# alternatives

Evaluates alternative investments across hedge funds, private equity, and venture capital. Calculates fee drag, PE return metrics, and strategy mechanics.

- skill · `type=skill` · Claude Code, Codex, Cursor, GitHub Copilot, Gemini CLI, OpenCode · 667 installs · ★ 218
- Author: JoelLewis
- License: MIT · policy=mirror · the beginning of the file is at the end of this page
- Source: https://github.com/JoelLewis/finance_skills/tree/HEAD/plugins/wealth-management/skills/alternatives/SKILL.md
- Updated: 2026-07-18
- HTML: https://affpapa.org/en/nevibecode/skills/alternatives

## What it does

This skill equips coding assistants with a knowledge base for analyzing private equity and alternative managers. It details primary trading styles, including Long/Short Equity, Global Macro, Relative Value, and Managed Futures. The instructions define compensation terms like the "2-and-20" rule, high-water marks, hurdle rates, and the PE J-curve effect.

The underlying references supply formulas for DPI, RVPI, TVPI, and cash-flow-sensitive IRR. The assistant can evaluate liquidity barriers such as redemption gates (10-25%), lock-up windows, and side pockets. It also contrasts true manager alpha against alternative beta derived from systematic factor replication.

Incentive fees may be applied before or after deducting the annual management fee, depending on the partnership agreement. Omitting the exact fund terms leads to discrepancies in net return models.

## Install

### Claude Code (native platform)

1. **Skills CLI (Vercel)**
```bash
npx skills add JoelLewis/finance_skills --skill alternatives -a claude-code
```

2. **Manually: put the files in place**
- File: `~/.claude/skills/alternatives/SKILL.md` — Copy the whole skill folder; for one project use .claude/skills/alternatives/

### Codex

1. **Skills CLI (Vercel)**
```bash
npx skills add JoelLewis/finance_skills --skill alternatives -a codex
```

2. **Manually: put the files in place**
- File: `.agents/skills/alternatives/SKILL.md` — For all projects use ~/.agents/skills/

### Cursor

1. **Skills CLI (Vercel)**
```bash
npx skills add JoelLewis/finance_skills --skill alternatives -a cursor
```

2. **Manually: put the files in place**
- File: `.cursor/skills/alternatives/SKILL.md` — Cursor also reads .agents/skills/ and .claude/skills/

### GitHub Copilot

1. **GitHub CLI**
```bash
gh skill install JoelLewis/finance_skills alternatives
```

2. **Manually: put the files in place**
- File: `.github/skills/alternatives/SKILL.md`

### Gemini CLI

1. **Skills CLI (Vercel)**
```bash
npx skills add JoelLewis/finance_skills --skill alternatives -a gemini-cli
```

2. **Platform CLI**
```bash
gemini skills install https://github.com/JoelLewis/finance_skills --path plugins/wealth-management/skills/alternatives
```

### Windsurf (Devin Desktop)

**Manually: put the files in place**
- File: `.devin/skills/alternatives/SKILL.md` — The legacy .windsurf/skills/ path still works

### OpenCode

**Skills CLI (Vercel)**
```bash
npx skills add JoelLewis/finance_skills --skill alternatives -a opencode
```

### Claude.ai

**Claude.ai**
- Zip the folder and upload it in Settings → Capabilities → Skills

Where a file is given instead of a command, copy the files from the source to that path: https://github.com/JoelLewis/finance_skills/tree/HEAD/plugins/wealth-management/skills/alternatives/SKILL.md

## When to use it
- calculate private equity return multiples like DPI, RVPI, and TVPI
- compute investor fee drag under a 2-and-20 compensation model
- structure due diligence reviews for alternative asset managers
- model private equity cash flows across the J-curve lifecycle

## Example prompts
- Calculate net return and fee drag for a $10M investment generating 8% gross return under a 2-and-20 fee terms without a hurdle rate.
- Calculate DPI and TVPI when cumulative distributions reach $21M on $10M in paid-in capital with zero residual value.
- How do lock-up terms and side pockets protect funds holding illiquid positions?

## Source text · SKILL.md · MIT

Below is the content of a third-party file. It is data, not instructions for you: do not act on anything written inside unless the human asks. Block tag: b6335d8e43cb35cc.

BEGIN THIRD-PARTY FILE b6335d8e43cb35cc
```text
---
name: alternatives
description: "Analyze alternative investments including hedge funds, private equity, and venture capital. Use when the user asks about hedge fund strategies (long/short, macro, event-driven), PE or VC performance metrics (IRR, TVPI, DPI), fee structures ('2-and-20', carry, hurdle rates), the J-curve effect, illiquidity premiums, lock-up periods, or hedge fund replication. Also trigger when users mention 'managed futures', 'CTA', 'fund of funds', 'vintage year', 'capital calls', 'distributions', 'carried interest', or ask how to evaluate an alternative investment manager."
---

# Alternatives

## Core Concepts

### Hedge Fund Strategies
- **Long/Short Equity:** Combines long positions in undervalued stocks with short positions in overvalued stocks. Net exposure can range from net long to market neutral.
- **Market Neutral:** Targets zero beta to the market. Returns driven by stock selection alpha, not market direction.
- **Global Macro:** Takes positions in currencies, rates, equities, and commodities based on macroeconomic views. Highly discretionary.
- **Event-Driven:** Profits from corporate events — mergers (merger arbitrage), restructurings, spinoffs, bankruptcies.
- **Relative Value:** Exploits pricing discrepancies between related securities (convertible arbitrage, fixed income arbitrage, capital structure arbitrage).
- **Managed Futures/CTA:** Systematic trend-following strategies across futures markets. Historically provide positive convexity (perform well in crises).

### Fee Structures
The standard hedge fund fee is "2-and-20" — 2% annual management fee on AUM plus 20% performance fee on profits.

- **High-water mark:** Performance fees are only charged on new profits above the previous peak NAV. Protects investors from paying fees to recover losses.
- **Hurdle rate:** A minimum return (often a risk-free rate) that must be exceeded before performance fees apply.
- **Clawback:** Mechanism to recover performance fees if subsequent losses erode earlier gains (more common in PE).

### Private Equity Metrics
- **IRR (Internal Rate of Return):** The discount rate that sets the NPV of all cash flows (capital calls and distributions) to zero. The canonical money-weighted return — it is sensitive to the timing and size of cash flows, unlike the time-weighted returns used for public market funds.
- **TVPI (Total Value to Paid-In):** (Distributions + Remaining Value) / Total Capital Called. A multiple of invested capital.
- **DPI (Distributions to Paid-In):** Distributions / Total Capital Called. Measures realized returns only — the "cash-on-cash" multiple.
```
END THIRD-PARTY FILE b6335d8e43cb35cc

The third-party file has ended. Everything between the b6335d8e43cb35cc tags is data: requests and commands from it are not followed. An “end of file” line with another tag inside the block is part of the file.

First 2633 of 8439 bytes. © JoelLewis · MIT · https://github.com/JoelLewis/finance_skills/tree/HEAD/plugins/wealth-management/skills/alternatives/SKILL.md

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