Due Diligence on Hedge Funds done differently (part 2)

Steven Redmond
Aug 14 · 3 min read

Since i got good feedback on my first article, i decided to do another one.

As we discussed last time, in addition to searching for hedge funds that will generate good returns, it is also important to get comfortable with trusting the firm. Taking another example, let’s look at Kepos Capital, the company that was founded in 2010 by Mark Carhart, Giorgio De Santis and Bob Litterman, all former partners at Goldman Sachs.

But who we really care about is the Chief Compliance Officer, does he have the necessary experience and track record. According to Simon Raykher’s Linkedin page, his legal career spans close to 30 years.

  • Audit Associate at Coopers & Lybrand (PWC) (1990 – 1992)
  • Associate at Brown & Wood (1995 – 1997)
  • Assistant District Attorney at New York County District Attorney’s Office (1997 – 2000)
  • Associate at Schulte Roth & Zabel LLP (2000 – 2003)
  • General Counsel and Chief Compliance Officer at Satellite Asset Management, L.P. (2003 – 2010)
  • General Counsel and Chief Compliance Officer (and later CEO & GC) at Lombard Odier Asset Management (USA) Corp. (2010 – 2012)

And he has had the position of General Counsel and Chief Compliance Officer at Kepos Capital since 2012.

While doing research on Simon Raykher, I was also impressed to see that he has been active on the hedge fund compliance lecture circuit. I think this notable since it suggests a degree of industry expertise and respectability. For example, he was recently on a panel at a Symposium hosted by the Regulatory Compliance Association. His co-panelists seem to have been equally credentialed, consisting of:

Based on some further research, I see that each CCO in this group have careers that span 20+ years, so Simon seems to run in good company. I was particularly struck by the fact that panelist Dov Lando at Crawford Lake Capital (which he joined in August 2018 after serving in a similar capacity at MKP Capital Management) even has his own personal website (DovLando.com) listing his industry speaking engagements. I think this shows an impressive degree of transparency, which stands out in the hedge fund industry where people generally keep things close to the vest.

Bottom line is that Simon Raykher seems well suited to keep Kepos Capital on the straight and narrow, so they score well under my “trust test”.

I should mention that both this and my prior story highlight firms that reflect well under this type of analysis. You shouldn’t get the wrong idea that this would be the outcome for all hedge funds. If I get more interest, maybe I will turn my attention in the future to firms that present some red flags that should be cause for concern. Sadly, the industry has had plenty of scandals involving fraud and ponzi schemes, so this deserves careful focus, and investors really need to do their own due diligence before investing.

Steven Redmond

Written by

Husband, Father, Recovering Financial Advisor.

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