Implementation of Alternative Investments in Latvia - a Critical Analysis
|1.||Theoretical aspects of hedge fund||4|
|1.1.||Hedge fund in general||4|
|1.2.||Hedge fund strategies||5|
|2.||Hedge fund evaluation||8|
|3.||Hedge fund legal framework and implementation||11|
|3.2.||Hedge funds in Latvia||11|
|4.||Theoretical aspects of Private Equity Fund||13|
|4.1.||Private Equity Fund strategies||13|
|4.2.||Private Equity Fund benefits and disadvantages||14|
|5.||The Strategies of Private Equity Fund||15|
|5.1.||The Buyout strategy||15|
|5.2.||Venture Capital strategy||16|
|6.||Private Equity Funds worldwide statistics data||19|
|7.||Private Equity Funds in Latvia||20|
|7.1.||Latvian Private Equity and Venture Capital Association (LVCA)||20|
|7.2.||BaltCap Management Latvia||20|
|7.3.||The BaltCap Investments in Latvia||21|
In this report authors describe the meaning of hedge funds and private equity funds and their main strategies, and also make an analysis why these funds, especially hedge funds, are not widespread in Latvia, and what could be the reason.
Many people have heard about legendary Soros and his hedge fund Quantum, which for one day, made profit more than 1 billion USD and led to the devaluation of the pound. After these events in Europe, many operations of hedge funds are prohibited.
The term “hedge fund” was used to describe the “hedging” strategy used by managers from the 1950s-1970s. In a nutshell, this refers to occasions when the hedge fund manager made additional trades in an attempt to counterbalance any risk involved with the existing positions in the portfolio. This is now a specialist area in its own right. The result can be achieved in many different ways, but the most basic technique is to purchase a long position and a secondary short position in a similar security. This is used to offset price fluctuations and is an effective way of neutralizing the effects of market conditions.
The first mention of operations which could be called to private equity fund, returns us in 1901, Pittsburgh, where J.P. Morgan bought Carnegie Steel Company from Andrew Carnegie and Henry Phipps for 480 million USD. And after 6 years, Henry Phipss founded „Bessemer Trust” a "family office," to invest his 50 million USD in proceeds in private businesses and other exclusive holdings. And that assume that this is the first private equity fund.
In the report authors analyze two alternative investments: private equity and hedge funds. Authors research their main strategies, evaluation and developments in Latvia.…