I’m a crazy cat lady. Those that know me well in the industry are already clued into that fact. Those that don’t know me well probably at least suspected it. After all, no one can be this sarcastic and inappropriate without spending an inordinate amount of time by herself.
What folks may not know is I am, in fact, a total bleeding heart when it comes to any animal. I have stopped my car to rescue skunks, turtles, dogs, and cats. I have nursed injured geese and mice. In fact, just before Christmas I found homes and no-kill shelter placements for 48 cats that a even crazier cat lady was hoarding in her BFE, Tennessee trailer.
So imagine my outrage when the story broke about a baby dolphin that died after a bunch of total effing morons passed it around on the beach for selfies.
I was so pissed I stomped around the house blathering on (to myself and to my three cats) about how stupid the entire human race has become and how this is all a sign of the total end of civilization, which I am sure some idiot will capture on a freaking GoPro.
And then I started to calm down. I did what those of us who work with causes have to do so often when confronted by things too horrible to imagine. I breathed and I began to think about all of the people that I know who do good things for the world. How private equity veteran Jeremy Coller is a vegetarian and a champion for farm animal welfare. How 100 Women in Hedge Funds raised more than GBP550k for children’s art therapy. How one of my favorite seeders and one of my favorite family office guys both do volunteer work with wildlife and schools in Africa every year.
As a level of sanity returned, I remembered a quote from the existential masterpiece Men In Black: “A person is smart. People are dumb, panicky dangerous animals and you know it.”
I needed to re-focus on persons. Not people.
All too often, however, we tar a person with our people brush. Sometimes it’s well deserved (not to mention a time saver), but most of the time we find that there are exceptions to every rule. And while it’s hard for most of the public to imagine them as individuals, this is also the case in the world of alternative investments.
Let’s consider some of my fave hedge fund “you people” themes:
Hedge Funds Keep Getting Crushed – Sure, most index providers show hedge funds started the year down more than 2% on average, but that means some funds did worse and…gasp….some funds did significantly better. Hopefully you saw some of the latter in your own portfolio, but if not, Business Insider proves this point with this handy article.
Hedge Funds Charge 2 & 20 – In their study “All That Glitters” Elizabeth Parisian and Saqib Bhatti conclude that pensions pay roughly $81 million in hedge fund years per year, amounting to roughly 57 cents on every dollar of profit. In December 2015, Eurekahedge reported that average hedge fund performance fees last touched 20% in 2007, while Citibank reported that management fees were, on average 1.59%, with an operating margin of 67 basis points. I’ve seen several funds launch of late with either no management fee or zero performance allocation. And what we’re talking about? They are just the headline fees. Most managers, roughly 97% the last time I polled them in 2013, were willing to drop fees for large investments. That’s a whole lot of persons charging less than “those people.”
Hedge Fund Billionaires – Google “hedge fund billionaire” and, if you’re like me, you’ll get 131,000 results in about 0.57 seconds. Of course, what’s interesting about that fact is it is probably roughly 130,500 hits higher than the actual number of hedge fund billionaires. If one assumes that all hedge fund managers with AUM over $1 billion are, in fact, billionaires (a stretch if I’ve ever heard one), then that leaves roughly 9,500 hedge fund managers who are not billionaires, unless they secretly won the family inheritance or actual lotteries. That’s a pretty unbalanced barbell on which to base any kind of income assumption. And of course, that doesn’t take into account that a hedge fund manager, even a Big Billionaire Hedge Fund Manager, can lose money for the year if they don’t achieve profitability for their clients.
At the end of the day, as my former boss, George Van, used to say, “hedge funds are as varied as animals in the jungle,” and boy, is he right. And whether we want to believe it or not, hedge fund managers are individuals first, and “those people” second.
The moral of the story? Generalizations are generally not your friend. They make you mad. They make you sad. They may make you ignore investment options based on public opinion rather than facts. Instead, take a moment to slow down and individualize. Unless I find out you took a selfie with that dophin, in which case, I suggest you speed up and use your head start.