Is summer giving all the folks who normally slave to make SEC filings as boring as possible an opportunity to loosen up? The evidence may be anecdotal, but it’s growing. Exhibit A was this dead frogs disclosure from two weeks ago. Now, via fund of funds Ascendant Capital Partners, which filed this offering statement yesterday comes Groucho Marx. Here’s a snip:

Exclusive. Secret. Proprietary. These are words that have often been used when describing hedge funds. Investors in funds using these adjectives are asked to forego normal transparency and be glad that they have been accepted into these selective clubs. Sadly, the recent Madoff scandal proves that marketing pitches like this work. Investors, some supposedly sophisticated, overlooked many basic, common sense due diligence requirements because they desperately wanted access to his supposedly “elite” firm…

As a marketing strategy, there is no doubt that exclusivity and secrecy sell. However, from an investment standpoint, there is little if any truth to this facade. I have been in the hedge fund business for over twenty years, twelve as a hedge fund manager and over eight as a fund of funds manager. I have looked at hundreds of hedge funds employing all sorts of different investment strategies. There is no one strategy or technique that always does well. If one does it is quickly mimicked and rapidly loses its effectiveness. The events of the last year have had a dramatic and lasting effect on the hedge fund business. Many strategies will go away and there is no doubt that there will be increased regulation and oversight. Like Groucho (Marx), investors need be more discerning.

The comments come from the pen of Gary Shugrue, Ascendant’s Chief Investment Officer. And this isn’t the first time that Shugrue has poked at Bernie Madoff for serving as his own prime broker. Shugrue has also recently weighed in on the SEC’s uptick rule. And while we don’t know much about Shugrue, anyone who makes SEC filings more entertaining to read has our vote.

Posted in On the lighter side Tags: hedge funds, odd filings

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