To Start a fund

[Ravi]

Any insights on how to do this?

 

- Would like to start a fund initially with less than $1MM capital

- Should the structure be LC/LP ?

- Should it be registered it as a RIA - Licenses Series 66/7

- Start up costs

- Any good attorney recommendation

[Guest]

I have yet to read it, but supposedly it's a good read.

 

http://www.amazon.com/Start-Successful-Mutual-Step---Step/dp/097227880X

[Pablo12345]

The problem is that unless you can get to $25M in assets, no one will carry daily quotes for you. And without daily quotes you can't get investors.

[Guest misterstockwell]

The problem is that unless you can get to $25M in assets, no one will carry daily quotes for you. And without daily quotes you can't get investors.

 

Exactly the problem at Chou America Funds. No symbol, very little interest from investors.

[alertmeipp]

how about publish the number out yourselves on website like kaching...? create even create your own website to publish the info.

[A_Hamilton]

Why do you all keep referencing a mutual fund? Looks like Ravi is trying to start an unregistered hedge fund. I'd be interested to hear what others think, but a New York firm giving you a relatively standard partnership document would charge $40,000. Though you are also going to have to figure out whether you need an administrator, and you'll need an auditor and tax accountant. If your $1 million is coming from family/friends you may be able to get off the ground with a simple partnership agreement for a few thousand $$$, and forego the auditor, administrator.

[Guest misterstockwell]

Easiest would be to start a quasi investment club, with you making the decisions. Plenty of software out  there to take care of accounting, and brokerages handle that kind of account routinely.

[gfp]

Another very cost effective way to get started is to use Interactive Brokers' advisor platform for separate accounts.  You can start with a 'friends and family' account if you have fewer than 15 clients in most states, I believe.  The advisor platform is the same as you grow.  They can take fees for you under most any fee scheme you can come up with.  And since it's IB - you can trade most equities worldwide.  They don't have as easy a time with distressed bonds or very thinly traded OTC stuff though.

 

Here's an article that describes IB's offering.  (note: I do not agree with the title)

 

http://leighdrogen.com/the-hedge-fund-structure-is-dead/

[Ravi]

Attorneys want to charge $17,000 to start a hedge fund which is expensive for a small fund. If you do it as an investment advisor, we cannot structure a performance fee. I don't think I have an option other than starting  individual accounts which is a pain to manage them and allocate it. I wonder what is the best way to structure and any good suggestion for broker platforms. I will definitely consider IB.

[Guest]

Ravi,

 

what are your long term returns?

[Ravi]

I only started doing deep value from last couple of years. 2009 was close to 295% and 2010 was 95%. Most of it is driven by luck rather than talent. This is only possible because I was able to get into GGP at 65 cents and I had a 32 bagger and sold it last week. I am not expecting any where close to that in 2011 and going forward. My goal is only to make 10%-15% doing net nets, BK's, spin offs, special situations. So far I liked more Walter Schloss, Irving Khan strategy with my small capital base. My returns are also driven by buying leaps and out of money puts which I use (max of upto 15% of my portfolio). 

 

[Ravi]

globalfinancepartners - Thanks a lot for that link. The only question I have is, do you need to be get your state licenses to do that like for MO - series 66 and 7? Excellent article though.