I have been fairly fascinated by hedge funds for quite some time. I began studying them earlier last decade. It has been an intriguing field for investigation for a number of reasons:
1) Alpha Generators: In the early days of hedge funds, they created a ton of Alpha. Like pre-expansion sports leagues, there was a limited number of talented managers, and most were superstars.
2) Brilliant Characters: The managers of some better-known funds are brilliant and insightful investors. Their Alpha generation suggests as much. But they are also characters in the fullest sense of that word: Quirky, charismatic, compelling, mercurial. Once you become fabulously wealthy, you follow a different set of rules from the rest of us.
3) Contradiction Between Performance and AUM: Over the past decade, that elusive Alpha has gone away as AUM has ramped up to all time highs.
I was reminded of this when I saw this headline yesterday: Hedge Fund AUM Hits Another Record High In Q1 2014.