By Toddi Gutner

NEW YORK | Fri May 10, 2013 9:00am EDT

NEW YORK (Reuters) - As a successful Wall Street investment banker, Kathryn Swintek is skilled in the art of doing deals.

That's why Swintek has used her own funds to provide seed capital to early-stage companies throughout her career. But three years ago, she teamed up with Golden Seeds, a large angel investor network, for some extra support.

"As a solo investor, deal access is 'catch as catch can,' while in a group, deal flow is more consistent and plentiful," says Swintek, now one of the network's nine managing partners. "The other informed perspectives are valuable."

Overall, there are more than 330 angel groups in the United States and Canada that are active in start-ups, and funding hit $22.9 billion in 2012 - up 1.8 percent from 2011, when investments totaled $22.5 billion, according to the University of New Hampshire Center for Venture Research. Some 67,030 entrepreneurial ventures received angel funding in 2012.

Swintek considers her foray into angel investing as part of a well-rounded asset-allocation strategy. The minimum investment may not seem that high at first - many angel groups require only $25,000 invested in one deal per year.

But don't let that lure you into thinking that angel investing is for everyone. You must first be an accredited investor with a minimum net worth of $1 million - excluding your home - or earn an annual income of $200,000 or $300,000 if married and filing jointly.

Angel investing takes an enormous amount of time - up to hundreds of hours on screening deals and doing due diligence - along with a stomach for risk. Plus, just 10 percent of deals have a likelihood of success.

Of 10 deals, a reasonable number of investments for an angel portfolio, investors can expect to "get a nice return on one, get their money back on four, and lose everything on three or four," says Jeffrey Sohl, director of the Center for Venture Research, and a professor of entrepreneurship at the University of New Hampshire.

What is considered a "nice return?" About a 20 percent to 30 percent annual return over a five-year period, Sohl says. Every investor expects to find the next Google, but the odds are extremely low, he warns.

Still interested in diving into angel investing? Here are a few things to consider before you join a network.

CHOOSE YOUR GROUP WISELY

Each angel group is a little bit different. Perhaps most important is to share the same vision as the group. Are you interested in investing only in technology, women-owned companies or healthcare and life sciences?

You'll also want to join a group in your area. Boston, New York, Silicon Valley, Southern California and Washington, D.C., are active cities and regions.

Larger groups typically see more deals because these groups are often the first stop for an early-stage company. One of the largest, Tech Coast Angels, based in Southern California, has invested over $120 million in more than 200 companies. It asks members to invest a minimum of $50,000 annually, typically two rounds of $25,000 each.

Another group, New Vantage, based in McLean, Virginia, has invested $50 million in more than 55 primarily mid-Atlantic-based companies.

Get to know the group's expectations for financial and time commitment. Go to a few events of several different groups and get a feel for the dynamic and their due-diligence process.

For a well-rounded portfolio, you need to be able to consistently invest between $150,000 and $300,000 - which shouldn't reflect more than 5 percent to 10 percent of your total investment portfolio, financial advisers say.

You can expect your capital to be tied up between five and seven years before there is a liquidity event, such as a buyout, initial public offering or other exit strategy, Sohl says. In other words, this essentially needs to be money you can afford to do without.

GET EDUCATED

Some groups offer educational courses for a fee. Golden Seeds, for example, offers two courses to accredited investors outside their network for $350 each. You'll learn how to screen deals, conduct due diligence, understand deal structure and negotiation, perform post-investment monitoring, and know about state tax credit and government incentives for angel investing, among other topics.

Maverick Angels, in Agoura Hills, California, offers free seminars for members and prospective members.

For more information, tap resources like the Angel Capital Association, National Capital Angel Organization, The Kauffman Foundation or the Center for Venture Research.

BIG TIME COMMITMENT

There are many reasons people become angel investors - to mentor entrepreneurs, get into a company on the ground floor, or learn about the private equity world. Universally, they are all willing to commit their time.

Prepare to spend 40 to 50 hours to do due diligence on at least one company the group is considering or to attend networking or screening events.

Most angel groups will take a deep dive into a company's business model, marketing plan, technology platform, capital structure, competition, and financial performance along with the quality of management team.

At Golden Seeds, there are generally five to 10 members, each with representative expertise in each key area, including marketing, technology, finance and the relevant industry knowledge, who comprise a deal team on any given transaction.

Among the nascent companies funded by Golden Seeds, which backs women entrepreneurs, are Bespoke Global, an ecommerce platform for custom home furnishings, and HitFix, an entertainment web platform focusing on hard news.

All investments are making positive progress, with Bespoke and HitFix generating revenues that are growing year over year.

The process for angel investors to select companies to back generally requires two months before it is complete. Deal team members have many meetings and frequent calls with management in the course of due diligence.

(Editing By Lauren Young and Jan Paschal)

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David Einhorn speaks at the Sohn Investment Conference in New York, May 8, 2013.

Credit: Reuters/Brendan McDermid

By Steven C. Johnson and Sam Forgione

NEW YORK | Wed May 8, 2013 11:33pm EDT

NEW YORK (Reuters) - David Einhorn, one of the most closely followed managers in the $2 trillion hedge fund industry, had some blunt advice on Wednesday for his fellow investors: Do your own homework.

Einhorn, this year's star attraction at the Sohn Investment Conference, an annual confab where the industry's top investors share their favorite trade ideas, wrapped up his presentation by offering some words of warning about his public comments.

"It doesn't make sense to blindly follow me or anyone else into a stock," said Einhorn, president and co-founder of the $8.8 billion hedge fund Greenlight Capital. "Do your own work."

He may have been talking to the converted. Einhorn's limited impact on Apple Inc shares after he implored the technology giant earlier this year to better use its cashpile has been noted by industry analysts. A cover piece in March by Bloomberg Businessweek, "When David Einhorn Talks, Markets Listen -- Usually," highlighted the failure of the "Einhorn effect" to work its magic on Apple.

Einhorn is perhaps best known for his prescient call on the demise of investment bank Lehman Brothers before the financial crisis, a trade idea he made public at the 2008 Sohn conference, and for his short position in Green Mountain Coffee Roasters.

While the conference is one of the high points of the year for investors, it has also been criticized as a forum that allows money managers to move stock prices and advance their trades. Einhorn's remarks seemed to address those concerns.

The 44-year-old manager said he did not "speak about stocks to benefit from any price appreciations that might occur" and reiterated that his fund invested on a medium- to long-term horizon.

He said Greenlight had not liquidated any of the 30 trading positions he had advocated at past Sohn events "within three months of first speaking about it publicly", and added that 90 percent of the ideas were still in the fund's portfolio.

After a year, he said the fund had increased positions in about half of the calls and decreased positions in the other half.

Einhorn's plays do not always turn out well. While bullish bets on Norwegian insurer Gjensidige and a bearish call on U.S. Steel Corp. proved prescient, Einhorn spent a portion of his 15 minutes at last year's conference praising shares of Apple. The company's stock price has fallen about 16 percent since he gave that presentation.

Greenlight Capital is up 5.5 percent this year through April 30, according to a person familiar with the numbers. The S&P 500, meanwhile, rose 12 percent over that period.

This year, Einhorn suggested a long position in oil field services provider Oil States International Inc, saying that it was a high-quality business that markets did not appreciate.

"We didn't come up with a thesis on OIS in 15 minutes, and the data says there's a decent chance we won't change positions" in the near term, he said. "At Greenlight, when we find a good idea we tend to stick with it."

Investors who may have wanted to quickly put on trades based on Einhorn's ideas this year faced another complication: He did not begin his presentation until 6:30 p.m., two and a half hours after the close of the U.S. trading day.

(Reporting By Steven C. Johnson and Sam Forgione; Editing by Jennifer Ablan and Stephen Coates)

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Chairman of the Federal Reserve Bank Ben Bernanke attends the Treasury Department's Financial Stability Oversight Council in Washington April 25, 2013.

Credit: Reuters/Gary Cameron

By Luciana Lopez and Rodrigo Campos

NEW YORK | Wed May 8, 2013 5:02pm EDT

NEW YORK (Reuters) - Wealthy money managers bashed Federal Reserve Chairman Ben Bernanke's easy money policies at a closely watched annual investment conference and charitable event on Wednesday.

The Sohn Investment Conference, which raises money for pediatric cancer research, gets big name hedge fund managers to share their "best ideas" with other wealthy investors. This year's conference was sprinkled with criticisms of the Fed's $85 billion in monthly purchases of Treasuries and mortgage securities in an attempt to stoke the economy.

"Ben Bernanke is running the most inappropriate monetary policy in the history" of the developed world, said Stanley Druckenmiller, the retired head of Duquesne Capital Management.

The criticisms of Bernanke come as investors have begun to speculate when the U.S. Federal Reserve could slow or stop its monthly bond purchases, a policy designed to keep long-term interest rates low in order to spur spending and job creation.

With economic data mixed recently, analysts say the Fed could keep its ultra-loose stance well through year-end - an unpopular view at the conference, where many of the featured money managers are billionaires themselves.

Bernanke took a drubbing from the start, with the first speaker, Paul Singer, setting the tone.

Singer, founder of the $21 billion Elliott Management hedge fund and a big contributor to Republican political candidates, said the Fed's monetary policies are distorting the prices of long-term bonds and the global recovery.

"Everyone wants a safe haven," said Singer. "There is no such thing in today's markets and that's one of the elements of the distortion."

Singer's criticism of the Fed's bond purchases may not be surprising given his generally conservative political outlook.

But in recent months, other money managers and economists have expressed concern that the Fed, by keeping rates low, is artificially pushing up stock prices and forcing investors into riskier assets like junk bonds and securities backed by student loans as they chase yield.

Junk bond yields have fallen below 5 percent for the first time ever, as investors scrambling for the biggest returns possible have pushed the market into record territory. The yield-to-worst on the Barclays US Corporate High Yield Index closed Tuesday at 4.97 percent, breaking below the 5 percent barrier for the first time in the index's 30-year history.

The Fed's easy money policy has helped boost riskier assets such as equities, with the S&P 500 up 14 percent this year. Both the S&P and Dow Jones Industrials have set a string of all-time highs.

In contrast, the average hedge fund is up only 4.4 percent.

The Fed has also come under fire lately for risking its credibility on inflation. While policymakers have emphasized the employment side of their dual mandate, increases in consumer prices have slowed well below the 2 percent target.

Fed criticism was on full display at the Sohn conference in New York. The mounting criticism from money managers about the impact the Fed's quantitative easy policies have on the markets could give more ammunition to Fed policymakers who want Bernanke to begin scaling back on the bond buys.

Other central banks came in for their share of criticism, too, with fund managers pointing to the way global easing has masked the piles of debt amassing in developed markets, enough to raise fears of insolvency.

Kyle Bass of Hayman Capital got a laugh when he introduced a Japan finance minister index, a nod to the high turnover in that office in recent years.

But he was more serious when he dissected Japan's finances and central bank chief Haruhiko Kuroda's "shock and awe" campaign.

"They're completely insolvent," he said. "It's just a matter of when and not if."

In April, the Bank of Japan said it was likely to purchase over 7 trillion yen ($75 billion) of long-term government bonds a month, an aggressive monetary policy to end years of deflation in the world's third largest economy.

Druckenmiller, however, said the Bank of Japan was doing a better job than the Fed, considering Japan's deflation worries and its long-time bear market.

"I actually think their policy is much more appropriate," he said.

Not all the speakers at the Sohn conference were ready to heap scorn on the Fed. In fact, some money manager said they are placing bets that the Fed's easy money policies will continue to boost segments of the U.S. economy, such as housing, which has come roaring back in some parts of the country.

Steven Eisman, whose claim to fame is shorting the securitized subprime mortgage market in the run-up to the financial crisis, said he is positive on the U.S. housing market.

Eisman, the founder of Emrys Partners, said he likes homebuilders Lennar Corp and Standard Pacific Corp. Inc.. He's also a fan of real estate company Forestar Group Inc.

Eisman is particularly bullish on Ocwen Financial, calling the mortgage servicing firm "completely mispriced" and the "most powerful" play on housing in the entire sector.

But Eisman's love of housing doesn't extend north into Canada. He said his best short idea is to bet against shares of Home Capital Group, a Canadian mortgage lender.

"If housing rolls over, this company is going to have serious problems," he said.

(Additional reporting by Steven C. Johnson and Samuel Forgione; edited by Jennifer Ablan and Leslie Adler)

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