Birds of a Feather – Do Hedge Fund Managers Flock Together?

40 Pages Posted: 10 Feb 2016 Last revised: 31 Jul 2020

See all articles by Marc Gerritzen

Marc Gerritzen

Berenberg

Jens Carsten Jackwerth

University of Konstanz - Department of Economics

Alberto Plazzi

Swiss Finance Institute; Universita' della Svizzera italiana

Date Written: July 17, 2020

Abstract

Mandatory filings for UK hedge funds allow analysis of the effect of managerial employment networks on investment behavior. Employment in the same firm leads to significantly more similar investment behavior in terms of raw returns, abnormal performance (alpha), systematic risk (beta), and residual returns. Employment at the same firm at the same time strengthens the results significantly. The joint effect accounts for about a fifth of the difference in investing behavior. Results are robust to fund and manager level controls, as well as to endogeneity concerns.

Keywords: hedge funds, social ties, networks, abnormal performance

JEL Classification: G11, G20, G23

Suggested Citation

Gerritzen, Marc and Jackwerth, Jens Carsten and Plazzi, Alberto, Birds of a Feather – Do Hedge Fund Managers Flock Together? (July 17, 2020). Swiss Finance Institute Research Paper No. 16-10 , Available at SSRN: https://ssrn.com/abstract=2729993 or http://dx.doi.org/10.2139/ssrn.2729993

Marc Gerritzen

Berenberg ( email )

Hamburg
Germany

Jens Carsten Jackwerth

University of Konstanz - Department of Economics ( email )

Universitaetsstr. 10
Konstanz, 78457
Germany
+497531882196 (Phone)
+497531883120 (Fax)

HOME PAGE: http://cms.uni-konstanz.de/wiwi/jackwerth/

Alberto Plazzi (Contact Author)

Swiss Finance Institute ( email )

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

Universita' della Svizzera italiana ( email )

Via Buffi 13
CH-6900 Lugano
Switzerland

HOME PAGE: http://usi.to/mpy

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