Due Diligence Comments

You will notice that I give a great importance to hedge fund operations. This arena is our field of competence. Our principal task is to provide investors with a multi-level due diligence analysis that can be summarized like this :

1^st level : In depth analysis of all papers provided by the fund. If not sufficient, we ask the managers to complete our own documentation (at least AIMA due diligence questionnaire).

2^nd level : Visit of the managers with a special emphasize on their structure : human resources, financial and IT. Reference checks. Phone up prime brokers, administrators, lawyers and auditors.

3^rd level : Follow up of the fund during three to six months in order to see their ability to communicate and give us a clear idea of the quality of their selection process.

All sides of the company are observed from an operational stand point. We analyze everything, from their company structure to their backup tapes. We almost always discover skeletons in the closet.

We can assure you that this process would have certainly disqualify the LTCM fund because of its financial operational risk.

For a lot of asset managers that are investing in hedge funds because their friend has already chosen a particular one, the kind of due diligence process that I am describing would seem exaggerated. However we can assure you that managers that have invested in LTCM or pension fund managers would definitively not think that our process is exaggerated.

A lot of fund marketers have claimed in recent years that hedge funds are the solution.