This week on our Masters in Business radio podcast, we speak with Simon Lack of SL Advisors, and author of The Hedge Fund Mirage: The Illusion of Big Money and Why It’s Too Good to Be True. Lack previously sat on JPMorgan’s investment committee, allocating over $1 billion to hedge fund managers. He founded the JPMorgan Incubator Funds, two private equity vehicles that took economic stakes in emerging hedge fund managers.
We discuss the challenges of finding those rare managers who generate alpha. Lack’s experience seeding hedge funds for JPMorgan has left him with the conclusion that being a general partner with most hedge funds is much more lucrative than being a limited partner (i.e., investor).
Lack places the blame for poor hedge fund performance squarely on the investor class — noting that these are not mom and pop investors putting $10,000 into an ETF, but very sophisticated institutional investors deploying billions of dollars on behalf of pensions, endowments, and family offices. A consistent lack of knowledge exists among these investors, and an excessive willingness to chase last year’s hot fund is a regular problem.
All of the books discussed can be found here.
You can hear the show on Bloomberg Radio, or stream/download the full show, including the podcast extras, on iTunes, SoundCloud and on Bloomberg. All of our earlier podcasts can be found on iTunes, Soundcloud, and Bloomberg.
The Courage to Act: A Memoir of a Crisis and Its Aftermath by Ben Bernanke
Misbehaving: The Making of Behavioral Economics by Richard Thaler
The Undoing Project: A Friendship That Changed Our Minds by Michael Lewis
Flash Boys: A Wall Street Revolt by Michael Lewis
The Blind Side: Evolution of a Game by Michael Lewis
Moneyball: The Art of Winning an Unfair Game by Michael Lewis
The Pillars of the Earth by Ken Follett