JPMorgan Identifies Hedge Fund Co-Investment Trends, Tactics

In the first quarter 2014 edition of Prime Brokerage Perspectives, J.P. Morgan identifies a growing trend among institutional investors and fund managers: the co-investment.

Rather than investing in a hedge fund manager’s main fund, co-investments enable an institution to invest alongside a hedge fund manager on a specific project that may be one of many investment ideas the fund may be utilizing. Although the report didn’t cite it, one popularized example on the outer edge of the investment may be Bill Ackman’s Pershing Square investing in Allergan, Inc. (NYSE:AGN) and partnering with Valeant Pharmaceuticals Intl Inc (NYSE:VRX) who is seeking to acquire the firm.