Hedge Funds, Private Equity, and Alternative Investment Vehicles

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1 University Press Scholarship Online You are looking at 1-10 of 58 items for: keywords : hedge funds Hedge Funds, Private Equity, and Alternative Investment Vehicles Roy C. Smith, Ingo Walter, and Gayle Delong in Global Banking Published in print: 2012 Published Online: May 2012 ISBN: eisbn: acprof:oso/ Hedge funds, private equity investments, and other forms of alternative investments that offer the possibility of enhanced portfolio returns on a risk-adjusted basis have been available to sophisticated investors and institutions for many years. In the early 2000s, trillions of dollars of new investment funds that flowed into alternative investments and contributed to the bubbles of the markets suffered proportionately when the bubble burst. Banks were attracted to and participated in the surge in alternative investments in many ways, as lenders, agents, and as principal investors in funds distributed to clients. The multiple exposures of banks to mortgage-backed and nonmortgage asset-backed securities, and to hedge funds and private equity funds caused them a high degree of distress, forced writedowns of assets, and compelled banks to raise additional capital. Consequently, many banks that were once active in alternative asset investments became much less so as the industry deleveraged and lost momentum. By 2010, only a few banks were still active as major players in this industry. Alternative Investment or Nomadic War Machine? Ewald Engelen, Ismail Ertürk, Julie Froud, Sukhdev Johal, Adam Leaver, Michael Moran, Adriana Nilsson, and Karel Williams in After the Great Complacence: Financial Crisis and the Politics of Reform Published in print: 2011 Published Online: January 2012 ISBN: eisbn: acprof:oso/ Page 1 of 6

2 This chapter explores the role of alternative investment funds in the recent financial crisis. It considers the different ways in which the source of private equity and hedge fund success during the boom were understood, contrasting the positions of supporters and critics. In contrast to these positions, the chapter reframes private equity and hedge funds as a mutable, integral part of the world of bricolage described in 2. It is argued that these intermediaries were bricoleurs building structures from conjunctural conditions of low interest rates and abundant liquidity in the 2000s. Yet there was something distinctive about their strategy which we understand outside the market frame through the Deleuzian analogy of nomadic war machine. The chapter concludes by arguing that it is not fixed strategies that generate reward, but rewards which drive variable tactics of value extraction which often impose costs on others. The Past, Present, and Future of Hedge Funds Roland Füss and Sarah Müller in Portfolio Theory and Management Published in print: 2013 Published Online: May 2013 ISBN: eisbn: acprof:oso/ The finance literature documents that investors can benefit from adding hedge funds as part of the alternative asset class to their asset allocation. By outlining the most important literature, this chapter gives a comprehensive overview of the fundamental characteristics of hedge funds and provides evidence supporting their use in a tactical and strategic portfolio allocation context. Because hedge fund return properties differ from those of traditional asset classes, this chapter discusses appropriate performance measures as well as enhanced portfolio optimization approaches when considering hedge funds in mixed-asset portfolios. It also includes information on relevant organizational and regulatory issues. This chapter also focuses on the increased systemic relevance of hedge funds for financial markets, the complex connections they have with other financial institutions, and the implications for future regulatory developments in this industry. Page 2 of 6

3 Mergers and Acquisitions Sharan Jagpal in Fusion for Profit: How Marketing and Finance Can Work Together to Create Value Published in print: 2008 Published Online: September 2008 ISBN: eisbn: acprof:oso/ This chapter shows how the firm can use marketing-finance fusion to evaluate mergers and acquisition strategies. It examines the potential gains from mergers, the history of mergers and acquisitions, the effect of private equity firms and hedge funds on merger activity and merger performance, and the special problems posed by international mergers. In particular, it shows how buying and selling firms can objectively value brands by combining game theory and data from choice-based experiments. The Contractual Governance of Private Equity Funds and Hedge Funds: A Case Study Joseph A. McCahery and Erik P. M. Vermeulen in Corporate Governance of Non-Listed Companies Published in print: 2008 Published Online: January 2009 ISBN: eisbn: acprof:oso/ This chapter examines the contractual governance arrangements of private equity and hedge funds. Section 2 examines the traditional structure and investment strategies of hedge funds and private equity, highlighting the respective benefits and costs of the two types of funds. Section 3 reviews the activity of hedge funds, concentrating on the increasingly important role they play in corporate governance and corporate control. It then considers the variety of investments made by private equity partnerships. Section 4 compares the contractual structure of private equity and hedge funds, describing the terms and conditions of fund formation and operation, and the contractual features that distinguish the two types of funds. Page 3 of 6

4 In the Shadow of Corporate Governance Reform: Change and Continuity in Managerial Practice at Listed Companies in Japan * John Buchanan and Simon Deakin in Corporate Governance and Managerial Reform in Japan Published in print: 2009 Published Online: February 2010 ISBN: eisbn: acprof:oso/ This chapter presents an empirical analysis of the implementation of the company with committees law of 2002 that was aimed at expanding the role of independent directors. Most boards continue to have a significant executive presence and external directors are treated as advisers and associates rather than as monitors of management or as agents of the shareholders. However, there has been an increase in external directors across all companies (not just those opting into the new law), and a clearer separation between monitoring and execution. Because the core of the community firm appears to remain intact, the chapter interprets these developments as a renewal of the postwar model, stressing elements of continuity along with the adaptability of the Japanese corporation in the face of external pressures. A similar conclusion is reached concerning the limited impact on managerial practice of growing shareholder engagement, including recent instances of hedge fund activism. Introduction to Hedge Funds Douglas Cumming, Na Dai, and Sofia A. Johan in Hedge Fund Structure, Regulation, and Performance around the World Published in print: 2013 Published Online: May 2013 ISBN: eisbn: acprof:oso/ Chapter 1 explains what hedge funds do, and differentiates hedge funds from other asset classes such as venture capital, private equity, and mutual funds. This chapter also provides some descriptive statistics of the size of the hedge fund market over time, makes some size comparisons with other assets classes and outlines some of the main issues relevant to the analysis of hedge funds. Chapter 1 provides an outline for the scope of material that comprises the subsequent chapters of this book. Page 4 of 6

5 Alfred Winslow Jones: : Financial Hippie Edward Morris in Wall Streeters: The Creators and Corruptors of American Finance Published in print: 2015 Published Online: May 2016 ISBN: eisbn: Publisher: Columbia University Press DOI: / columbia/ The chapter describes Alfred Winslow Jones and the development of the first hedge fund. Systemic Risk and Hedge Funds Nicholas Chan, Mila Getmansky, Shane M. Haas, and Andrew W. Lo in The Risks of Financial Institutions Published in print: 2007 Published Online: February 2013 ISBN: eisbn: Publisher: University of Chicago Press DOI: / chicago/ This chapter reports that inferences about risk can be acutely sensitive to the sample period used to produce risk measures. It also discusses the increasing role of hedge funds. The dynamics of hedge funds are quite different to those of more traditional investments, and the potential impact on systemic risk is apparent. Illiquidity and smoothed returns may be significant properties for hedge fund returns. Serial correlation may serve as a proxy for a fund's liquidity exposure. The banking sector has significant exposure to certain hedge fund indexes, implying the presence of some common factors between hedge funds and banks, and raising the possibility that dislocation among the former can impact the latter. It is shown that the average liquidation probability for funds in 2004 is over 11 percent, which is higher than the historical unconditional attrition rate of 8.8 percent. The chapter explains how the banking sector is exposed to hedge fund risks. Corporate Governance and Managerial Reform in Japan D. Hugh Whittaker and Simon Deakin (eds) Published in print: 2009 Published Online: February 2010 ISBN: eisbn: Item type: book acprof:oso/ The chapters in this book address the state of Japanese corporate governance and managerial practice at a critical moment. They are Page 5 of 6

6 based on detailed and intensive fieldwork in large Japanese companies and interviews with investors, civil servants, and policy makers in the period following the adoption of significant corporate law reforms in the early 2000s up to the months just before the global financial crisis of At the start of the decade, the time seemed right for Japan to move to a shareholder value driven, Anglo American system of corporate governance. Instead, an adjustment and renewal of the postwar model of the large Japanese corporation has taken place. Japanese managers have adapted to and reshaped corporate governance norms, using them to reform internal decision making structures. The board's role is seen in terms of strategic planning rather than monitoring, and external directors are viewed as advisers, not as representatives of the shareholders. Companies have responded to the threat of hostile takeovers by putting poison pills in place and have rebuffed hedge fund activists' demands for higher dividends and share buybacks. Although shareholder influence is more extensive than it was, central aspects of the Japanese community firm in particular, managerial autonomy and a commitment to stable or lifetime employment for core of employees largely remain in place. The Japanese experience suggests that there are limits to the global convergence of company law systems, and that the widespread association of Anglo American practices with the modernization of corporate governance may have been misplaced. Page 6 of 6