FinanceAdvisor

Rule 144 of the United States Securities Act of 1933, entitled “Persons Deemed Not to Be Engaged in a Distribution and Therefore Not Underwriters”, describes the circumstances under which restricted securities may be sold on without the requirement of registering them with the Securities Exchange Commission before sale. For example, equity shares bought in a stock market, such as the NYSE, are registered and may be sold freely by their holders. However, restricted shares, typically shares that have been bought as part of a private placement or received by corporate insiders (e.g. as bonuses), may not be transferred or resold without formal SEC registration except under the specific circumstances defined by Rule 144. Securities, as covered by Rule 144, can be any type of transferable financial instrument issued by a company such as equity, debt, hybrid instruments etc. continued…

Long-Term Capital Management (LTCM) was a hedge fund founded in 1994 by John Meriwether (the former vice-chairman and head of bond trading at Salomon Brothers). On its board of directors were Myron Scholes and Robert C. Merton, who shared the 1997 Nobel Memorial Prize in Economics[1]. Initially amazingly successful, it folded in 1998, losing $4.6 billion in less than four months. continued…

Generally, a hedge fund is a lightly regulated private investment fund often characterized by unconventional investment strategies and often making use of legal structures (sometimes offshore) to mitigate the effects of local regulation and tax régimes. In contrast to regular investment funds, which are usually limited to only being able to “go long” (buy) instruments such as bonds, equities or money markets, hedge funds also have the ability to “short” (sell) instruments which they believe will fall in price. In this way, hedge funds are able to create more complex investment structures which can, for example, profit in times of market volatility, or even in a falling market. They are primarily organized as limited partnerships, and previously were often simply called “limited partnerships” and were grouped with other similar partnerships such as those that invested in oil development. Hedge funds are normally open to business and institutional investors only. continued…

A fund of hedge funds is a fund which invests in several different hedge funds to spread the risks. Funds of hedge funds select hedge fund managers and construct portfolios based upon those selections. The fund of hedge funds is responsible for hiring and firing the managers in the fund. continued…