August 26, 2004
Subject: Hedge Fund Regulation
Dear Ms. Fornelli:
Thank you for giving investors an opportunity to respond to proposed regulation to require all hedge funds to register. I am the chief financial officer of Pointer Management Company, which manages a fund of funds, Pointer (QP), L. P. The vehicle was created in 1990 to invest money with hedge fund managers who primarily focus on long/short equities. We currently have $580,000,000 in net assets and invest with 20 core managers. We are currently exempt from registration.
During our 15 year history, we have worked with an estimated 100 different hedge fund managers. We wish to emphasize that during this time, we have suffered no losses from fraudulent activity on the part of our managers. Our manager due diligence consists of on-going contact with hedge fund analysts and their staff, on-site visits, regular teleconferences, review of audit reports and other memoranda. Our ongoing analysis of the manager's portfolio exposure includes a focus on leverage, holdings, risk control and key personnel. We have very good liquidity with over 50% of the portfolio subject to liquidation quarterly and 95% annually. We have however maintained a stable pool of investments over our history. We have had no incidences of impropriety or inaccurate valuations.
Our investors include partnerships, trusts, endowments, foundations, corporations, individuals, corporate and public pension funds. Pointer Management Company and its principals own 12% of the fund. Our investors are sophisticated investors, represented by financial advisers, attorneys and accountants. All Pointer (QP), L. P. investors are qualified purchasers. Our minimum investment is $1,500,000. Reports are made to investors on a monthly basis and quarterly unaudited reports with the partner's capital balance are rendered. Audited annual financial statements are provided to all investors. We admit investors quarterly and allow annual withdrawals, subject to appropriate notice. The terms of our investment activity are clearly documented in our offering memorandum, partnership and subscription agreements. We feel that we keep our investors adequately informed at all times.
We offer our record as evidence of the fact that the industry is properly regulating itself. We do not feel that the added administrative burden of registration by all hedge funds will benefit our investors. We respectfully request that this proposal be dropped. Thank you for your consideration.