Hedge Fund Partnerships
Most of the time when I hear about hedge fund founders, I only hear one name, with the exception of Charlie Munger and Jim Rogers. I'm curious to know how often HF's have multiple founders?
The goal of chipping in $2-3 million with 4 other pissed off MD's certainly feels more attainable than raising the $10+ million by myself, that I often hear is necessary to realistically have a shot at this thing.
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All the time. Only problem is eventually someone gets tired/bored/bad and stops being an active partner, or one guy is just generally accepted as the brains behind the operation. My shop is a huge partnership between basically 4 guys but if anyone said the name they'd only think of one guy as the founder and sole partner just because that's the way it usually goes once the fund actually builds a rep.
Does the payout structure change once one guy takes over the operation, or is he stuck with the 25% or whatever his initial stake was and not receive any type of bonus for running the show? I would think the other partners may be in favor of a discretionary bonus, if one guy is killing it, while the rest of them are chilling on a beach some place warm, but then again... people are greedy.
The analysts with responsibility for capital (including our lead guy) all get compensated partially as a % of the incentive fees attached to their capital base, so as a result he gets a healthy chunk of change in a good year given he's responsible for a vast majority of our AUM. The other guys are more than happy to let him do his thing and if he wasn't already getting paid enough I'm sure nobody would have a problem with him getting a little extra. Some places I'm sure are different, like you said some people can be assholes.
I work for a fund that is 50/50 owned but one of the partners is the face of the business and synonymous with it. The other partner is an equally brilliant investment professional, but doesn't really do CNBC/Ira Sohn/guest lectures etc.
Thanks for the helpful responses.
I'm also curious as to how many of these founding partners were friends/former coworkers before they started or it's more like "We all have a couple million to throw at this, we all have impressive CV's, and we all hate our jobs. Let's do this."
Launching is a career defining / risking decision, so I doubt you'd find PMs who'd launch together simply because their combined capital might be enough to cover overhead. You'd better be comfortable with the other partner(s) whose trades could blow up the entire fund or overshadow the good performance of your own book.
The partnership could also be the one like in the attorney office. All partners work independently but share common function/resource. I think it should be more realistic. And it also helps for each other.
I'll be a data point for guys that came from/met at the same fund.
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