The viability of new multi-strategy hedge funds is extremely low due to immense barriers to entry and scale requirements.
Closed-end funds, even those from top managers, are structurally prone to trading at a persistent discount to NAV.
Aggressive activist trading strategies can lead to significant legal and regulatory challenges, such as the disgorgement of profits.
Opportunities Identified
Creative market actions, like Boaz Weinstein's tender offer, can provide valuable insights into sentiment in illiquid markets.
For investors, the persistent discount in closed-end funds like PSUS could present a long-term buying opportunity if they have conviction in the manager.
Extreme market dislocations, like the Avis short squeeze, can generate massive profits for funds positioned to exploit them, though legal risks are high.