Fed up with misbehavior in the hedge-fund industry, respected hedge-fund investor Sandra Manzke is fighting back.
A pioneer in hedge-fund investing and best known for founding Tremont Capital Management, Manzke sent an angry missive to hundreds of her peers earlier this week, calling on them to join together to push for reform in the $1.5 trillion industry.
“I am appalled and disgusted by the activities of a number of hedge-fund managers,” said the letter, which raises a fist against what Manzke sees as a general degradation of ethics in the industry.
The letter, reminiscent of the way in which Tom Cruise’s Hollywood agent character penned a manifesto blasting his cutthroat industry in the hit movie “Jerry Maguire,” comes amid a historic shakeout of this once-lucrative business. Hedge funds are battling the double blows of poor performance – down an average of 20 percent so far this year – and billions in investor withdrawals, known as redemptions.
It’s partly as a result of these conditions that Manzke says she’s seeing fund managers increasingly act against the best interests of their investors.
Some are fighting to “get their money out ahead of investors,” or “mispricing their books,” said the letter by Manzke, who currently runs hedge-fund investment firm Maxam Capital Management in Darien, Conn.
She’s also livid over the growing practice of hedge funds locking up investors’ money for months or years – a practice known as “gating ” – while they still feel they’re entitled to charge 2 percent management fees during that time period.
Fed up, she blasts the structure of hedge-fund fees, saying they have grown to “outrageous levels.”
Manzke, who says she made her first hedge fund investment in 1985, back when there were only 68 hedge funds in existence, sees her letter as more than just a list of grievances.
In addition to venting about what she sees as egregious practices amid the shakeout, Manzke’s letter also called on hedge-fund investors to fight back.
Specifically, she calls for the formation of a group that she calls the Hedge Fund Investors United Forum, which she hopes will set industry standards and allow investors to join forces in fighting headstrong managers.
“As a group we can influence the future of the industry,” she said in the letter.
“I really felt it was time for somebody to say something,” Manzke told The Post yesterday.
The letter, meanwhile, seems to have taken on a life of its own.
It has already made its way around the world, people told The Post, which received a copy that had already been forwarded multiple times.
Manzke sent the letter to hundreds of investors she pulled from her Rolodex, including high-net-worth individuals, pension-fund managers and other fund-of-hedge-fund executives, she said. kaja.whitehouse@nypost.com