BACK TO BUSINESS!!!! Right! Before the Next Market Crash (Think!), You Better Have Your Own Hedge Fund

(If throwing a contribution Pottersville2's way won't break your budget in these difficult financial times, I really need it, and would wholeheartedly appreciate it. Anything you can afford will make a huge difference in this blog's lifetime.)

Palin's Boob Job*

I'm sure none of my readers are thinking about this (even the groundhogs), but . . . just in case . . . (and whom do you think will be reaping these gains?). And exactly where will these billionaires live?

Inquiring minds want to know. (Emphasis marks added - Ed.)

Don’t worry about the strategy - the name is the hardest part and we don’t have a lot of time. Thomas Strauss, chief executive of Ramius, the alternative investment unit of brokerage firm Cowen Group expects “significant” growth in the hedge-fund business in the next three to five years as institutions like U.S. public pensions search for returns that are less correlated with other markets. ”I wouldn’t be at all surprised if the industry doubled in size,” Strauss added in an interview with MarketWatch.

New Hedge Funds Raised More in 2010

By Alistair Barr, MarketWatch

SAN FRANCISCO (MarketWatch) — Hedge-fund launches raised more money in 2010 as investor confidence began to recover enough to back new managers, according to an industry survey released Tuesday.

At least 59 new funds with more than $50 million in assets under management were launched last year, raising $17.4 billion, according to a survey of hedge-fund start-ups by industry publication AR magazine.

That’s up 17% versus 2009, when 53 new funds raised $14.89 billion, a record low for the survey.

Bridgewater Associates , run by Ray Dalio, Overland Advisors and Astenbeck Capital Management were the source of last year’s biggest launches, AR said.

The 2008 financial crisis triggered record investor redemptions and left the average hedge fund down almost 20%. At the end of the year, Bernard Madoff’s Ponzi scheme was a hammer blow to the industry.

Since then, investors have been wary of allocating a lot of money to new hedge funds, instead preferring to stick with the largest, established firms.

However, hedge fund performance has recovered steadily in the past two years and some investors have begun to look for new managers. Blackstone Group (BX 16.55, -0.12, -0.72%) launched a so-called seeding fund that backs new managers last year and Julian Robertson’s Tiger Management is also keen on seeding.

‘Doubled’

“2008 is still in people’s minds, but the world is still way under-invested in hedge funds,” said Thomas Strauss, chief executive of Ramius, the alternative investment unit of brokerage firm Cowen Group (COWN 4.47, -0.04, -0.89%) .

He expects “significant” growth in the hedge-fund business in the next three to five years as institutions like U.S. public pensions search for returns that are less correlated with other markets.

”I wouldn’t be at all surprised if the industry doubled in size,” Strauss added in an interview with MarketWatch.

‘Skittish’

Still, hedge-fund launches are still well below the peak from an industry boom during the previous decade. In 2004, a record $40 billion was raised by new funds, according to AR.

“Investors remain skittish about backing brand-new managers, and raising money is still far more challenging that it was before 2008,” Michelle Celarier, editor of AR, said in a statement.

Biggest launches

The biggest launches of 2010 came from established players or groups that already had assets under management.

Bridgewater formed the largest new vehicle called Bridgewater Pure Alpha Major Markets Trading fund, which incorporates the most liquid portions of its flagship Bridgewater Pure Alpha fund.

The new trading vehicle raised $2.4 billion. It wasn’t marketed to new investors but instead was created for clients with gains from the flagship fund that could not be reinvested in that fund, according to AR.

Overland Advisors, a multi-strategy fund run by Derek Dunn and Gordy Holterman, was spun off from a proprietary-trading group at Wells Fargo (WFC 32.92, +0.20, +0.61%) . The fund raised $2.2 billion from investors, AR said.

Astenbeck Commodities Fund II, run by Andrew Hall, the former Citigroup (C 4.85, -0.05, -1.02%) star energy trader whose proposed $100 million bonus came under public scrutiny, attracted $1.5 billion from investors, AR said.

A bigger 2011?

There are already several big new hedge funds emerging this year.

Former traders from Duquesne Capital Management, led by Sean Cullinan, are opening Point State Capital, which is expected to launch with roughly $5 billion in assets. Read about this launch here.

Point State would be the biggest hedge fund launch since 2008, when Goldman Sachs (GS 164.93, -0.12, -0.07%) raised over $8 billion for two new strategies, according to AR.

Former Duquesne technology portfolio manager Wojtek Uzdelewicz is also preparing a new firm called Espalier Global Management, the publication said.

Mark Carhart, former co-head of quantitative strategies at Goldman, opened his new fund, Kepos Capital, to investors in January, it added.

Highbridge Capital Management co-founder Henry Swieca’s Talpion Equity Partners also debuted in January, while former Credit Suisse (CS 45.14, +0.01, +0.02%) proprietary trader George “Beau” Taylor and head of energy arbitrage Trevor Woods rolled out a new commodities fund, Taylor Woods Capital, on February 1, according to AR.

Goldman shut its Principal Strategies Group, its main proprietary trading business, in 2010 and there are several hedge funds emerging from this group.

A team of traders led by Bob Howard joined private equity firm KKR & Co. (KKR 16.00, +0.04, +0.25%) , which is planning to launch a hedge fund later in 2011.

Morgan Sze, also from Goldman’s Principal Strategies Group, is prepping a big hedge fund operation in Hong Kong that is expected to open its doors with at least $1 billion, AR said.

Pierre-Henri Flamand, another top trader from Goldman’s principal strategies business in Europe, raised more than $1 billion in capital and commitments for his new hedge fund Edoma Capital. Read about Flamand’s efforts here.

Peter Muller, head of Morgan Stanley’s (MS 29.66, -0.26, -0.87%) proprietary trading desk, is also leaving his firm to start his own operation, though that won’t happen until the end of 2012, AR reported.

A small blessing I guess. * Stolen from those finely tuned (A)ristocrats!