Today’s Discussion QUESTIONS ANY TIME! 1. Who is in the spectrum of hedge fund investors? 2. What are the four stages of fund development? 3. What are the hedge fund operating models? 4. Why are hedge funds doing this? 5. MERLIN 6. YOU
What is a Hedge Fund? 1. A hedge fund is an investment fund that can undertake a wider range of investment and trading activities than other investment vehicles. 2. Hedge funds are only open for investment from particular types of investors specified by regulators including institutions, such as pension funds, university endowments and foundations, or high net worth individuals. 3. As a class, hedge funds invest in a diverse range of assets, but they most commonly trade liquid securities on public markets. Hedge funds also employ a wide variety of investment strategies, and make use of techniques such as short selling and leverage. 4. Hedge funds are typically open-ended, meaning that investors can invest and withdraw money at regular, specified intervals.
What is Prime Brokerage? 1. Prime brokerage is the generic name for a bundled package of services offered by investment banks and securities firms to hedge funds and other professional investors needing the ability to borrow securities and cash to be able to invest on a netted basis and achieve an absolute return. 2. Prime brokerage services include custody, transaction clearing and settlement, trade execution, account servicing, reporting and analytics, stock loan, and capital introduction among others. 3. The prime broker provides a centralized securities clearing facility for the hedge fund so the hedge funds collateral requirements are netted across all deals handled by the prime broker. 4. The prime broker benefits by earning fees ("spreads") on financing the clients margined long and short cash and security positions, and by charging fees for commissions, clearing and/or other services.
In the Zone: Three Types of Fund Operating Models
Why Are Hedge Funds Doing This?The AUM / Performance Map Fund Fee Revenues Under Various Performance and AUM Scenarios
The Merlin Solution Merlin has built a Merlin creates tailored solutions for each client that platform with a suite combines the relevant products and services needed, of products and enabling our clients to focus on what they do best, services that: generating alpha for their investors.• Integrate seamlessly Workflow Analytics from front to back • Multi-prime aggregation • Performance statistics and office, to provide a attribution holistic solution that is • Account and trade reconciliation • Risk decomposition intuitive and efficient • Managed account oversight • Compass real-time • Order Management Systems (OMS) • Investor reporting• Is highly configurable to meet the needs of each fund to enable you to evolve Trading Services • Electronic trading • Account management • Global desk • Client services • Outsourced trading • Capital development • Stock loan • Merlin Institutional Group (MIG)
Workflow | Analytics | Trading | Services Workflow Solution – Open ArchitectureHighlights: Streamlining workflow is one of the most important and least understood elements to creating a sustainable and growing business. Merlin’s focus on optimizing• Flexible trading flows accommodate many trading workflow, operations, and administrative services spans all our products, services, models and platforms and tools.• Open OMS platform for Analytics Allocations for away trades (Export from Merlin OMS) trade monitoring, Trading allocations, rebalancing, and end of day reporting Portfolio Manager EMS/ Route Away EMS/ Desks OMS Desks Trades Away• Analytics and reports OMS Brokers Merlin Portfolio Analytics Merlin Portfolio Analytics Trade Flexible Trading Solutions aggregate positions and Entry transactions across all Attribution Compass and Attribution Compass FIX Drop Trade Reporting Trade counterparties and Upload Copy and Clearing Reporting custodians Performance P&L and Performance P&L Clearing• Integration, data flow, and Operations Risk Operations Risk Merlin OMS reconciliation with all trading Intraday Merlin OMS partners and custodians Positions Positions Transactions Transactions Activity Allocations Merlin Custodians Allocations• Merlin’s operational support Reporting teams act as an extension Trade Reporting Client Accounts of your team Merlin Portfolio Accounting Merlin Portfolio Accounting Posting Allocations Recon and Other Custodians Break Fix Merlin Custodians Transaction Transactions All Client Accounts Client Accounts All Client Accounts Posting Custodial and Positions Client Accounts Custodial Aggregated positions and Recon Recon Merlin Operations Aggregated positions and Prime Brokers transactions across all primes transactions across all primes Positions and Transactions Admin / Transactions and Position Exports if Requested 3rd Parties
YOUKnow Your Story and Deliver Your MessagesWhen meeting a new contact,you have 60 seconds toexplain: • Who you are • What you do • How you do it • Why you are better or different • Why the person should believe you • Harmonize Know your offering and value proposition, then get to the point clearly and quickly
YOU (CONT’D): Your Work Experience and… “Pepper...and Salt” February 1, 2012
YOU (CONT’D) What is your edge? What truly differentiates you? • UMM I MEAN YA KNOW LIKE • R.I.M. (Elevator Pitch) • Know the equation for success = IQ + EQ • Your “INTENTION” • Take action — Call, connect, email and LinkedIn those people you said you would
YOU (CONT’D) A: Hunter, Revenue Producer, Business Originator, Sales Person, Rain Maker, Profit Generator B: Keep Revenue, Get Larger Portion of Wallet, Manage Relationships, Serve Clients C: Commodity, Expense, Replaceable