Minutes

AAII Orange County Chapter

Monthly Meeting, November 4th , 2006

Oasis Senior Center

800 Marguerite

Corona del Mar, CA 92625

Reported by: Rex Chen

 

Title: The Role of Hedge Funds in your Portfolio

 

Speaker: Mary Sigler, Managing Partner, Hudson Pacific Capital Management

 

            Chapter President Bob Welge brought the meeting to order at 9:00 am.  In the beginning of the meeting, Bob announced elections for the Orange County officers are held today.  All of the existing officers are running for their respective positions.  Without any objections from the audience responses, all the officers were unanimously elected for next year’s officers.  Bob then announced today’s speaker, Mary Sigler from Hudson Pacific Capital Management and her presentation on The Role of Hedge Funds in your Portfolio.

           

In this talk, Mary introduces about Hedge Fund, an alternative investment methodology characterized by unconventional investing strategies.  The concept behind Hedge Fund has been around in the market for many decades since 1949.  In general, traditional funds are correlated with the stock market performance, but Hedge Funs have little to no correlation with the stock market, depending on the strategy.  From a risk to reward trade-off standpoint, Hedge Funds can be quite beneficial for an investor’s portfolio. 

 

There are number of different Hedge Fund strategies including: equity market neutral, long/short, convertible arbitrage, distressed securities, merger arbitrage, and others.  Besides difference in investment techniques, Hedge Funds can have a lot more leverage (e.g. up to five times).  Furthermore, Hedge Funds have less transparency since it is typically held in private placement and are locked-up for one or more years.  To invest in Hedge Funds, currently one needs to be an accredited investor (e.g. 250K minimum and above).  In the future, restrictions on Hedge Fund investment may change and become more available to the general public. 

 

One question from the audience asked for recommendations to evaluate Hedge Fund managers.  The speaker mentions about looking at the pedigree of the individual fund managers and to use third party administrators to get more accurate evaluations.  Following the conclusion of Mary’s presentation and taking questions from the audiences, Bob adjourned the meeting at 11:00 am.