed that way. Why? The 2 and 20 game seems to have rubbed investors the wrong way—an arrangement where they collect a 2% management fee and 20% of the profits leaving you with the letters e, t, and s of your assets. Then you pay taxes.

What’s the word on the street as this dreadful group gathers in Las Vegas for the SkyBridge Alternatives conference (SALT) being held at the Bellagio hotel? “Tips at the shoe-shining station a few feet from the main ballroom were down more than 50%, to $5 or under in most instances, from as much as $20 one year earlier, a shoe shine employee said,” reports Rob Copeland and Timothy Martin in the WSJ.

Oh and some clients will have to do without the limos to the club.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.
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