market folly

We wanted to post up the video from one specific panel at the Bloomberg Markets 50 Summit in New York that featured Marcy Lasry of Avenue Capital, Glenn Dubin of Highbridge Capital, and Bruce Richards of Marathon Asset Management.

Their panel talked about hedge fund strategies and their various outlooks.  Bloomberg's Stephanie Ruhle moderated the discussion and here are some of the highlights.


Marc Lasry's Comments

Lasry noted how banks don't really have trading groups as much, so hedge funds aren't dealing with the banks as much and people "come to you" now and bypassing banks.  They've got one of the largest distressed funds in Europe and lots of banks have approached them about their portfolios.

Lasry argued that smaller hedge funds have to "be up double" what a big fund is to essentially justify all the risks an investor takes on investing in a smaller fund.

"At the end of the day, all you want to be focused on is the net (return).  The reason there's a discussion on a fees is people believe that net returns have come down, and that's because of the risk-free rate."


Glenn Dubin's Comments

Asked if he would started a hedge fund again today given regulatory requirements and the landscape, Dubin said setting up a hedge fund today is much more challenging than it once was. 

He echoed Lasry's comments that banks getting out of various business has led to new opportunities for many hedge funds. 

He also said there's no question the larger funds have a competitive advantage over smaller funds when it comes to accessing dealflow.  He also notes they have an advantage in hiring and the ability to retain top talent as it's a very competitive industry now.

"Fees are an odd issue in our industry."  He feels it's a binary outcome: either you decide to invest in a manager (and the market has set the fees), or you don't.  "To negotiate with a manager is a ridiculous discussion to have."

Dubin thinks the best opportunity now is to step in to provide capital where banks used to, but no longer can due to requirements.


Bruce Richards' Thoughts

Regarding hedge fund fees, he says large institutions want discounts available for big capital allocations to funds and Marathon reduces their fees for these big tickets or longer lock-ups.

"As a global institution, you search  the world for the best risk/reward to make absolute returns." 

Richards also recently spoke at the Alpha Hedge West conference and we've got coverage of his talk there via that link.

Embedded below is the video from the Bloomberg Markets 50 Summit:



For more coverage of the various conferences lately, head to:

- Notes from the Value Investing Congress (Ubben, Roepers, McGuire & more)

- Notes from the Alpha Hedge West Conference (Bass, Burbank, Richards & more)