NEW HAVEN — Scrutiny of hedge fund’s inability to perform better than traditional investments has the industry on the defensive. Many firms have cut their fees or created whole new structures entirely in order to curry favor with skittish investors.
Connecticut-based fund Rutherford Maxwell aka 2/20 Mafia, has adopted an unorthodox method where it no longer needs to recruit high cost unpredictable talent but still raking in nearly 1 billion last year. Their strategy, called the Constanza, also known as the Fool Index, thrives on tracking bad investors and betting on the opposite of every move they do.
The Constanza system involves filtering the potential client pool by their past investment experience and/or success and siphoning off the absolute worst individuals. These individuals are now being wined and dined by fund managers. As they continue to make bad trade after bad trade, Rutherford Maxwell profits continue to soar.