Cryptocurrency Hedge Fund Returns 2,129% YTD

Tyler Durden's picture

We'll preface this post by saying we have never heard of the Alternative Money Fund - which "Specializes in Returning Freedom and Value" - and very well may never hear of it again, however it is notable for two things: i) it is a "hedge fund" invested entirely in cryptocurrencies and ii) it has allegedly generated a 2,129% return YTD, making it the best performer in hedgeco's ranking of asset managers YTD.

The "fund's" own description is similar to what one would find in any traditional asset manager, with one exception of course: it does not invest in traditional securities at all, only cryptos:

  • 30 or so names in the portfolio
  • discretionary, not systematic
  • technically driven bottom-up, primary.
  • fundamental research, secondary
  • performance not directly correlated to the price of bitcoin. Good addition for Bitcoin holders.

It also writes that it is "committed to provide exceptional returns through an actively managed portfolio of blockchain assets. With the emergence of Bitcoin, Altcoins and this exciting new technology has created a new asset class for investors." The fund also notes that its "trading strategy does NOT use leverage or margin. Returns are reported monthly and capital accounts may be increased or redeemed each month."

So far so good; when one reads further in, some "lingo" red flags start to emerge:

The volatility associated with the cryptographic verification and game theoretic equilibrium, these blockchain-based digital assets create valuable opportunities in an actively traded portfolio.

Hmm, "cryptographic verification and game theoretic equilibrium" may sound exciting but it's what one would say when scrambling for sophisticated words to sound intelligent, in other words what Fed presidents do every single day.

Reading through the full presentation reveals much more such language (which probably would be a sufficient red flag) although the most remarkable feature of the fund, as noted, is its performance.

Through August, the fund claims to be up 2,129%. That puts it at the top of hedgeco.net's 2017 league table.

Its holdings:

Back to the red flags: this is how the fund defines its marketing:

  • Marketing is done by word of mouth, internet, hedge fund databases, 3rd party marketers, and other sources. 
  • Distribution of the marketing material will be done by face-to-face meetings with potential investors and funds. Mail-outs, business cards and phone calls to friends and family and others will also be done.
  • We are not planning on getting too aggressive with this plan, more organic growth is desired.
  • The managing member very active on: Facebook, Angellist, Instagram, Medium, Twitter, and more
  • Customized email from altmoneyfund.com, business cards, etc.
  • Returns will be posted on the Hedgefund Indices

Red flags aside, we wonder how long before many more such "hedge funds" crop up, all having generated returns (whether real or fabricated) that traditional hedge funds can only dreams of, and how long before the more naive elements in the investing community rush to flood them with capital in hopes of "getting rich quick" with 4 digit annual returns, creating yet another ponzi active asset manager bubble even as traditional long/short and numerous other legacy investors, struggling to outperform the S&P, slowly disappear?

The fund's "presentation materials" for those curious are below, and the good news for the overly gullible: as the fund notes, "currently there are no fees for the first
$500k under management"

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Occident Mortal's picture

Nobody has gained anything until they sell.

Whenever I buy something I have to hand over my money and I don't get that money back until I sell.

tmosley's picture

>He thinks his little slips of paper are money

Soul Glow's picture

>He thinks his zeros and ones are money.

affirmed_78's picture

At least they're not tied to government.

mmanvil74's picture

Not sure why ZH is so skeptical, anyone with basic math and a few minutes of time can verify the returns those particular cryptos have experienced in recent months, and 2000% is entirely reasonable (without leverage or trading, just buy and hold).  

And anyone with a few days and some basic understanding of cryptos could duplicate the entire crypto portfolio for themselves and pay zero fees.  

Are crypto assets volatile? Of course they are. Fortunately, they've been volatile in the right direction and we are still in the infancy stages of this trend.

ZH is correct when he/they surmise that many more crypto hedge funds will pile into crypto, driving up prices even further.  Expect total crypto market cap to hit $1 Trillion by 2020.  Will it crash multiple times on the way there? Of course it will.  Does crypto represent the emergence of a new financial system that will eventually replace fiat, delivering "freedom and value" to humankind once and for all?  Most definitely. 

haha-clinton-dix's picture

Run your calculations on Mt. Gox right before their hard drive crashed.

Always ALWAYS be skeptical when it comes to your money. If you had all the money back from waste and mistakes, you will be light years ahead of the best investor ever.

tmosley's picture

Tulving.com

Oldbugs don't want you to remember that clusterfuck.

DjangoCat's picture

So where would you put your hard earned bucks then?

TBills?

Stawks?

Cash?  In the bank?

Gold or silver?  In the basement?

Real estate? and pay the taxes?

Not too many good choices out there if you want to keep them longer than a few years.

BTFDemocracy's picture

You don't want Bitcoins, Gold, EUR or USD, you want the things they buy.

You don't want the things they buy, you want the emotions they give you.

 

Grave's picture

thats putting it mildly:
if you got one of the listed cryptos about over a year ago when btc was at 200 usd, you would be 20x up from your investment on btc alone
and then this small crypto went up 80x.
you do the math :p
(80x20=1600x, yes thats 320k for each initial 200 usd you could have made)
trading alts is very high risk/reward. some die some soar
but hitting the right one is like a huge profit amplifier.

hint: its in the group and is closely tied with the king cryptos btc/ltc through segwit and lightning network (and that 80x was only first leg up, at least two more coming :p)

Golden Phoenix's picture

The people down arrowing your post are too dumb to look at price charts. If they did they wouldn't still be in gold. 

Rebelrebel7's picture

At least they're not tied to oil and war! US money is not tied to the government. It is not even legal tender, yet, for some inexplicable reason, it is back by the full faith and credit of the US government, which of course is completely non existent, because of it! US currency, is actually considered to be total counterfeiting from a legal standpoint.

tmosley's picture

>He thinks he knows what money is

tmosley's picture

Blown. The. FUCK. Out.

VD's picture

crypto-hedgies will do what to crypto-muppets? this time really is different? they don't call it Tulipcoin for nuthin'.

Shitonya Serfs's picture

Easy to make money when you're playing with other peoples'

lulu34's picture

"Figures" never lie ,   but..... Liars can figure.   So be it.

The Cooler King's picture

Here's what I dug up in 10 minutes on the internet:

 

- The 'fund' is run by this guy

http://altmoneyfund.com/managing-members

- He was a 'manager' of the USC basketball team, which basically means he was the nerd that got jock straps put on his head

- But in true REVENGE OF THE NERDS style, he got into cryptos, and probably, as a USC alum, got Will Ferrell & Snoop Dog to  put 10k each into the fund,

- When bitcoin started to go parabolic, he knocked off his own brother Mike, (who was probably partner & stole his wallet).

http://www.legacy.com/obituaries/pvnews/obituary.aspx?pid=179551923

 

& now, he's mosley's hero!

 

tmosley's picture

Slander is a crime, you know.

Anything to defend the shiny, I guess. 

Remember kids, no refunds!

tmosley's picture

You should probably stop committing fraud too.

Kaiser Sousa's picture

Hilarious...

"Look, over there"...

Theta_Burn's picture

No infrastucture, no jobs created, no production of any kind.. not even papers to push, just speculation, electron creation, and shady exchanges so everyone can get a piece..

This sure sounds sustainable. eventually electric and IT wires will need to be replaced, generation capacity upgraded, who the fuck will do that? the pussies chasing electron riches?

Soul Glow's picture

Wallmart is in talks to make a cryptcurrency now.  Soon every company will have their own cryptcurrency.  There's about to be millions of them.  Tell me this isn't fiat currency at it's finest!

VD's picture

i called it crypto-fiat long ago. as i "coined" buttcoin TulipcoinTM

tmosley's picture

You don't know what the word fiat means.

How can you have been here as long as you have, yet still be so utterly fucking ignorant? It's embarassing.

VD's picture

hey tmoron, if Wallmart says they're good for their crypto-fiat, then they're good for it. get it? at least it's backed by physical stores filled up with cheap made in china junk. tho the gov does have lots of nukes to back FRNs.

The Cooler King's picture

mosley would prefer you spend your CRYPTO at OVERSTOCK.com to buy an $8k living room ensemble that's gonna end up at the local dump because it's cheap crap made in China that isn't even worth 2.5 bitcoins when they only cost $4

 

But to cart it to the dump, you're gonna need CASH to buy a 1991 Ford F-150 Lariat with the extra long bed, because you can't buy a 2018 VELOCIRAPTOR, lo & behold, with bitcoins no matter how hard you tell the dealer that you're BFF's with Satoshi because you sold a house full of silver to buy digital coins after FAILING to crash JP Morgan.

Golden Phoenix's picture

Your psych meds fell off the nightstand and rolled under the bed. Just thought you should know.

The Cooler King's picture

Actually, I don't need any psych meds...

 

'WILD LETTUCE' extract does an excellent job and you can grow it legally.

 

The problem, I guess, is, 'growing it' (which I imagine is difficult to do from a container compartment in San Francisco where you wasted all your viable growing space trying to hook up to the internet so you could follow the BTC price action.

tmosley's picture

Is that another name for locoweed.

Stuff really isn't good for livestock like yourself.

tmosley's picture

>no infrastructure 

Crypto IS infrastructure you retard.

It is a direct replacement of the banking system (and more), and should be valued as such.

MANvsMACHINE's picture

No jobs created?  Wake up.

Who do you think is doing all the work surrounding the development and marketing of all of these coins?  Check the websites of the various coins and look at who is behind them.

HRClinton's picture

It's the Free Market. Deal with it, or cry into your soup broth and stay with your Ponzi Money Masters. 

BTW, imagine the self-congratulatory posts, of PM had gone up even a tiny fraction of Crypto.

Nothing wrong with PM, but there's plenty wrong with many PM owners: self-righteous assholes and financial hypocrites. 

seek's picture

No infrastructure? No jobs?

Miners bought over two million GPUs last quarter for things like Ethereum. And that doesn't count ASICs used for bitcoin.

Do the math on parts to systems and you're at a billion USD in capex. That's not counting the data centers, people running them, etc. Real money is going into this stuff.

You're watching the buildout of a transaction processing network on par with VISA, NYSE, etc. LIke anything it may fail but don't delude yourself thinking this is all vaporware and coins are being mined by kids in the basement.

Look at who is investing in exchanges like Coinbase -- it's the same crowd behind every other investment discussed on this site. Sure, it has the same non-backing, but a few years ago when many of us were mentioning this new thing, bitcoin was trading at $10. 400X ROI over four years if you paid attention, and that run isn't over yet.

LostandFound's picture

Actually this technology and software is going to eat up alot of jobs and cause more unemployment that it will employment.

The value of blockchain lies in trust between people as opposed to trusting a central authority (which cannot be trusted) and the proof of ownership of a digital asset that cannot be duplicated or altered.

i am personally not convinced with Bitcoin as a store of value (i would rather own gold and silver), but i am convinced with blockchain and what these companies are attempting to disrupt in a global centralised system.

I am amazed that the hedgers are arguing as to which is better, gold / silver or crypto, when we should all be supporting a decentralized system in anyway we can that is not rigged with fraud.

People need to spend a day understanding what block chain is and what these protocols are attempting to do, it makes perfect sense that this will be a major investment as the world continues to go digital. 

This isnt tulip ville, this is real shit, I live here in Dubai and the government is pushing block chain massively by 2020 to run majority of the authorities.

We are past the point that this technology is not going to happen, it is happening right in front of your eyes, to deny it is futile.  

 

 

Scuba Steve's picture

Agreed, and as a stacker it hurts me to say it but it is the truth.

What hurts me the most is the Elite/Bankers are using the increased Cryptomining and use to get capital away from Gold n Silver ... a bitter pill to take but hopefully in the end the decentralization opens the spigots.

Philippines's picture

I'd like to see someone cash out a billion dollars worth of bitcoin in gold.

chicken_goose's picture

Looks like a textbook example of a Ponzi scheme to me.

Ben A Drill's picture

I have a 1300% return on tomatoes.

Weirdly's picture

If an EMP goes off your electric oven will not work and you can't make pizza.  So, why even bother with growing tomatoes? 

Yellow_Snow's picture

The Smart Money... Someone made some serious Bitcoin thereprobabily cashed out of gold and bought Crypo's.

Grandad Grumps's picture

Virtual tulips .... but what is any fund, equity or otherwise. They are all virtual and no ownership of anything actually changes hands. Play money in a play money system.

monero's picture

All money is virtual, that's the point of money.  Gold represents the work and energy put into them to mine them, which makes it a good store of past labor in a portable form.  Gold has little use to most humans unless you want to make some jewelry, yet people still desire this metal.  How many years will it take for the the tulip-callers to give up on this analogy?  Something can be in a bubble and still have real merit long-term.  

Yellow_Snow's picture

Most be some MIT pencil-neck geek nerds running that fund.  Driving Lambo's with trophy wifes.  They should've bought gold... right?

Quinvarius's picture

Good luck getting it out.

monero's picture

You can easily get $1000s out everyday in (USD) cash, if you like, via over-the-counter trading.  But, you might have to stash it under your house like Walter White to avoid suspicion if you live in the USSA, which is why so many bitcoiners move to freer countries and ex-patriate from their oppressive homelands.  

Consuelo's picture

 

 

Leaving aside the term 'mania' for a moment, it is still amazing what 'winning' does to a psyche.   Matters not what the commodity is, when you're on the winning side, anything is plausible, justifiable, the wave of the future, and ---- Permanent.