Hedge funds would love to secure funding from a source that would be willing to ride out the bad times as well as enjoy the good times. If the recent financial crisis taught the industry anything, it's that limited partners really desire the ability to redeem funds lightning fast. A good trader never rides a loss for very long, after all.

These days, if you want to be investor-friendly, you pretty much to have very generous redemption policies. Which brings us to Bill Ackman of Pershing Square, who has reportedly been thinking a lot about this issue. He has informed clients that he is mulling the idea of creating a closed end fund via an IPO. The idea isn't new. ThirdPoint already has such a fund. Only the fund would go public--not Ackman's company. That would create a more stable supply of funds. Instead of yanking money during tough times, investors could either sell their shares or hang on for a recovery. Burt they couldn't simply ask for investment back. With the correct underwriters, this might also open up a new customer base: Retail investors.

You do have to wonder how potential investors would view this. Perhaps Ackman would have to opt for a different strategy with this fund, investing more broadly instead of making massive bets on a few companies that he intends to influence. If the funds invests narrowly, then buying the closed-end fund is a skin to making a bet on the market perception of Ackman's value as an investor.

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