Taking Hedge Funds Public

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Access to the public capital markets has got to be a great lure for hedge fund managers. Lots of capital sitting around eager to get into the alternative investment business with not enough access—either because of government regulation or institutional rules that block investment in hedge funds. Getting listed would clear up a lot of these problems. So it’s not surprising to read this morning that Fortress is considering an IPO.
Back when Goldman went public a friend of ours referred to it as the ultimate “blank check IPO.” Basically, they’re going to do whatever it is they decide will make them money—run their own personal hedge fund, buy hotels, lend money to Russians—and shareholders just have to hang tight and hope things work out.
Hedge fund IPOs would be like Goldman’s blank check on crack. The most serious question, in our mind, is the Next Generation question. So much of what many hedge funds do to make money depends on a couple of brilliant and daring individuals. There is no evidence at all that hedge funds can survive into the next generation, after their founders cash out or retire to daisy pushing pastures.
Hedge Funds Flirt With Heresy: Going Public [New York Times]

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