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Project 3: A New Hedge Fund Biases in investment decisions as well as corporate decisions can potentially generate inefficiencies in market prices. Equity analysts and other market participants may even exacerbate these effects. Can “smart” investors identify and exploit short-term inefficiencies in the market? The goal of this project is to help you develop at least one concrete idea for starting a hedge fund. You should provide a short report (not more than 5 pages, double-spaced) developed around the following topics: 1. What is the main idea and why do you expect the idea to work? 2. Please explain the trading strategies clearly. In particular, please outline the portfolio construction and rebalancing procedure. 3. What factors generate the inefficiencies you are trying to exploit and why do they persist? How long do the inefficiencies persist and why? 4. Why have other smart investors not yet exploited the opportunity? What types of risks and constraints do they face that may prevent them from successfully exploiting the opportunity? 5. Would common investors be able to exploit this opportunity? Why or why not?
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Surname 1
Idea for Starting a New Hedge Fund
Biases in investment decision as well as corporate decision can potentially generate
inefficiencies in market prices. Equity analysis among other market participants has the potential
to exacerbate such effects. In this project, the basic notion is to establish whether “smart”
investors can identify and exploit the short-term inefficiencies within the market. The idea
explained in this report is to invest in land using other people’s money.
The Idea
The project idea to develop a hedge fund that invests in land and solely funded by
potential investors rather than investment backs. With such an idea would be possible to become
the manager of my own hedge fund, which will provide me with the opportunity to invest other
people’s wealth on their behalf. The fundamental goal will be to generate profits for the hedge
fund business and for my investors (Oltheten and Waspi). In this regard, I would like to utilize
my expertise and experience as a financial professional to seek funding outside the aid of
investment banks and forge my own path. Typically, starting an investment company and
making it the general partner of the fund would further make the hedge investors take part as

Surname 2
limited partners in what would be more of private partnership than a private company or a sole
proprietorship (Morewedge, Tang and Larrick).
Trading Strategies
The trading strategies for the edge fund are based on the nature of investment and
business environment among other factors. The trading strategies will include the overall risk
management policies meant to minimize possible risks during the trading...

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