Anthony Scaramucci 
The Little Book of Hedge Funds 
What You Need to Know About Hedge Funds, but the Managers Won’t Tell You

The Little Book of Hedge Funds that’s big on explanations
even the casual investor can use

An accessible overview of hedge funds, from their historical
origin, to their perceived effect on the global economy, to why
individual investors should understand how they work, The Little
Book of Hedge Funds is essential reading for anyone seeking the
tools and information needed to invest in this lucrative yet
mysterious world. Authored by wealth management expert Anthony
Scaramucci, and providing a comprehensive overview of this shadowy
corner of high finance, the book is written in a straightforward
and entertaining style. Packed with introspective commentary,
highly applicable advice, and engaging anecdotes, this Little
Book:

* Explains why the future of hedge funds lies in their ability to
provide greater transparency and access in order to attract
investors currently put off because they do not understand how they
work

* Shows that hedge funds have grown in both size and importance
in the investment community and why individual investors need to be
aware of their activities

* Demystifies hedge fund myths, by analyzing the infamous 2 and
20 performance fee and addressing claims that there is an increased
risk in investing in hedge funds

* Explores a variety of financial instruments–including
leverage, short selling and hedging–that hedge funds use to
reduce risk, enhance returns, and minimize correlation with equity
and bond markets

Written to provide novice investors, experienced financiers, and
financial institutions with the tools and information needed to
invest in hedge funds, this book is a must read for anyone with
outstanding questions about this key part of the twenty-first
century economy.

Table of Content

Foreword xi

Introduction: Anatomy of a Hedge Fund: The Password Is xv

Chapter One What Is a Hedge Fund? The Traditional Long-Only Portfolio versus the Alternative Hedge Fund Portfolio 1

Chapter Two The Parlor Cars of the Gravy Train: The Long and the Short of It 29

Chapter Three Accessing the Inaccessible: From the Elite to Main Street 51

Chapter Four Heads We Win; Tails You Lose: Eating Your Own Cooking while Enduring Symmetrical Glories and Punishments 67

Chapter Five The Alpha Game: In Search of El Dorado 81

Chapter Six Ironing Out Inefficiencies: Exploiting the Efficient Market Theory 97

Chapter Seven A Balancing Act: Outperforming the Market while Taking Less Risk 117

Chapter Eight If You Can’t Beat ‘Em, Join ‘Em: Hedge Fund Manager Selection and Due Diligence 143

Chapter Nine The Men Behind the Curtains: Fund of Hedge Funds 169

Chapter Ten From Wall Street to Park Avenue: Setting Up Shop at the Hedge Fund Hotel 193

Conclusion: The Shape of Things to Come 215

Appendix: Due Diligence Questionnaire 223

Notes 229

Acknowledgments 233

About the author

Anthony Scaramucci is the Founder and Managing Partner of Sky Bridge Capital, a global alternative investment and advisory firm. The firm has $5.8 billion in assets under management or advisement as of January 31, 2012. He was the cofounder of Oscar Capital Management, which was sold to Neuberger Berman, LLC in 2001 after building a managed account business and four hedge funds having in aggregate more than $800 million of assets. Upon Neuberger Berman’s sale to Lehman Brothers in 2003, he served as a Managing Director in their Investment Management Division. From 1989 to 1996, Mr. Scaramucci worked at Goldman Sachs & Co., where he was appointed a Vice President in Private Wealth Management in 1993.
Mr. Scaramucci is a recipient of the Ernst & Young Entrepreneur Of The Year 2011 New York Award in the Financial Services category and a board member of Warrior Gateway, The Lymphoma Foundation, and The Brain Tumor Foundation. He is also on the Board of Overseers for the School of Arts and Sciences at Tufts University and a member of the NYC Financial Services Advisory Committee and BENS (Business Executives for National Security). Mr. Scaramucci is the author of Goodbye Gordon Gekko: How to Find Your Fortune Without Losing Your Soul and a regular CNBC contributor.