It's hard to predict what the tipping point will be, but when you have a number of influential and outspoken firms (taking a stand), it's going to raise the ire of the companies trying to do the deal.
There are certainly plenty of opportunities to put $500 million worth of capital in the hedge fund space. I think by and large Yale is looked upon as a preferred investor, and therefore I think a lot of managers would be open to having discussions with them.
If I were invested with a manager and all of a sudden the market was down 20 percent and my manager was only down 2 percent, I'd question that.
The flows have slowed significantly. That is due to two things. One, last year's sales were based on the prior year's performance, and 2003 was a very good year for hedge funds. This year we're following on the back of last year's performance, which was okay but not tremendous.
It's a result of investor demand and the type of managers coming into long/short and where they cut their teeth.
The most obvious impact of Bayou will be that people will ask how good their consultants' due diligence is. How good are their questions and what should they ask that they haven't asked yet?
Looking ahead, people will dig deeper, look harder and wait longer before investing.
Five years ago, the strategy was to pick the top 10 stocks you like and swing for the fence. But do it in a way that if you were wrong you didn't lose your shirt (meaning you have short positions to protect you)...that's not what it looks like now.
People will want to understand where the conflicts are and how they might affect a consultant's independence.
