Hedge fund family ties

Harold D. Spilker

Journal of Banking & Finance, 2022, vol. 134, issue C

Abstract: 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 (search for similar items in EconPapers)
JEL-codes: G11 G12 G23 G40 L14 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:134:y:2022:i:c:s0378426621002776

DOI: 10.1016/j.jbankfin.2021.106326

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