MONTHLY UPDATE CORECTED VERSION As poyayan pointed out the profit for the incubator fund was $2,824 not 3824 MONTHLY UPDATE JUNE 30 REVIEW ⢠Personal account values: as of June 30 close was $728,489 ⢠Incubator hedge fund: values as of June 30 close was $111,824. ⢠End of Quarter ; June marked the end of the second quarter, as I said in my post at the end of March, I am little focused on monthly returns, while quarterly return are somewhat more important. The first quarter return was 13.5%, the second quarter the return was around 13%. While the second quarter preformance was slightly lower then the first, it was much stronger when compared to the S&P 500. The S&P 500 was essentially flat for the quarter, so having earned 13% was quite an accomplishment. Also it seems that incubator fund performance is starting to mirror the performance of the personal account I would expect the same going forward. June was split in 2 parts, before June 16 almost every asset class fall besides treasuries and MBS (stocks, precious mettles, lower rated bonds, emerging markets, preferred shares, oil) while volatility had a sharp spike. Volatility has Peaked on the 16th (see my post of June 16th regarding VXX) and almost everything rebounded. Precious metals were the only one left out which is rebounding now. ⢠Going forward; I am continuing the same strategies I have been using going forward, I am adding a couple of small strategies, and am aggressively expanding one of my hedged strategies. I am still short volatility, however have been limiting some of the short exposure it the last couple of days when the VIX reached 15. Also while doing some extensive analysis on the short VXX position, it seems that maybe in a few months down the road I might start to reduce (or stop adding) to the short VXX position due a possibility that this strategy might become a little more risky in the long term. ⢠Comments ; I have realized that over the last 3 months the number of comments have been pretty small comparing to the first 2 months (the first 2 months have 3X as many comments as the last â3 monthsâ). I am not sure the exact reason why, is it that people would rather comment when the they think that the OP has no clue what he is doing, versus someone that seems to have a strategy..?, in any case I really appreciate your comments regarding my strategies, as well on the possibility of converting to a full hedge fund next year. Thanks
Well in the beginning I think there was some trading advise and comments about what appeared to be a long bias. Your performance has shown you don't need advise re. trading and that you are better hedged than at least I realized early on. Like most, I don't know much about converting to a hedge fund and the earlier discussion apparently hasn't talked you out of it so unless you care to talk about your strategies in more detail ;-), not much to say other than good job. Don
Thanks for your comments. First I think everyone can use advice on trading, no matter how good or bad of a trader he is. Regarding talking about my strategies in more detail, I regret that on a lot of strategies I am limited in how much detail I could provide. Some of them are thinly traded and detailing too much can come back to hurt my strategy. However on some of my strategies (like short vxx) volume doesnât seem to be an issue and I have been pretty detailed on them. Re hedge fund conversion, the advice I am looking for is not necessarily limited to âhow to open a hedge fundâ, I understand that some of you are not experts on that, I would still be interested in opinions on issues like , is my track record long enough, would hedge fund investors (individual or institutions) look at me..? Am I better off waiting another 3 years? I think some of you might have some good constructive advice. Thanks
Hi, If that's the kind of information you're looking for, just ask. No, you certainly don't have enough track record (or size) to be attractive to institutional investors. Until you're managing > $10mm in assets, and approaching 3 years of audited track record (and certainly monthly numbers + dd will be very relevant)... institutional investors (even those looking at emerging managers) will not be interested on anything remotely approaching "fair" terms. Yes, you can certainly look for individual investors (and maybe even family offices). In that context, it's like fishing, and you never know who might be biting at any given time... and certainly if/when they'll bite. You're not going to wow someone with the numbers alone... as there are certainly tens (maybe hundreds) of small-time aspiring managers with 26%+ returns YTD. But this is as good a time as any to get on the radar of prospective investors. Get yourself in databases, get people on your monthly distribution list, begin to refine your pitch on exactly what you do, attend industry conferences. And if you can keep returning 50%+ a year, then it's only a question of time before the biters come. Of course, to even begin to have that conversation with prospective investors, you MUST get your regulatory/legal act together. That means getting the proper SEC registration, incorporating, getting an auditor, etc, etc. You have enough of your own assets (I'd put in at least $500k) that you can get attention from mini-prime brokers, and can afford to pay legitimate legal/tax advisers to do this the right way. EDIT: And on another note, you're not going to get away with "I am limited in how much detail I could provide" when talking to a remotely sophisticated investor. I don't see any reason you have to share that info on a public message board, but investors will want to see your investment process: how you generate/research trading ideas, how you manage risk. Gaudy numbers are just useful for getting people in the door, your investment/risk management process is what gets them to invest.
I know you laid out some options, my question is what is your "suggestion/recomendation" ? are you recomending I should start launching now and look for individual investors? Thanks
I don't know you or your situation well enough to give you a specific action plan. Best thing I can do to help is lay out options, and you figure out what makes sense for you. For *me*, if I was in your situation... it would be a no-brainer for me to launch the business aspect of things: get legal/tax/audit/admin lined up, start marketing, etc, etc.. I've had a lot of experience in startups, so perhaps that made it easier for me. One comment which is both obvious (and yet not so obvious): with a $600k portfolio, if you continue to return 50% a year... that's $300k in gains a year. It will be a *significant* time before any income as a fund manager will surpass that. So, in that sense, don't stress yourself out too much about becoming a "manager". Not that important in the big picture. (I say this having launched my fund with about $2 million of my money.)
I appreciate your advice heec. (By the way I currently have close to 900k in my combined accounts 728k + and 11k + I am sure there some more of you that could share some advice, looking forward.
Have you talked to your broker? Most brokers know people who have contacts with accredited investors. That one way I found additional investors when I was running a hedge fund. I had to open an account with the broker but I didn't trade much there because I didn't particularly care for the platform. What broker are you trading with? PS. Who is your 3rd party administrator (auditor) for your incubator?