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Congrats Sanjeev! Thanks for all the work you put into the board and to all the board members as well! It really is a rare and special place on the internet

Similar to the above, most of Mohnish Q&A's focus on his investment process and skills - what advice does he have on managing an investment business specifically, especialy for those who are looking to start one in the future? What are some things he wished he had known when launching his fund and the lessons learned from his mistakes/experience managing a hedge fund? Hopefully, I'm getting the gist of my question across but looking for insight into the aspects of how he manages the business outside of actual investing, like marketing (or lack thereof if mainly through referrals), communication with investors, etc etc - especially as it relates to his early years. Also, ditto the above poster, thank you Joel!

I took a look through the Books board and didn't find too many books on this subject. I know many board members have successfully started and operate funds/RIAs and other non-finance related small businesses. Could you guys share some books or any other resources (websites, blogs, etc) that you found helpful - especially those that provide more practical, specific info vs. motivational or very generic advice? Thanks in advance!

Great points, I think your reasoning makes a lot of sense when you think about the fee structure from a practical view - which is clearly what's important - vs a theoretical/what would Buffett do now perspective. If you don't mind sharing, what fee structure did you ultimately end up settling on? To everyone else, thanks for the great discussion.

Thank you Eric! I skimmed through the letters awhile back trying to remember why I kept thinking the 6% was related to some equity market return after realizing the govt yields didn't fit. Obviously I totalled missed it, thanks for digging that up - much appreciated. http://finance.zacks.com/average-return-dow-jones-during-its-lifetime-3314.html This article seems to show that he was certainly in the right range if looking across its history all the way to 1890s! I'd be interested in knowing others thoughts on what hurdle rate would be appropriate if launching a fund using the Buffett fee structure like many on this board have done now or in recent past (obviously small list but Pabrai, Sanjeev, etc). Since the Dow obviously has many flaws as a price weighted index, demonstrated by standard benchmark being market cap-weighted S&P nowadays, would you guys feel that someone who wanted to stay true to Buffett's thinking should raise the hurdle higher to maybe 9%? Just thinking out loud. IMHO seems like that would be too high of a hurdle and is one of the reasons why my first attempt to rationalize the 6% was similar to stahleyp's - using the 10 yr yield. Also the rationale behind that seems to make a lot of sense too as others here have pointed out - fund manager is only paid based on outperformance over the easily accessible, risk-free return of govt bonds rather than "riskier" equity market. Plus I'm sure it certainly helps (justifiably) these fund managers when they can say they're using the same fee structure as Buffett did! :)

Thanks for both of your thoughts. My first guess was also the 10 yr, but based on the historical data that I've looked at in the mid to late 50s, seems like 10 yr yield was in the 3.5% to 5% range. I also thought I read something along the lines of it being related to avg equity market returns, but again based on historical data that I looked at, that didn't seem to fit either - closer to 9-10%. Andy, your info on the inflation factor might be the missing link and makes the math seem to work. Also agree with your other thoughts - preaching to the choir! - but I guess what triggered this question was what Buffett, Pabrai, Sanjeev or any other fund manager that uses this relatively unique fee structure would say to an investor that asks, "So why a 6% hurdle? Why not 4% or 8%?" Maybe this isn't a common question bc I imagine after comparing it to other fund fee structures - esp. those without hurdle rates - this one understandably comes off as being extremely fair and a perfect alignment of incentives. Would still be interested to hear what others here think if different from the above two - thanks again to you both!

I've always wondered how he arrived at 6% for being the hurdle rate to use after consolidating the early partnerships. But I can't remember reading anything that outlined his thinking. If someone knows or, preferably, could point me to a primary source detailing his reasoning, I'd appreciate the info. Is it based on historical gov't bond yields up to or from the late 50s? Or equity market returns? Thanks in advance

Have you looked into Interactive Broker's Family and Friends account? It's a basic but effective platform to manage SMA's (including different tax statuses) with some helpful trading procedures to manage allocations across the accounts evenly. I'm based in the US so not sure if its different for Canadian accounts, but I currently use to manage accounts for friends and family and am very pleased with it. Again, not familiar with Canadian laws, but as long as you fall under the de minimis exemption in your state for number of clients, you do not have to register as a RIA to open this account in the US. Is there a billing function in the IBRK friends and family? Yes and there is the option for both a standard management fees or performance fees. Again, just a reminder, the ability to charge these requires RIA registration and certain client status (eg qualified investors for performance fee) if you do not fall under the de minimis exemption in your state (more than 5 investors in my state). I spoke with a rep before setting up the account and they pointed me to one of their online video tutorials or something like that, which allows you to see many of the F&F's accounts features - its essentially the same as their professional advisor account. I'd look into finding that video demo to check it out for yourself.

Have you looked into Interactive Broker's Family and Friends account? It's a basic but effective platform to manage SMA's (including different tax statuses) with some helpful trading procedures to manage allocations across the accounts evenly. I'm based in the US so not sure if its different for Canadian accounts, but I currently use to manage accounts for friends and family and am very pleased with it. Again, not familiar with Canadian laws, but as long as you fall under the de minimis exemption in your state for number of clients, you do not have to register as a RIA to open this account in the US.

Happy Birthday!!!

Sry accidentally posted without finishing. Hey everyone, I've been trying to incorporate some special situation plays into my portfolio recently. Just like I imagine many of us do with our more traditional holdings, I was hoping to use some 13Fs of special situations and event driven funds as a starting point. Do any of you guys track any specific funds via 13Fs that focus on these sorts of situations? If so, I would really appreciate any recommendations. So far, with my limited research, I've looked at Jana Partners, Mount Kellet and Seneca Capital. Thanks in advance!

[amazonsearch]One Up on Wall Street[/amazonsearch] Just finished reading, and while I enjoyed it, it might be a bit simple for those already versed in financial analysis. Though the flexibility of his investment style was refreshing after having spent the past few months going through the value investing classics, so if you're looking for a change, I'd highly recommend this! I really enjoyed his explanation of his 6 categories because its been forcing me to start thinking about my holdings and potential ideas through the appropriate lens and with the right expectations, something I've done vaguely in the past but will now be sure to do explicitly going forward. The categories are slow growers, stalwarts, fast growers, cyclicals, turnarounds, and asset plays. The discussion of 10 baggers was also really interesting. Selling really is one of the, if not the hardest, parts of all this. Hopefully, I'll give my winners more room to run going forward if the fundamentals remain intact or better yet improve. Haven't done a great job of that in the past.

http://thedailyshow.cc.com/extended-interviews/z9b8f1/timothy-geithner-extended-interview This is an excellent conversation, and I think most of you will find it well worth the 40 mins. I'd be very interested in hearing people's thoughts on it because its a conversation I've had many times in the past with both financially literate people and...well let's just say, others less so, and it often reaches the same impasse that that these two did by the end. I could stop there, but since its the internet, I can't resist adding my own thoughts. Stewart brings up some interesting points, but I ended up almost completely agreeing with Geithner here. And the almost is more a function of my lack of understanding of the intricacies of the financial system (esp. in terms of authority of Treasury) that Geithner briefly mentioned rather than any real disagreements. Daily Show is one of my favorite shows and I believe Stewart is an incredibly smart guy, but I often find that his understanding of topics related to economics and finance is overly simplified and too black and white - not that I'm an expert by any means. Anyway, makes me really want to read the book. Has anyone yet? I actually haven't read a book on the financial crisis and would appreciate people's recommendation on the best one iyo. Too Big to Fail? The Big Short? Those are the only ones I can remember off the top of my head.

+1, his thoughts on options are very interesting. Some good ideas to explore as well!

Thanks to all for thoughts on Competition Demystified. Definitely on my list now!