NEW YORK (Fortune) -- Not quite rich enough and not quite smart enough, a
certain investing class has for years paid through the nose for what was thought
to be world-class money management by investing in funds that promise access to
the best hedge funds.

The Bernard Madoff scandal now calls into question the value of the so-called
fund-of-fund industry.

A fund-of-funds manager puts clients' money to work in a portfolio of hedge
funds or other non-traditional investment vehicles.

The client gets access to accounts he wouldn't normally have access to but the
expenses are exorbitant: often a 1% management fee and between 5% and 15% of any
gains.

That might feel okay when the fund is turning in stellar performance, but not so
much when they're losing money, or worse, investing in a fraud.

"The fund-of-funds community has a problem because they're a step removed from
the actual investment of money," says Michael Lewitt, president of hedge fund
Harch Capital Management. "To convince people they add value they sell
themselves as offering diversification, due diligence and access to exclusive
hedge funds. The Madoff scandal hits at the heart of this model, and could be
devastating for the industry."

Indeed, some advisors seemed to do little more than turn over most or all of
their clients' money to Madoff -- money that may now be gone.

"The fact that very well respected fund-of-fund names like Fairfield Greenwich
and Maxam Capital Management were funding a ponzi scheme for a period of decades
blows up the raison d'etre for a fund-of-funds," said Lewitt.

Before the Madoff scandal broke, the average fund-of-funds had been struggling
with the same negative trends slamming the average hedge fund -- investors
pulling money out, poor performance and lots of volatility.

And the average fund-of-funds is down about 19% this year, underperforming hedge
funds by about 2 percentage points.

"Even before these numbers came out, investors were beginning to realize that
these two layers of fees made their chances of making money pretty remote," said
Steve Cesinger, the chief financial officer at private equity and real estate
investment firm Dewberry Capital.

According to CNBC, Fairfield is planning to sue Madoff, claiming that it was a
victim of fraud and that it did due diligence and hired auditors.

"It is clear that there will be extensive litigation around this scandal and
that fund-of-funds managers will be exposed to that litigation," said Steve
Thel, a law professor at Fordham law school where he teaches securities
regulation.

But Thel said such suits against funds of funds will address two main questions.
First, did the fund managers conduct reasonable due diligence. And second, did
they disclose to investors that they were not diversified.

Given that some prominent fund-of funds turned down Madoff it's hard to argue
that proper research was conducted. As for whether proper disclosures were made,
"that's still to be discovered," said Thel.

Posted by Jim Rojas on June 30, 2009, 12:23 pm

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noauth wrote:

> NEW YORK (Fortune) -- Not quite rich enough and not quite smart enough, a

certain investing class has for years paid through the nose for what was thought
to be world-class money management by investing in funds that promise access to
the best hedge funds.

> The Bernard Madoff scandal now calls into question the value of the so-called

fund-of-fund industry.

> A fund-of-funds manager puts clients' money to work in a portfolio of hedge

funds or other non-traditional investment vehicles.

> The client gets access to accounts he wouldn't normally have access to but the

expenses are exorbitant: often a 1% management fee and between 5% and 15% of any
gains.

> That might feel okay when the fund is turning in stellar performance, but not

so much when they're losing money, or worse, investing in a fraud.

> "The fund-of-funds community has a problem because they're a step removed from

the actual investment of money," says Michael Lewitt, president of hedge fund
Harch Capital Management. "To convince people they add value they sell
themselves as offering diversification, due diligence and access to exclusive
hedge funds. The Madoff scandal hits at the heart of this model, and could be
devastating for the industry."

> Indeed, some advisors seemed to do little more than turn over most or all of

their clients' money to Madoff -- money that may now be gone.

> "The fact that very well respected fund-of-fund names like Fairfield Greenwich

and Maxam Capital Management were funding a ponzi scheme for a period of decades
blows up the raison d'etre for a fund-of-funds," said Lewitt.

> Before the Madoff scandal broke, the average fund-of-funds had been struggling

with the same negative trends slamming the average hedge fund -- investors
pulling money out, poor performance and lots of volatility.

> And the average fund-of-funds is down about 19% this year, underperforming

hedge funds by about 2 percentage points.

> "Even before these numbers came out, investors were beginning to realize that

these two layers of fees made their chances of making money pretty remote," said
Steve Cesinger, the chief financial officer at private equity and real estate
investment firm Dewberry Capital.

> According to CNBC, Fairfield is planning to sue Madoff, claiming that it was a

victim of fraud and that it did due diligence and hired auditors.

> "It is clear that there will be extensive litigation around this scandal and

that fund-of-funds managers will be exposed to that litigation," said Steve
Thel, a law professor at Fordham law school where he teaches securities
regulation.

> But Thel said such suits against funds of funds will address two main

questions. First, did the fund managers conduct reasonable due diligence. And
second, did they disclose to investors that they were not diversified.

> Given that some prominent fund-of funds turned down Madoff it's hard to argue

that proper research was conducted. As for whether proper disclosures were made,
"that's still to be discovered," said Thel.

With the small budget Brinks operates on, I doubt it.

Why would a company spend millions of dollars on advertising, when they
can just lower their rates and get more client referrals that way?

All they are doing is keeping rates high. Their overhead must be choking
them beyond belief. ADT doesn't need to advertise that much, or nor do
they resort to using scare tactics like Brinks does.

Jim Rojas

Posted by mleuck on June 30, 2009, 10:18 pm

If you were Registered and logged in, you could reply and use other advanced thread options

> noauth wrote:

> > NEW YORK (Fortune) -- Not quite rich enough and not quite smart enough,=

a certain investing class has for years paid through the nose for what was=
thought to be world-class money management by investing in funds that prom=
ise access to the best hedge funds.

> > The Bernard Madoff scandal now calls into question the value of the so-=

called fund-of-fund industry.

> > A fund-of-funds manager puts clients' money to work in a portfolio of h=

edge funds or other non-traditional investment vehicles.

> > The client gets access to accounts he wouldn't normally have access to =

but the expenses are exorbitant: often a 1% management fee and between 5% a=
nd 15% of any gains.

> > That might feel okay when the fund is turning in stellar performance, b=

ut not so much when they're losing money, or worse, investing in a fraud.

> > "The fund-of-funds community has a problem because they're a step remov=

ed from the actual investment of money," says Michael Lewitt, president of =
hedge fund Harch Capital Management. "To convince people they add value the=
y sell themselves as offering diversification, due diligence and access to =
exclusive hedge funds. The Madoff scandal hits at the heart of this model, =
and could be devastating for the industry."

> > Indeed, some advisors seemed to do little more than turn over most or a=

ll of their clients' money to Madoff -- money that may now be gone.

> > "The fact that very well respected fund-of-fund names like Fairfield Gr=

eenwich and Maxam Capital Management were funding a ponzi scheme for a peri=
od of decades blows up the raison d'etre for a fund-of-funds," said Lewitt.

> > Before the Madoff scandal broke, the average fund-of-funds had been str=

uggling with the same negative trends slamming the average hedge fund -- in=
vestors pulling money out, poor performance and lots of volatility.

> > And the average fund-of-funds is down about 19% this year, underperform=

ing hedge funds by about 2 percentage points.

> > "Even before these numbers came out, investors were beginning to realiz=

e that these two layers of fees made their chances of making money pretty r=
emote," said Steve Cesinger, the chief financial officer at private equity =
and real estate investment firm Dewberry Capital.

> > According to CNBC, Fairfield is planning to sue Madoff, claiming that i=

t was a victim of fraud and that it did due diligence and hired auditors.

> > "It is clear that there will be extensive litigation around this scanda=

l and that fund-of-funds managers will be exposed to that litigation," said=
Steve Thel, a law professor at Fordham law school where he teaches securit=
ies regulation.

> > But Thel said such suits against funds of funds will address two main q=

uestions. First, did the fund managers conduct reasonable due diligence. An=
d second, did they disclose to investors that they were not diversified.

> > Given that some prominent fund-of funds turned down Madoff it's hard to=

argue that proper research was conducted. As for whether proper disclosure=
s were made, "that's still to be discovered," said Thel.

> With the small budget Brinks operates on, I doubt it.

> Why would a company spend millions of dollars on advertising, when they

> can just lower their rates and get more client referrals that way?

> All they are doing is keeping rates high. Their overhead must be choking

> them beyond belief. ADT doesn't need to advertise that much, or nor do

> they resort to using scare tactics like Brinks does.

> Jim Rojas

Not likely, Brinks Security has been a profitable company with low
attrition for quite a while whereas ADT is currently losing more
customers through attrition than they bring on

Besides if you are a security company protection houses from burglars
how else are you going to advertise? "Brinks Security.....it's a
keypad......and.......a keypad.."

Posted by Crash Gordon on June 30, 2009, 11:17 pm

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no false alarms that way...just two keypads :-)

--
**Crash Gordon**

>> noauth wrote:

>> > NEW YORK (Fortune) -- Not quite rich enough and not quite smart enough,

>> > a certain investing class has for years paid through the nose for what

>> > was thought to be world-class money management by investing in funds

>> > that promise access to the best hedge funds.

>> > The Bernard Madoff scandal now calls into question the value of the

>> > so-called fund-of-fund industry.

>> > A fund-of-funds manager puts clients' money to work in a portfolio of

>> > hedge funds or other non-traditional investment vehicles.

>> > The client gets access to accounts he wouldn't normally have access to

>> > but the expenses are exorbitant: often a 1% management fee and between

>> > 5% and 15% of any gains.

>> > That might feel okay when the fund is turning in stellar performance,

>> > but not so much when they're losing money, or worse, investing in a

>> > fraud.

>> > "The fund-of-funds community has a problem because they're a step

>> > removed from the actual investment of money," says Michael Lewitt,

>> > president of hedge fund Harch Capital Management. "To convince people

>> > they add value they sell themselves as offering diversification, due

>> > diligence and access to exclusive hedge funds. The Madoff scandal hits

>> > at the heart of this model, and could be devastating for the industry."

>> > Indeed, some advisors seemed to do little more than turn over most or

>> > all of their clients' money to Madoff -- money that may now be gone.

>> > "The fact that very well respected fund-of-fund names like Fairfield

>> > Greenwich and Maxam Capital Management were funding a ponzi scheme for

>> > a period of decades blows up the raison d'etre for a fund-of-funds,"

>> > said Lewitt.

>> > Before the Madoff scandal broke, the average fund-of-funds had been

>> > struggling with the same negative trends slamming the average hedge

>> > fund -- investors pulling money out, poor performance and lots of

>> > volatility.

>> > And the average fund-of-funds is down about 19% this year,

>> > underperforming hedge funds by about 2 percentage points.

>> > "Even before these numbers came out, investors were beginning to

>> > realize that these two layers of fees made their chances of making

>> > money pretty remote," said Steve Cesinger, the chief financial officer

>> > at private equity and real estate investment firm Dewberry Capital.

>> > According to CNBC, Fairfield is planning to sue Madoff, claiming that

>> > it was a victim of fraud and that it did due diligence and hired

>> > auditors.

>> > "It is clear that there will be extensive litigation around this

>> > scandal and that fund-of-funds managers will be exposed to that

>> > litigation," said Steve Thel, a law professor at Fordham law school

>> > where he teaches securities regulation.

>> > But Thel said such suits against funds of funds will address two main

>> > questions. First, did the fund managers conduct reasonable due

>> > diligence. And second, did they disclose to investors that they were

>> > not diversified.

>> > Given that some prominent fund-of funds turned down Madoff it's hard to

>> > argue that proper research was conducted. As for whether proper

>> > disclosures were made, "that's still to be discovered," said Thel.

>> With the small budget Brinks operates on, I doubt it.

>> Why would a company spend millions of dollars on advertising, when they

>> can just lower their rates and get more client referrals that way?

>> All they are doing is keeping rates high. Their overhead must be choking

>> them beyond belief. ADT doesn't need to advertise that much, or nor do

>> they resort to using scare tactics like Brinks does.

>> Jim Rojas

> Not likely, Brinks Security has been a profitable company with low

> attrition for quite a while whereas ADT is currently losing more

> customers through attrition than they bring on

> Besides if you are a security company protection houses from burglars

> how else are you going to advertise? "Brinks Security.....it's a

> keypad......and.......a keypad.."

Posted by Jim Rojas on July 1, 2009, 6:52 am

If you were Registered and logged in, you could reply and use other advanced thread options

mleuck wrote:

> Besides if you are a security company protection houses from burglars

> how else are you going to advertise? "Brinks Security.....it's a

> keypad......and.......a keypad.."

I have done many ADT takeovers over the years. I noticed a trend that
every zone was programmed as entry/exit, and a 30 second dialer delay in
place...what the hell is up with that?

Jim Rojas

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