West Palm Beach (HedgeCo.net) – Hedge fund operational due diligence provider, Castle Hall Alternatives, published its latest White Paper, \u2018From Manhattan to Madoff: the Causes and Lessons of Hedge Fund Operational Failure.\u2019<\/p>\n
The Paper\u2019s analysis and findings are based on HedgeEvent, a comprehensive, web-based database of more than 300 operational events, now available to Castle Hall\u2019s due diligence clients. HedgeEvent supplements HedgeDiligence, the firm\u2019s existing client web portal.<\/p>\n
Chris Addy, Castle Hall\u2019s CEO, said \u201cthe colossal fraud perpetrated by Bernie Madoff, together with a number of other recent cases, has made investors acutely concerned by the risk of operational \u2018blow ups\u2019. However, there has been little systematic study of operational failure, meaning that investors have limited guidance as to the extent of this problem.\u201d<\/p>\n
\u201cThe creation of HedgeEvent, which has taken more than two years to compile, has enabled us to summarize key metrics related to hedge fund operational failure\u201d said Addy. \u201cFrom Manhattan to Madoff analyzes operational events by number, estimated loss, causal factor and by the strategy of the funds involved.\u201d<\/p>\n
HedgeEvent contains 327 cases of hedge fund operational failure through June 30, 2009. Madoff, with an estimated financial impact of $64 billion, is by far the largest; the remaining cases have an aggregate estimated financial impact of approximately $15 billion. Of the 327 operational events, 121 have an estimated impact of $10 million or more, and 31 of at least $100 million.<\/p>\n
\u201cWhile operational failures are material \u2013 Madoff spectacularly so \u2013 it does not seem that fraud is pervasive in the hedge fund industry\u201d said Addy. \u201cInvestors should, however, be very focused on the lessons which can be learned from those hedge funds which did generate large losses. Many of these were well established firms which attracted capital from reputable investors.\u201d<\/p>\n
Across all Events, the most common causes of operational failure are theft and misappropriation followed by existence of assets (the manager claimed to own fake securities or operated a Ponzi scheme where reported assets did not exist). The most common strategies subject to operational failure are long \/ short equity followed by managed futures. It is notable that investors have traditionally viewed these strategies, holding largely exchange-traded securities, as straightforward with low operational risk.<\/p>\n","protected":false},"excerpt":{"rendered":"
West Palm Beach (HedgeCo.net) – Hedge fund operational due diligence provider, Castle Hall Alternatives, published its latest White Paper, \u2018From Manhattan to Madoff: the Causes and Lessons of Hedge Fund Operational Failure.\u2019 The Paper\u2019s analysis and findings are based on […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[4744,15770,5184,11148],"class_list":["post-11548","post","type-post","status-publish","format-standard","hentry","category-hedgeco-news","tag-bernie-madoff","tag-castle-hall","tag-due-diligence","tag-hedge-fund"],"_links":{"self":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/11548","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/comments?post=11548"}],"version-history":[{"count":4,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/11548\/revisions"}],"predecessor-version":[{"id":11552,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/11548\/revisions\/11552"}],"wp:attachment":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/media?parent=11548"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/categories?post=11548"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/tags?post=11548"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}