Superfunds InWestors!

I was perusing the regular message boards when I found this excerpt about a litte fund you may have heard of.

The very suspect “Superfund” has it’s own, fully owned, introducing broker. Not only do they charge management fees on the order of 5%, but they take another 5-6% in commissions by sending their orders through their own broker (their OM actually states this in the fine print, so investors will have no recourse). So, in effect they are charging 10% p.a. on total AUM, which in essence, makes it pretty difficult for investors to see good returns in the long run.

I haven’t validated this statement from the prospectus but I wouldn’t put it past my man in Monaco.

From research I did awhile ago, and from what I remember, Baja went to Austrian police academy and worked as a jailer before becoming a titan of the alternative investment world. His lead programmer has a degree from The University of Bermuda or some other such Caribbean island. His first few businesses failed and I believe so did his first few trading models.

So would you expect a guy like that to pull in $60MM+ last year? Or own an F1 Racing Team? Or live in Monaco and play tennis with the Prince? Probably has a smoking hot wife too.

Honestly its easy to portray the man as a scam artist or swindler but like all villains are heroes and heroes are villains, the genius and shear success of business plan must make you stop and take notice. When you realize how well he has done given the obvious adversity, you wonder why SuperFunds isn’t a case study at Harvard Business.

Here are some the keys to his success:

1) No way was this guy was getting institutional money so he focused on retail, and high volume retail. Smart move, an even smarter move was to leverage not his own sales force, but the financial advisor networks and the asset allocators. Wine & dine, schmooze, offer say 4% load and 4% back end might just cause a guy to pick SuperFund over say John Henry’s Funds if they both perform about the same. And besides, their clients  don’t know any better.

2) He met and incentive people in high places. A large equity holder is none other then ex Solomon Brothers, and star of “Liars Poker” Louis Ranieri. With a nice chunk of equity, old Louis has no problem speaking to the public on the benefits of managed futures in a diversified account. Bet that’s how he ran his own Ameritrade 401k.

3) Finally latching on to a small, yet compelling, piece of research touting the whole non-correlation, asset allocation, MPT nonsense that did indeed show an allocation to managed accounts in the long run makes sense. Well, mainly due to the long volatility exposure which could be replicated in who knows how many cheaper ways.

So Hero, Villain, you decide. Commercials are lousy, he’s pretty much shameless, but what an utterly brilliant execution and business model. It just makes you wonder what great marketing and a decent return may actually do in this business????

Read more in depth research here.


~ by largecaptrader on July 8, 2009.

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