2008-08-24 21:52:28
Ron Insana Closing Insana Capital Partners "Legends" Hedge Fund
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The idea was a simple one.
Ron Insana would open a hedge fund called "Legends". The hedge fund would be a "fund of funds", and would allow investors to invest in hedge funds that they normally wouldn't have access to, such as SAC Capital and Renaissance Technologies.
Insana and his "Legends" fund wouldn't make their own picks - instead, they would act like a bouncer at the best club in town. They would provide their investors with access to the most successful hedge funds in the world (access that they normally wouldn't be granted) in exchange for having their palms greased. Insana's fund would charge investors a 1.5% management fee and 20% of their profits for getting them invested in the best hedge funds in the world. These fees are on top of the fees already charged by the hedge funds in question. So if you wanted to invest in the Renaissance Technologies Corporation, you would not only be paying that funds 5% management fee and 40% cut of the profits, but you would ALSO be paying Insana and his fund 1.5% and 20% of the profits remaining after Renaissance took its cut.
The idea was that Insana was going to leverage his "celebrity" (he was a prominent figure on CNBC before leaving the company in 2006) in order to attract investors in his fund. Then, he would leverage his significant portfolio of hedge fund contacts to get access to typically closed funds.
It was seemingly a very good plan, except Insana wasn't able to generate nearly enough capital to make the fund a success. Insana had been shooting for $1 billion dollars in capital - instead, he was able to raise $116 million dollars. Sounds like a lot of money, but it's really not that much in the world of hedge funds.
Insana didn't exactly have the best timing - the market blew up in the 14 months that his fund was operational, as the S + P 500 dropped a total of 15%. According to the New York Times, Inana's fund only dropped 5%, but that simply wasn't good enough for hedge fund investors who were expecting outsized returns, even in the face of a weak market.
Insana will now be taking a job with SAC Capital, one of the hedge funds that Insana's "fund of funds" granted investors acess to. It's unknown exactly what Insana's role will be with the company.
Filed under: Hedge Fund News | Trader Profiles | The Economic Meltdown
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