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The annual SkyBridge Alternatives Conference, hosting the biggest and best in the hedge fund industry, is weighed down this year by underperformance and client defections—which amounted to the largest exodus of investors since the financial crash.
Omega Advisors fund manager Leon Cooperman questioned whether to continue on after redemptions at his firm, while major hedge-fund clients, such as China’s sovereign wealth fund, asserted 90% of hedge-fund managers probably couldn’t even navigate the markets.
Some of the biggest names in finance are getting in on the criticism—Warren Buffett said at Berkshire’s annual meeting this month that "there’s been far, far, far more money made by people in Wall Street through salesmanship abilities than through investment abilities."
“There is a decided pessimism in the hedge-fund community,” event organizer Anthony Scaramucci (pictured) told the Wall Street Journal. “A lot of guys opted out of coming, frankly, because of performance issues.”
Since the beginning of the bull market in 2009, a traditional mix of stocks and bonds outdid a broad hedge-fund index in 22 of 28 quarters—and investors are taking notice. Clients pulled $15B from hedge funds in Q1, marking the first consecutive quarters of outflows since 2009.
To give a sense of attendees' mood, tips at the shoe-shining station by the main ballroom were down over 50%, to $5 or under, from as much as $20 last year, an employee told the Wall Street Journal. [WSJ]
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