September 16 - 18, 2008
The Alternative Investment Annual Meeting
Representatives
From These Firms:
| HEDGE FUND MANAGER WORKSHOPS |
| ·Panels ·Hedge Fund Manager Workshops ·Green Hedge Trail ·Keynotes |
| Creating Reinsurance Firms and Banks - New Permanent Capital Vehicles for Hedge Funds and Fund of Funds |
Warren Buffett started a hedge fund in 1956. Working out of his bedroom with $5,000 of his own and $100,000 from family and friends, he charged no management fee, but he did charge a 25% performance fee on returns in excess of 6%. 13 years later, after delivering compounded returns of roughly 30% (net of fees and expenses), he had approximately $100 million in AuM, 25% of which was his. He was very successful by any standard in today’s hedge fund industry. Why Warren Buffett Gave Up His Very Successful Hedge Fund Despite that success, Buffett quit cold turkey - to go into reinsurance and banking (many years later, regulators forced him to give up control of one or the other and he sold the bank). Armed with permanent capital from the reinsurance and banking businesses, a modest amount of very low cost leverage whose availability was independent of asset values, and market multiples on performance, Buffett became even more successful than he ever was in the hedge fund business (his investors did pretty well too). Why Lock-Ups and Closed End Funds Don't Work Modern efforts to secure permanent capital using lock ups or closed end funds have not been very successful. Resistance to lock ups is fierce and closed end funds generally end up selling at a discount to NAV and today, managers usually have to commit to repurchasing shares if the discount exceeds a certain amount (begging the question of whether it really is permanent capital) in order to complete the initial offering. Learn from Success Drawing on Buffet’s blueprint 35 years earlier, David Einhorn and a number of investors in Greenlight Capital funded Greenlight Capital Re with $212 million in 2004. Einhorn manages all of the reinsurer’s investable assets. In May of 2007, Lehman Brothers and UBS took Greenlight Capital Re public (symbol – GLRE). Assets currently exceed $1 billion and much like Buffett, Einhorn benefits from managing the permanent capital provided by the combination of equity capital and premium generated reserves. Despite a drop in the insurance indices of roughly 25% since its IPO, GLRE trades roughly 146,000 shares per day at a premium to book value (and very close to its IPO price of $19). Investors in GLRE have done better than if they had invested in the Greenlight Capital funds over the same period of time and also benefit from daily liquidity. Relative to their returns from investing in the Greenlight funds, UK and U.S. taxable investors in GLRE also benefit from taper relief in the UK and the elimination of annual K-1s and lower capital gains rates in the U.S. This workshop is designed for founders (or partners owning more than 15%) of hedge fund or FoHF management companies who would like to learn more about creating a reinsurer or bank in order to generate significant amounts of permanent capital and provide superior returns (without a proportionate increase in risk) for their investors. Workshop Leaders Joe Taussig of First International Capital participated in the creation of Greenlight Capital Re and will conduct the workshop. Over the years, he has partnered with a number of other hedge fund and FoHF managers to create reinsurers and banks, each of which allocates its investable assets to its sponsoring hedge fund or FoHF manager. Four or five of these reinsurers and banks are expected to offer their shares to the public in the next 12 months, generating billions of dollars in permanent capital for their sponsoring hedge fund and FoHF managers and superior returns (without a proportionate increase in risk) for the investors. Matthias Knab, Director of Opalesque Ltd, will moderate this workshop. Matthias Knab is an internationally recognized expert on hedge funds and alternatives
and has frequently served as chairman of hedge fund conferences in New York, Tokyo, Shanghai, Hong Kong, Miami, Bahamas, Stockholm, Dubai etc. In addition, he has presented or
moderated at hedge fund events in Sydney, Cape Town, Madrid, and Bombay, and lectured at numerous universities on the subjects of hedge funds and the state of the global
alternative asset management industry. |
| Hedge Fund Manager Workshop: Islamic Finance: Tapping Middle Eastern Wealth Through Islam-Compliant Vehicles is Easier than Most Hedge Fund Managers Think |
Some hedge fund managers may already hold an Islamic compliant stock portfolio, without even knowing it. In this brief workshop, the participants will understand the fundamentals of Islamic Finance, as they relate to equities. The workshop includes a demonstration of a Shari'ah compliant stock screening procedure, which can be used to screen and optimize equity portfolios and make them Shari'ah compliant.
Workshop Leaders Raj Mohammed, Managing Director, Five PIllars Pte Ltd Raj Maiden started his banking career at Standard Chartered Bank from where he moved to Rabobank Asia Ltd and to Credit Lyonnais’ (now Credit Agricole) private banking division until 1997. He continued his career heading the business unit for Bloomberg covering Malaysia, Indonesia and Brunei and India. In 2004 he started a consultancy to promote the understanding of Islamic finance and creating Shari'ah-complaint products. Together with his team of scholars, Raj focuses to:
Mohammed Amin, PricewaterhouseCoopers LLP Mohammed Amin is a partner in PricewaterhouseCoopers LLP and leads PwC’s Islamic Finance practice in the UK. His personal specialisation is taxation, both of Islamic Finance and of financial institutions more generally. |