First-Loss Capital for Hedge Fund Managers

[ctheo1]

I am interested in connecting with traders who have DIRECT experience of first-loss hedge-fund structures (e.g. prelude, topwater....etc)

Pls send me a direct message.
Thank you.

 

[trend2009]

what do you mean? Traders who provide first loss hedge fund? Or traders employed by first loss hedge fund? Or traders who invested in first loss hedge fund?

 

[Robert Morse]

I have spoken to a number of these programs over the years as they were hoping we would refer them business. I'm not a fan so never did. What do you like about these programs that generally ask you to put up $1mm and provide $10mm in BP in a pooled asset and have a split that seems to be around 55% to you, with your funds as first loss? Some even charge interest on the leverage.

 

[newwurldmn]

I have spoken to a number of these programs over the years as they were hoping we would refer them business. I'm not a fan so never did. What do you like about these programs that generally ask you to put up $1mm and provide $10mm in BP in a pooled asset and have a split that seems to be around 55% to you, with your funds as first loss? Some even charge interest on the leverage.

If it’s pooled, what happens if someone loses more than their 1mm deposit? I would think that loss gets socialized.

 

[Robert Morse]

Most of these are well funded, so the losses would have to breach their capital to hit yours but you would have to read their agreements. They generally do not allow risky trading but there is no protection on your investment beyond their risk management.

If it’s pooled, what happens if someone loses more than their 1mm deposit? I would think that loss gets socialized.