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via Stock Market Psychology Blog: Behavioral finance and beyond by Richard L. Peterson M.D. on 1/14/08
The latest Popular Science Magazine (February print issue) has a great article on our upcoming, but separate business, MarketPsy Capital. The Market Psy Capital long-short hedge fund is the primary strategy discussed in the article, although we have several other fascinating strategies as well. I'll add a link to the Popular Science article when the online version becomes available.I'd love to discuss it more, but it's legally not clear how much I can say to people I don't already know. Lately I've heard "don't talk about it at all" from lawyers, which is a bit awkward. I think the fact that we can analyze investors', analysts', and financial reporters' writing patterns to detect collective psychological biasing is pretty exciting. Even more exciting is that we can predict, within a range of probabilities, where stocks are likely to go next.
The Securities and Exchange Commission (SEC), which is the licensing organization for asset managers, has some rather confusing regulations about discussing hedge funds in public. Many hedge funds have very limited websites -- a company description and employment page only, see HBK Investments. Some hedge funds are totally obscure (see Cannell Capital), and others' restrict access from US web surfers: GLG Partners. The above are all major hedge funds. A discussion of the SEC rules is in the following blog post. Some excerpts of interest below:
By raising money privately, rather than in the public markets, and from wealthy investors, hedge funds are able to avoid the stringent regulations set forth in the U.S. Securities Act of 1933. But as part of that deal, "issuers" — in this case, the hedge fund advisers — and those acting on behalf of the issuer cannot sell securities by any form of "general solicitation or general advertising, including but not limited to the following: any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over radio or television; any seminar or meeting whose attendees have been invited by any general solicitation or general advertising."
Hedge funds can raise private money in the form of a 3(c)1 funds, which require that there not be more than 100 investors and that they be moderately rich. In December, the SEC set a new standard of a net worth of $2.5 million. Or they can raise 3(c)7 funds with no limits on the number of investors but a higher wealth standard of "qualified" investors — a net worth of $5 million. Being private and raising money via 3(c)1 or 3(c)7 means not having to comply with the Investment Company Act of 1940.
I think the Popular Science article does a good job of explaining our underlying strategies (without giving away the valuable bits), but unless one is considered "qualified" by the SEC, then I can't offer fund investments. I hope that answers any questions for aspiring investors.
Happy Investing!
Richard
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