Hedge fund tricks or treats?

Though increasingly popular with investors, hedge funds can be a potential minefield for the unwary. Here, Sinclair Capital’s Jon Lukomnik highlights some examples of hedge fund subterfuges that investors should look out for

Halloween – supposedly a time of heightened supernatural activity – is fast approaching. Given hedge funds’ traditional opacity, investors could be forgiven for thinking that they would need to be a soothsayer to avoid putting money into hedge funds ‘destined’ for a blow-up. Premonitions aside, however, being aware of certain hedge fund tricks can help investors avoid future pitfalls.

Three problematic trading practices can be found in various hedge fund strategies. The first can be