Hedge Fund Family Ties

45 Pages Posted: 5 Sep 2020 Last revised: 24 Feb 2022

See all articles by Harold D. Spilker III

Harold D. Spilker III

University Of Hawaii At Manoa, Shidler College of Business

Date Written: October 15, 2021


Using a novel dataset, I show that hedge fund managers connected through shared employment histories hold and trade more of the same stocks than unconnected managers. A long-short portfolio of connected-unconnected overlapped trades generates 3.6% of annual alpha. Results are greater between fund-pairs with stronger social connections and longer relationships implying a socially reinforcing channel is responsible. Shock based tests confirm social channels lead to the main findings, supporting models of manager coordination. The findings identify common sources of risk and return for employment-linked hedge funds, except during severe drawdowns when common holdings are protected from fire sales.

Keywords: Hedge Funds, Social Networks, Investment Decisions, Manager Origin

JEL Classification: G11, G12, G23, G40, L14

Suggested Citation

Spilker III, Harold D., Hedge Fund Family Ties (October 15, 2021). Journal of Banking and Finance, Available at SSRN: https://ssrn.com/abstract=3663574 or http://dx.doi.org/10.2139/ssrn.3663574

Harold D. Spilker III (Contact Author)

University Of Hawaii At Manoa, Shidler College of Business ( email )

2404 Maile Way
Honolulu, HI 96822
United States
8089568738 (Phone)

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