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Do Institutional Investors Have an Ace up Their Sleeve?

By: Columbia -Ideas at Work- Secrecy is to hedge funds what secret sauce once was to Jack-in-the-Box: fund managers argue that the ingredients and precise amounts that make up their investment portfolios are intellectual property that, if publicly disclosed, would allow competitors to replicate their successes. Hedge funds are exempt from most SEC disclosure rules for investment companies because they are not marketed to the general public and only certain qualified investors are permitted to invest in them. Until, that is, such funds reach $100 million or more in publicly traded equity, when disclosure requirements under section 13(f) of the Securities Exchange Act of 1934 kick in. Some hedge funds deliberately keep publicly traded equity holdings below the $100 million mark to avoid disclosure. But successful funds have a tendency to grow, and most inevitably surpass the $100 million baseline. To keep reading this interesting article published in Morningstar, please click here.

Full post as published by The Trade Secrets Vault on October 04, 2010 (boomark / email).