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Matt Levine

Spinoffs, Kickbacks and Arbitrage

Also carried interest, corporate governance, and bond market liquidity.


Do you think that Hillary Clinton and Donald Trump know that hedge fund managers don't benefit much from the carried interest tax break? (Because hedge funds mostly produce short-term capital gains, and the tax break really benefits people, like venture capitalists and private equity and real estate investors, who receive carried interest for managing long-term investments.) Probably, right? So why do politicians talk about carried interest as a hedge fund issue? Probably because "hedge fund fat cats" is more fun to say than "venture capital fat cats." The "hedge fund" branding has really backfired. Everyone expects you to hedge, your performance is aggregated with that of day-trading soi-disant "hedge fund managers" to prove that your industry is a rip-off, and you get criticized for a tax break that doesn't even apply to you. If I ran a hedge fund I'd tell people I was an alternative asset manager.