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Hedge fund maths: heads we win, tails you lose

Most fund managers share generously in good times, but are exposed to none of the losses in bad.

REALITY CHECK: The reality is that many hedge funds, not just Mr Ackman's (above), reap far higher percentages of their gains than that stated in their fee structure. That's because when they experience substantial losses they don't have to give anything back.

WHEN do 1.5 and 16 add up to 72?

That's the riddle confronting investors in Pershing Square Holdings Ltd, the closed-end fund run by the prominent activist investor Bill Ackman.

In a letter to investors this month, Mr Ackman disclosed that through the end of November, the fund had...

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