Investors have figured out another way to dump their hedge
funds: sell their partnership interests on the secondary market. Even such big names as SAC Capital Advisors
and Elliott Management are on the block as investors clamor to unlock their
investment capital, the New York Post told us..
The secondary market has exploded — doubling over the past
year, said Brian Shapiro, the founder of Simplify, a firm that tracks the
business. Last year, secondary market listings in hedge funds, funds of funds,
and private-equity funds hit $65 billion in notional volume. Such secondary trading started to take off in
2008 when several hedge funds refused to let investors take their money out,
and Shapiro expects further growth of 125 percent this year.
“There’s a lot of unpredictability in the markets now,” he
said, which is leading institutional investors to engage in what he calls
“opportunistic selling.” Poor hedge-fund performance is a main driver of the
sales.
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