In 1891, a group of New York industrialists met for dinner to discuss the launch of a new club that would serve as an alternative to the existing business clubs of the day.  After dinner, that group agreed to call the club The Metropolitan Club and chose John Pierpont Morgan as its first president.  The new club generated so much interest that a few months later it purchased a plot of land at the corner of Fifth Avenue and 60^th for a permanent home.

JP Morgan himself may have been pleased to see that earlier today, his alternative club was the host of a conference on alternative investments.  The event was co-hosted by the CFA Institute and the CAIA Association and like the launch of the Metropolitan Club itself, demand for this event likely surprised organizers.  Despite some predictions of the death of alternative investments, it was standing-room only.

The Pilot or the Plane?

Ted Seides, the Director of Investments at hedge fund manager Protege Partners kicked things off with a review of the key issues facing the hedge fund industry in 2009.  Regular readers will remember Protege as the company that made that bet with Warren Buffett that hedge funds would beat the S&P over 10 years.

(Our analysis last year suggested that it would be a horse race – and that the outcome was less than certain.  Since that bet was placed, however, both hedge funds and the Oracle have taken a drubbing.  Still, things are looking pretty good for Protege at this point.  As Seides pointed out, the S&P is down 13% over the past 10 years while the HFRI is up nearly 100%.  And in January, hedge funds beat the S&P 500 by nearly 10%).

A year ago, Seides predicted three mega-trends in the hedge fund industry: bifurcation between big and More…