In 2012, the US Securities and Exchange Commission charged hedge fund manager Philip Falcone with securities fraud. In 2013 he was barred from the securities industry for at least five years. Now speaking for the first time since receiving the ban, he says there is "an awful lot of mediocrity" in the industry today.
Falcone rose to prominence shorting subprime mortgages during the financial crisis, making him a billionaire, although he no longer makes it onto the Forbes list of big time dollar earners.
"There seems to be a lot more liquidity in the market now than there was in 2008, when I was involved in 2008. There were times that it didn't — it felt like everything was going to completely collapse. And I don't ... I don't have that feeling right now," Falcone says.
"I think, obviously, with the oil and gas debacle, that's just kind of pushed the whole market lower. But I think, in general, there's an awful lot of mediocrity out there. And I think that's one of the other problems, that there's a lot of club trading where people don't have any creativity. And it's creating kind of a vacuum, because everybody's in the same names" .
He also says that from an investment and hedge fund perspective, he would be very wary of investing money simply because of the number of hedge funds managers.
"What have they done? Do they have their money in with it?" And, you know, "What's their background? Do they have experience with this?" And I think there's not a lot of experience relative to the number of funds".
According to data from Hedge Fund Research, there are 10,000 hedge funds in the industry, with 6,825 new hedge funds launched since 2009.
This year, the average hedge fund is down 3.25%.