Congrats on the hedge fund. Hope everything goes well. Are you going to be using the same strategies for the fund as you are currently using trading for yourself? And if so, do you think these strategies can handle the increased capital amounts? As my trading performance has increased, I've also thought about starting a fund, but I've always realized that the strategies that I use really couldnt handle much more capital than I'm currently using.
At what point does a trading entity like a closely held LLC with multiple investors actually have to structure itself as a hedge fund?
An LLC whose primary business is trading is a hedge fund. There is no such thing as a "hedge fund structure" as an alternative to an LLC or limited partnership. "Hedge fund" is the business and LLC is the business entity. Just like for Walmart, "retailer" is the business and corporation is the business entity form -- there is no "retailer business entity".
"It's just scary that anyone would ever use a mutual fund." Hey, I am happy to hear about your progress. One aspect of hedge fund I like is a managed index fund. A lot of managers use it cause it is cheap to run. All you need is accounting and back office. plus some fluffs. While I agree with the atrocious mismanagement of mutual funds and in general business as 'crime'. A decent index fund is not a bad investment for an individual or LLC based timer outfit. A monkey[with a right motivation and mentor] can do it - it is insured up to 100k and no need of an overpriced prima donna ivy league MBA.
We considered it. Most of the investors are friends and family. They know that no matter what, I'll do what is best and they just want their money ran in the same way that I run mine. I run mine as I see fit. In fact, I've been taking things much more seriously lately. I only go out on thursday nights now. - I've talked about how i trade with a number of people who know my strategies pretty well. They think that I can trade up to about 5-10m just fine the way I trade. Beyond that, I'll probably only loose a bit of performance up to about 50m.
In addition to the "When Genius Failed", the story of LTCM suggested by others(which I think is the number one read on this subject) there are a couple good reads as well. I think the recently published "Confessions of a Street Addict" by and about Jim Cramer and Cramer-Berkowitz, his hedge fund, is a great insight into the life of a hyper-active stock trader. Because its so recent it's quite relevant to what we do. I'm not opining on the guy himself (though I do find him to be pretty smart and entertaining). He damn near blew out right before quitting and now he's a journalist/TV and radio personality. There is another book, of lesser quality by a former employee of Cramer Berkowitz, last name Maeir I believe, that is highly critical of Cramer. It was a quick read. Micheal Steinhardt put out a self-congratulatory autobiography about 6 months ago. Its a good anectodal source on the business over a long stretch of time and there is no denying Steinhardt's legendary status. Anything written on Soros seems to be awful, especially anything he writes himself IMO. The "Stock Market Wizards" contains a few good interviews with some hedge fund managers, I found the chapter on SAC to be particularly good.