The Melvin Dilemma

Apr 26, 2022 by
Ted Seides

In the early days of institutional interest in hedge funds, Byron Wien published a paper entitled “The Inherent Instability of Hedge Funds.” He described how strong performance leads to inflows, which can shift the investable opportunity set away from the one in which the manager thrived, and weak performance can lead to concerns over the stability of the organization.

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