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Hedge fund hold ’em

Author

Listed:
  • Lu, Yan
  • Mortal, Sandra
  • Ray, Sugata

Abstract

Hedge fund managers who do well in poker tournaments have better fund performance. This effect is stronger for tournaments with more entrants, larger buy-ins, larger cash prizes, and for managers who place higher or win multiple tournaments. After tournament wins, net flows to the manager’s fund increase significantly. These increases are higher for tournaments with media coverage, when the tournament win is bigger, and for more prestigious tournaments. Along with higher net flows, fund alpha also decreases following the tournament win. Given this, hedge fund investors would be better off investing in an otherwise similar manager without poker tournament success.

Suggested Citation

  • Lu, Yan & Mortal, Sandra & Ray, Sugata, 2022. "Hedge fund hold ’em," Journal of Financial Markets, Elsevier, vol. 57(C).
    • Handle: RePEc:eee:finmar:v:57:y:2022:i:c:s1386418120300859
    DOI: 10.1016/j.finmar.2020.100616
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    References listed on IDEAS

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    More about this item

    Keywords

    Poker; Hedge funds; Investor flows; Alpha erosion;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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