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From Kirsten Bischoff, Opalesque New York : No matter what the assets under management eventually grow to be, most hedge funds start out as one person’s dream. And for many, that dream is – simply stated – to run an investment strategy that they believe in, and to generate solid performance for their investors. While the general public is made acutely aware of the billions of dollars generated by those who manage the largest funds, many forget that a large portion of the hedge fund industry’s 7,000 funds are small businesses.

When H. Kevin Byun founded Denali Investors LLC in New York in November 2007, starting with investments from family and friends he became one of these small businessmen. That his foray into the hedge fund industry happened in concert with the worst global financial crisis in history has been unnerving at times, but Byun’s value-based and special situations investment strategy of a handful of concentrated positions long ago required him to have the courage of conviction.

Advantages of a strong investor base Perhaps one of the evolutionary lessons which funds will take away from 2008 is that more important than the size of the investor base, is the strength of its commitment to a partnership with a manager.

Redemptions soared through 2008 and continue in 2009 with hedge funds losing approximately $70bln in January to investor redemptions. The self perpetuating cycle of redemptions......................

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