Humbled hedge fund managers acquiesce to clients at Las Vegas conference

Swaggering hedge fund managers, long known for ignoring client complaints during years of strong performance, are trying something new: listening.

The shift was evident at the annual SkyBridge Alternatives Conference at Bellagio in Las Vegas this week, where a group of money managers humbled by losses or meager returns acknowledged that they needed to do more to satisfy investors.

“Expectations about a hedge fund manager’s way of conducting business has become more demanding — and perhaps rightfully so,” Kenneth Tropin, founder of $12.1 billion Graham Capital Management, said during a panel discussion Wednesday.

“Every hedge fund manager has had to make the effort to be much more transparent, a much better communicator and more negotiable.”

After a string of disappointing investment returns, those negotiations have recently centered on lowering the relatively high fees hedge funds charge.

Managers traditionally take 2 percent of assets managed annually and 20 percent of profits, but investors now pay an average of 1.5 percent and 17.7 percent, respectively, according to data tracker HFR.

‘FEES HAVE GOT TO COME DOWN’

“In a low return environment, unless you are particularly exceptional you’re not going to be able to generate returns sufficient to justify the fees,” Leon Cooperman, billionaire founder of $5.2 billion hedge fund firm Omega Advisors, said while speaking at the same event.

“Fees have got to come down,” added Kyle Bass, Chief Investment Officer of Hayman Capital Management.

Investors in hedge funds are pleased that managers are more willing to listen.

Sean Bill, Investment Program Manager for the Santa Clara Valley Transportation Authority and an adviser to the San Francisco Employees Retirement System, said firms are now more willing to lower their fees and increase the amount of portfolio information they share.

“It’s finally reaching a tipping point,” Bill told Reuters on the sidelines of “SALT,” as the event is known. “Hedge funds are seeing the writing on the wall.”

But better terms don’t always make up for hedge fund losses.

“I’m not happy with performance. Only a small percentage of managers can earn their fees,” Roslyn Zhang, managing director for fixed income and absolute return investments at China Investment Corp, told Reuters. “Luckily we have some of them. But with the others we are evaluating what to do with them.”

A benchmark of all strategies, the Hedge Fund Intelligence Global Composite Index, gained just 2 percent last year and is down 0.36 percent in 2016 through April.

UNDER ATTACK

The SALT conference, in its eighth year, is the most prominent hedge fund-focused event in the U.S. Organized by SkyBridge’s managing partner Anthony Scaramucci, the event mixes well-known investors with politicians and celebrities.

This year, speakers included Citadel founder and billionaire Ken Griffin, recently retired basketball star Kobe Bryant, former U.S. House of Representatives Speaker John Boehner, and transgender rights advocate Caitlyn Jenner. The reggae band The Wailers performed on Wednesday night; on Thursday, rockers The Killers entertained the male-heavy crowd.

Outside of the main Bellagio ballroom, besuited salespeople pitched prospects in the hallways, networked and drank at sponsored poolside cabanas, and, after-hours, played craps on the hotel’s expansive casino floor.

Hedge fund managers’ newfound willingness to compromise comes as the industry faces a barrage of negative attention.

Presidential candidates Donald Trump and Hillary Clinton have both pilloried hedge fund managers, and some large investors, especially those tied to public workers unions, have been openly critical of the industry.

David Rubenstein, billionaire co-founder of Carlyle Group, told the approximately 2,000 person SALT audience on Wednesday that the hedge fund and private equity industry was “under attack.”

Rubenstein suggested an unusual response to a traditionally secretive industry: public relations.

“All of us have an obligation to try to explain … what the hedge fund industry and the private equity industry does that is useful,” Rubenstein said, noting cash-strapped public pension clients, investments that improve companies, and creating jobs. “We shouldn’t be upset about what we do. We should be proud.”

ad-high_impact_4
Business
Happie Home Startup Establishing Headquarters In Las Vegas
Digital companion startup company Happie Home is establishing its headquarters in Las Vegas after receiving tax abatements from the Governor's Office of Economic Development on Nov. 15. (Bailey Schulz/Las Vegas Review-Journal)
A Facebook-branded space inside of Macy’s at the Fashion Show shopping center
A Facebook-branded space inside of Macy’s at the Fashion Show shopping center will showcase 13 small businesses in November and December and seven in January. Bizuayehu Tesfaye/Las Vegas Review-Journal @bizutesfaye
T-Mobile uses ticketing data to plan for event
T-Mobile Executive Director of Arena Operations explains how ticket sales data and demographics help plan staffing, vendors, parking and operations for an event.
Costco opens its doors in southwest Henderson
Costco has opened its fifth Las Vegas-area location near the intersection of St. Rose Parkway and Amigo Street. (K.M. Cannon/Las Vegas Review-Journal)
Las Vegas strip mall and office park
The Krausz Cos. and WG Group bought a strip mall and an office park in Las Vegas for nearly $80 million total. They acquired a portion of Tropicana Beltway Center in the southwest valley for $59 million. They also acquired the Westbay office complex in the Las Vegas Medical District. The buyers are former owners of The Gramercy, a once-mothballed mixed-use project in the Las Vegas suburbs. They sold The Gramercy in phases for more than $100 million.
Mario Barth talks about the growth of the tattoo industry
Celebrity tattoo artist and business owner Mario Barth talks about the growth of the tattoo industry at The World of Tattoo industry trade show at Planet Hollywood in Las Vegas
$7.5M Las Vegas pot dispensary opens near Las Vegas Strip
Planet 13, which bills itself as one of the largest dispensaries in the world, opened to the public Thursday. It has entertainment including an interactive floor and floating orbs. (K.M. Cannon/Las Vegas Review-Journal)
Caesars CEO to step down next year
Caesars Entertainment Corp. CEO Mark Frissora will leave the casino company in February. Frissora has been CEO since July 2015. He was named CEO right after Caesars' operating company filed for Chapter 11 bankruptcy protection Caesars Entertainment emerged from bankruptcy protection in October 2017 Before Caesars, Frissora spent seven years as chairman and CEO of Naples, Fla.,-based Hertz He led the consolidation of the rental-car industry through Hertz‘s acquisition of the Dollar Thrifty Automotive Group.
Planet 13 in Las Vegas adds twist to marijuana dispensary look
Planet 13, which bills itself as one of the largest dispensaries in the world, opened to the public Thursday. The dispensary is located near the intersection of Desert Inn Road and Sammy Davis Jr. Drive, near Trump International, in Las Vegas. Planet 13 has plans in the future for a coffee shop, a tasting room for marijuana-infused beer and wine, a lounge for consuming marijuana on site if that is legalized and space for food.
Caesars Entertainment opening 2 resorts in Dubai
Cove Beach will open on Meraas’ Bluewaters Island in Dubai in November and Caesars Palace Bluewaters Dubai and The Residences at Caesars Palace Bluewaters Dubai will open in December. (Caesars Entertainment)
Bellagio, MGM Resorts International’s luxury hotel turns 20
The more than 3,000-room Bellagio hotel is situated on the site of the former Dunes Hotel. The Dunes was imploded in 1993, and construction of the Bellagio started in 1996. It cost $1.6 billion to build, making it the most expensive hotel in the world at the time. The Bellagio was former Wynn Resorts Ltd. Chairman and CEO Steve Wynn’s second major casino on the Strip after The Mirage. MGM Resorts International acquired the property from Steve Wynn in 2000. (Tara Mack/Las Vegas Review-Journal)
Facial recognition software at G2E – Todd Prince
Shing Tao, CEO of Las Vegas-based Remark Holdings, talks about his facial recognition product. (Todd Prince/Las Vegas Review-Journal)
Former NBA player, Shaquille O'Neal, speaks about his new Las Vegas chicken restaurant
Former NBA player, Shaquille O'Neal, speaks about his new Las Vegas chicken restaurant. Bizuayehu Tesfaye/Las Vegas Review-Journal @bizutesfaye
Bobby Baldwin to leave MGM
MGM Resorts International executive and professional poker player Bobby Baldwin is set to leave MGM.
Caesars has new armed emergency response teams
Caesars Entertainment Corp. has created armed emergency response teams. They are composed of former military and law enforcement officials. "These teams provide valuable additional security capabilities,” Caesars spokeswoman Jennifer Forkish said. Caesars is hiring Security Saturation Team supervisors, managers and officers, according to LinkedIn. The company did not say how many people it plans to hire for the units. (Las Vegas Review-Journal)
Las Vegas, airlines prepare for CES
CES in January is expected to attract more than 180,000 attendees. (Las Vegas Review-Journal)
AGS partners with Vegas Golden Knights
AGS is the nation’s second-largest manufacturer of Class II slot machines used primarily in tribal jurisdictions. It announced a marketing partnership with the Vegas Golden Knights NHL team. (Las Vegas Review-Journal)
Lehman Brothers bet big on Las Vegas
Lehman Brothers collapsed 10 years ago, helping send the country into the Great Recession.
Fremont9 opens downtown
Fremont9 apartment complex has opened in downtown Las Vegas. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
Ross & Snow launches in Las Vegas
Luxury shoe brand Ross & Snow has opened in Las Vegas, featuring "functional luxury" with premium shearling footwear. (Bailey Schulz/Las Vegas Review-Journal)
Remote Identification and Drones
DJI vice president of policy and public affairs discusses using remote identification on drones. (Bailey Schulz/Las Vegas Review-Journal)
Drones and public safety in Nevada
Two representatives in the drone industry discuss UAV's impact on public safety. (Bailey Schulz/Las Vegas Review-Journal)
Frontier Airlines to launch flights from Las Vegas to Mexico
Frontier, a Denver-based ultra-low-cost carrier, will become the first airline in more than a decade to offer international service to Canada and Mexico from Las Vegas when flights to Cancun and Los Cabos begin Dec. 15. (Rick Velotta/Las Vegas Review-Journal)
MGM Resorts International CEO Jim Murren addresses Oct. 1 lawsuits
MGM Resorts International Chairman and CEO Jim Murren addresses criticism his company has received for filing a lawsuit against the survivors of the Oct. 1 shooting. (K.M. Cannon/Las Vegas Review-Journal)
MGM Resorts International opens the doors on MGM Springfield
Massachusetts’ first hotel-casino opens in downtown Springfield. The $960 million MGM Springfield has 252 rooms and 125,000-square-feet of casino. (K.M. Cannon/Las Vegas Review-Journal)
MGM Resorts International prepares to open MGM Springfield
Las Vegas-based MGM Resorts International gave news media and invited guests a preview of the $960 million MGM Springfield casino in Massachusetts. The commonwealth's first resort casino will open Friday, Aug. 24. (K.M. Cannon/Las Vegas Review-Journal)
A Walk Through Circus Circus
It only takes a short walk through Circus Circus to realize it attracts a demographic like no other casino on the Strip: families with young children. (Todd Prince/Las Vegas Review-Journal)
Morphy Auctions, a vintage slot machines seller, wants gaming license
Vice president Don Grimmer talks about Morphy Auctions at the company's warehouse located at 4520 Arville Street in Las Vegas on Thursday, Aug. 16, 2018. (Rick Velotta/Las Vegas Review-Journal)
TOP NEWS
News Headlines
Add Event
Home Front Page Footer Listing
Circular
You May Like

You May Like