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These Two Guys Are Ruining Everything For Everyone

Never mind those two men behind the fee curtain.
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This is now an emergency! Someone please buy this from Steve Cohen.

Sure, it’s all well and good that Adage Capital founders Bob Atchinson and Phil Gross are happy driving Nissan Altimas, flying commercial and taking the bus. But that is so not what running a hedge fund is all about, and hedge fund managers who like to dabble in the art market or build personal pee-wee hockey rinks or hire a little light entertainment for the birthday parties or buy Puerto Rico simply can’t do that on 50 basis points with refundable incentive fees with a benchmark hurdle. You people are going to drive John Paulson into becoming a mutual fund manager.

Adage is getting harder to dismiss as an anomaly. The firm has nearly doubled in size over the past four years and is now one of the world’s 10 largest hedge funds. Its approach also reflects a bigger structural change in the industry. Many of the public retirement plans and other institutional investors that have poured money into hedge funds for years have hit their limits on what they can allocate to the sector. To keep the gas pedal on growth, hedge-fund managers are increasingly recasting themselves as something closer to staid money managers like Fidelity Investments. In many cases, that means taking a different tack on fees….

From offices high in Boston’s John Hancock Tower, Adage’s founders preside over an operation that bears little resemblance to most hedge funds. There is no central trading desk or bullpen area to swap ideas, people familiar with the firm said.

Investment analysts, 26 in total including the founders, work silently in separate offices ringing the floor. Six golf putting holes dot the space, people familiar with the firm said, though they are rarely used except for a half-hour tournament each December in which the winner gets no money. A person who has been inside described it as a “library.”

Giant Hedge Fund’s Radical Idea: Performance Guaranteed or Your Money Back [WSJ]



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