Chapter 5: It's All About the People
If you’ve ever bought a house, you know it’s a long, stressful process. You have to get an inspection, talk to the bank, and negotiate with the seller. Now imagine doing that for a multi-million dollar company.
Due diligence
Hedge Fund Compliance Chapter 8: How Investors Check if a Fund Is Compliant
Up until now in this series, we talked about compliance from the hedge fund’s point of view. How they build programs, hire people, write policies. Chapter 8 flips the script. Now we look at it from the investor side. How do investors figure out if a fund’s compliance is actually good?
Hedge Fund Analysis Book Retelling: Final Thoughts and Key Takeaways
And that’s a wrap on “Hedge Fund Analysis” by Frank J. Travers.
Over the past 20 posts, we went through the entire book, from the history of hedge funds all the way to the final scoring model. Here’s what I think you should take away from all of this.
Hedge Fund Scoring Model: Making the Final Investment Decision
Chapter 12 is the final chapter and it is where everything comes together. After all the sourcing, screening, interviewing, number crunching, operational checks, risk reviews, and reference calls, Travers shows us how to take all that work and turn it into a single, structured decision.
Hedge Fund Reference Checks: How to Verify Who You're Trusting With Money
Chapter 11 opens with a Reagan quote, “Trust but verify.” That pretty much sets the tone. You have spent hundreds of hours doing investment, operational, and risk due diligence on a hedge fund. But have you actually checked whether the people running it are who they say they are?
Risk Due Diligence: How to Spot Hidden Dangers in Hedge Funds
Chapter 10 opens with a Warren Buffett quote: “Risk comes from not knowing what you’re doing.” Hard to argue with that. Travers uses this chapter to walk us through the risk due diligence process, and honestly, some of the findings are pretty eye-opening.
Hedge Fund Operations Checklist: What to Verify Behind the Scenes (Part 2)
In Part 1 we covered the big picture of operational due diligence and why so many hedge fund failures trace back to operational problems. Now in Part 2, Travers lays out exactly what to check, what questions to ask, and then shows us a real example interview with the operations team at Fictional Capital Management (FCM).
Operational Due Diligence: How Hedge Fund Frauds Like Bayou Happen (Part 1)
Chapter 9 is where Travers shifts from talking about investment analysis to something most people overlook: the boring operational stuff that actually prevents you from losing all your money to fraud.
Inside a Hedge Fund Office: The FCM Onsite Visit Case Study (Part 2)
In Part 1 we covered the theory behind onsite interviews. Now Travers takes us inside the actual visit to Fictional Capital Management. This is where we get to see how all those interview techniques play out in a real (well, fictional but realistic) setting.
Onsite Hedge Fund Visits: Meeting Strategies and What to Watch for (Part 1)
You have done the phone calls, crunched the numbers, analyzed the portfolio. Now it is time to actually show up at the hedge fund’s office and talk to people face to face.
Hedge Fund Due Diligence - How to Check Before You Invest
Chapter 6 of The Hedge Fund Book is all about due diligence. Basically, it is the homework you do before handing someone your money. And after Madoff, after LTCM, after Bayou, everyone agrees on one thing. That homework was not being done properly. This chapter shows what good due diligence looks like and what happens when people skip it.
Hedge Fund Manager Interviews: Meeting Notes and Follow-Up (Part 2)
In Part 1, we watched Travers set up and begin his initial phone call with Jaime Williams from Fictional Capital Management. Now we pick up where we left off, with the conversation getting into the really meaty stuff: asset growth, liquidity, short selling, risk management, and the all-important question of what makes this fund special.
How to Interview a Hedge Fund Manager: First Call Tips (Part 1)
You have done your homework. You read the DDQ, you looked at the presentation, you reviewed the monthly letters, and the numbers did not scare you away. Now what?
Chapter 5: The 7 Steps of a Private Equity Deal
You want to buy a company. Or at least a piece of one. How does that actually work? Chapter 5 of Demaria’s book lays it out in 7 steps. The whole thing takes 3 to 18 months depending on the deal. And really, the entire process boils down to one word: trust. Buyer and seller have to trust each other enough to make a deal happen. Let’s walk through it.
Hedge Fund Data Collection: 13F Filings and Beyond (Part 2)
In Part 1 we looked at what a Due Diligence Questionnaire (DDQ) is and how Travers uses it to collect initial data on a hedge fund. In this second part, we cover the rest of the DDQ, the other materials you should request, how to analyze performance data, and one of the most useful free tools out there: SEC 13F filings.
Hedge Fund Data Collection: Where to Start Your Research (Part 1)
So you have narrowed your list of hedge fund candidates. You ran the screens, looked at the charts, compared the numbers. Now what?
Hedge Fund Due Diligence: A Step-by-Step Framework
Chapter 3 kicks off Part Two of the book, and this is where things get practical. We are done with the history lessons and strategy overviews. Now Travers rolls up his sleeves and shows us how to actually evaluate a hedge fund step by step.
Hedge Fund Analysis Introduction: Why Evaluating Hedge Funds Is So Hard
There are somewhere between 8,000 and 10,000 hedge funds out there. Let that sink in for a second. Even if you had infinite money, how would you figure out which ones are actually good?
Retelling Hedge Fund Analysis by Frank J. Travers
I just finished reading “Hedge Fund Analysis: An In-Depth Guide to Evaluating Return Potential and Assessing Risks” by Frank J. Travers, and I want to break it down for you in a series of blog posts.