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Ron Insana Flames Out |
HenryTo
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Joined: 06 Aug 2004
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Location: Los Angeles, California
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 Posted: Tue Aug 19, 2008 2:21 pm Post subject: Ron Insana Flames Out |
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Another cautionary tale for those who want to capitalize on the current big thing:
http://www.nytimes.com/2008/08/19/business/19sorkin.html?_r=1&ref=business&oref=slogin
| Quote: | Ronald G. Insana was one of the people who chased that dream. Yes, that Mr. Insana — the man who spent more than a decade as one of CNBC’s most prominent anchormen, interviewing some of the biggest titans in business and trying to make sense of the daily gyrations of the market.
In March 2006, Mr. Insana left the network to try his hand at becoming one of those titans, setting up a fund to help investors get into hedge funds, a so-called fund of funds. Paul Kedrosky, the writer and investor, said at the time that Mr. Insana’s announcement “reminded him a little of Lou Dobbs going to Space.com at the peak of the dot-com bubble.” Mr. Dobbs’s adventure, you may recall, didn’t turn out well; he’s back on TV.
Two weeks ago, Mr. Insana announced that he was throwing in the towel. Though his career detour doesn’t rank on the flameout scale anywhere approaching the Space.com debacle, it is an unusually instructive and cautionary tale.
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In the mutual fund business, beating the S.& P. would be more than enough to survive, and even prosper. Mr. Insana would have been a hero. But the hedge fund business is far more cut-throat. For a small fund like Mr. Insana’s, it is imperative to make money regardless of whether the S.& P. is up or down — and because he didn’t, the 20 percent portion of his fee structure was worth nothing.
That left his management fee, which amounted to $1.74 million. (That’s 1.5 percent of $116 million.) On paper, that may seem like a lot of money. But it’s not. Like many first-time fund managers, Mr. Insana was forced to give up about half of the general partnership to his first investor — in this case, Deutsche Bank — in exchange for backing him. After paying Deutsche Bank, Insana Capital Partners was left with only about $870,000.
That would have been enough if it was just Mr. Insana, a secretary and a dog. But Mr. Insana was hoping to attract more than $1 billion from investors. And most big institutions won’t even consider investing in a fund that doesn’t have a proper infrastructure: a compliance officer, an accountant, analysts and so on. Mr. Insana had seven employees, and was paying for office space in the former CNBC studios in Fort Lee, N.J., and Bloomberg terminals — at more than $1,500 a pop a month — while traveling the globe in search of investors. Under the circumstances, $870,000 just wasn’t going to last very long. |
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Ron Insana Flames Out Replies |
rffrydr
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Joined: 30 Oct 2005
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Location: Sunny California
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| Posted: Fri Apr 16, 2010 1:01 pm Post subject: |
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Insana has shown up on Bloomberg where he's given the time to really show his strengths as a consummate news anchor--with a trader's twist. He clearly no longer worships to the god of "objectivity." We're all the luckier for it.
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rffrydr
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