"If you like money, put your hands in the air!" bellowed a singer from the stage at the poolside party for Salt Las Vegas.

Of the hundreds of hedge fund industry delegates attending the conference's Latin-themed gala dinner, not a single hand went up.  

Possibly it was out of good taste, or because they were holding a drink in one hand and a freshly-rolled Cuban cigar in the other. One delegate was seen stirring his drink with an unlit cigar.

As the night rolled into early morning, a few delegates were seen dotted around the Bellagio hotel's craps, poker and blackjack tables. One was spotted faring well at a Superman slot machine.
 
It was a festive night with good spirits flowing, and not just at the bars. For some hedge fund managers, possibly many, it was a reprieve from the main purpose of the event: the hard task of raising capital from investors. According to accounts, it has been by no means easy.

One UK-based manager who runs a European-focused hedge fund says that his good performance has been clouded by his target region. "Investors say: 'Oh that's great, but Europe? No, no, no, sorry.'"

More hard truths prevailed at an emerging manager panel, which outlined the difficulties that small hedge funds face when trying to raise capital. It is an issue that is familiar among Hong Kong-based strategies, as 60% run less than $100 million

"I describe our business as a business about saying 'no'," says Ted Seides, president and co-chief investment officer of Protégé Partners, a US fund of fund that invests in small and specialised hedge funds.

The hedge fund sector "has attracted all of the best and brightest”, Seides adds. "We meet incredibly smart and talented people all the time and most of the time we have to say 'no'."

Stuart Bohart, president of Fortress Investment Group's liquid markets division, was more succinct as to why some managers are rejected. 

"Most [portfolio managers], I find, do a crap job of running a back office, running a trade desk, thinking about health plans [for staff] and putting paper in the copier," notes Bohart, who has been helping to expand Fortress's hedge fund range since he joined in 2010.

An exodus from Wall Street due to bank lay-offs and proprietary desk closures has led to "big talent rushing to hedge funds", says Bohart.

Yet he notes: "A lot of those people are not ready to run money [independently]. They were good at a bank with a big balance sheet and flexible capital and when you really get down to it and figure out if they can do this the answer often is no."

Bohart adds: "On top of it, they come with egos the size of this hotel, so that makes it very difficult."

The lucky few that receive capital from Protégé have a "combination of a strategy we're interested in, and a team that we think just knocks our socks off", says Seides.

Although he is firm in his belief that "there's always going to be room for someone to be the next great one", the market environment has changed drastically from a decade ago "when we were writing $25 million cheques to a guy who had a Bloomberg [terminal] and a dog".

Seides notes: "Today we're talking to people that have $25 million of their own money [to start a fund], so it's a totally different market."

Of the more than 1,500 hedge funds launched globally last year, only about 35 reached $100 million in AUM, notes panel moderator Omeed Malik, head of the emerging manager programme at Bank of America-Merrill Lynch.

Yet optimism is still in good measure at Salt. Even though some managers have lost a bit of heart after successive investor meetings, it's not all so bad when you're in the world's biggest party town.

One hedge fund manager at the poolside dinner, watching in bemused admiration as a fellow delegate danced onstage with a troupe of Latin dancers, sums it up: "You gotta love Vegas."