The ZenInvestor Hedge Fund Challenge
It’s a Friday afternoon, spring is in the air, the birds have returned to Chicago, trees and flowers are budding, and I’m in a good mood. What better use of my time than to present a challenge to anyone who self-identifies as a savvy investor? Here’s how the challenge works.
The Concept
Hedge funds have been the butt of jokes for a few years now, due to lackluster performance and some high-profile blow-ups. But not all hedge funds can be painted with the same brush. On average, hedge funds have not been living up to the hype about superstar stock-pickers and stock market savants who prey on unsuspecting retail investors, sucking all the Alpha out of the market.
Hedge funds today are widely ridiculed, especially by the passive, or “evidence-based” crowd. But I thought it would be informative, and fun, to look at Barron’s list of the top 100 hedgies for 2017, and try to draw some conclusions about performance that might be useful to all of us.
Accordingly, I took the liberty to replicate the Barron’s list, giving them full attribution, and posted it in the cloud for anyone to read, edit, and download. I just hope that the good folks at Barron’s don’t object to this little exercise and sue me for copyright infringement. After all, it could only help their circulation by getting free publicity, right?
The Rules of Engagement
Anyone can play. I’m not out to make money from this, and I’m not even requiring that you give up your email address. This is purely an intellectual exercise.
What I’m after is a well-constructed critique of the performance of these 100 hedge funds who share the accomplishment of having performed well in 2017. The ranking is already done for you. 1 through 100. What I want is a deeper look into the reported numbers, with the goal of coming up with observations that aren’t readily apparent to casual readers of this list.
Send me your observations via email at erik@zeninvestor.org. All that’s required is one idea that is more insightful than the 1-100 ranking.
I do this kind of exercise on a regular basis, and it often results in an insight that turns into an investment decision. I would like everyone who participates to benefit from what others have to say. I will hold my observations in reserve until everyone has a chance to weigh in.
The Reward
I have to give you some kind of incentive to participate, so I chose 3 free months of my premium newsletter as a reward to the participant who comes up with the most insightful observations. It won’t just be me making the decision about who had the best ideas. I have a 3 judge panel of highly experienced investment professionals who have generously agreed to donate their time to this effort.
In case you’re wondering, the reward I’m offering is worth $60. Not a big deal, but it’s not nothing.
Go ahead and download the spreadsheet, or just view it online. If you decide to participate in the challenge, just send your email to erik@zeninvestor.org