The old saw of "doing good to do well" is alive and well in
hedge fund land, according to a study that tied hedge
funds’ charitable contributions to their desire to
find new clients.
"Managers of funds that are going through a period of poor
performance and low net flows donate to stimulate future net
flows. These strategic donations work, and these managers
experience significantly higher net flows as a result of the
donations," concluded a study by business school professors Vikas
Agarwal of Georgia State University, Yan Lu of the University
of Central Florida, and Sugata Ray of the University of
The study looked at 6,642 donations from 667 hedge fund
managers between January 1994 and June 2016. It found that
after giving, the hedge funds’ annualized inflows
exceeded those of non-donating peers by an average of 9
"The probability for the managers of poorly performing funds
to make a donation is almost double that for the managers of
relatively well-performing funds," the authors wrote. "If
donations can help bring in more capital and can improve fund
performance, managers of funds with higher fees can earn
Furthermore, "the use of high-water marks is also positively
related to donations, consistent with the possibility that
poorly performing managers may want to attract new investors to
their funds from whom they have a better chance of earning the
incentive fee (since new flows will enter with a fresh
A new activist position by Jeff Smith’s
Starboard Value in Cars.com took off Tuesday morning, with the
stock jumping 7 percent after Starboard announced a 9.9 percent
stake in the online auto marketer.
Starboard disclosed its stake in a securities filing Monday after markets closed. In the
filing, it said the shares were undervalued and that it may
talk with third parties about business combinations or
disposition of assets.
Starboard paid an average of $25.42 for its 821,308 shares.
The stock closed at $29.23 on Wednesday, up 15 percent on the
activist’s purchase price.
Despite broadly failing to outperform stock markets, hedge
fund professionals are looking forward to big bonuses this
year, Bloomberg reports.
They predict their bonuses will be 39 percent higher than
last year’s, according to a survey of 500 buy-side
investors by Odyssey Search Partners.
Respondents estimated they’d take home an
average of $562,000 in bonus pay, up from $405,000 last year,
Odyssey said. Sector heads, partners, and portfolio managers
are looking to haul in $1.38 million on average — a 79
percent hike year-on-year.
The founder of Autonomy Capital — which has the
biggest stake among hedge funds in defaulted Puerto Rico bonds — has another
problem on his hands: an alleged angry ex-mistress.
Aline Marie Massel, 31, the former Miss Germany
International, said she had a two-year relationship with
Autonomy Capital CEO Robert Charles Gibbins, the New York
Post first reported. He promised to buy her a
Canadian estate and a Ugandan ostrich farm, she claimed, but
gave her an STD instead.
More sordid details were given in her lawsuit filed in
Manhattan Supreme Court, where she is suing Gibbins for $15
million in damages.
"These baseless allegations are without merit and Mr.
Gibbins will defend himself vigorously," a representative told
Institutional Investor’s Alpha in a