Erin Arvedlund, an author who's also worked at hedge funds, says the Atticus news is significant for the hedge fund industry. "It's part of a larger trend which is that a lot of good managers, and bad, are closing their doors because they're realizing, I can't make good money in this market," she says.
Started in 1996 with just $5.5 million, by 2008 Atticus had amassed $20 billion in assets under management. Then the market crashed and the firm's two largest funds fell between 27% and 44%. As is often the case with large hedge funds, Arvedlund thinks Atticus became a victim of its own success. "It's a question of capacity,” she says. "How much in assets do you want to run so you can take that 20% cut and how much can you reasonably manage, a lot of people get greedy. They want to run more than that because they can."
Arvedlund speculates, what happened with Atticus is all part of a "weeding out period." And, in the future tough times will lead to structural changes in the industry, "because it’s harder to raise money." Arvedlund says, "It'll be a democracy, dare I say, where the actual investor will have more say in the terms."
