Financial Research Associates LLC recently hosted a two-day seminar entitled “Hedge Fund Due Diligence Master Class.”  This is the second article in a two-part series extracting and summarizing key lessons from the event.  Specifically, this article discusses counterparty risk and valuation issues, recent regulatory developments impacting due diligence, strategic planning for sustainable due diligence programs, evolution of the due diligence process and manager perspectives on due diligence.  The first installment discussed red flags that investors should look for during diligence, the tension between increased portfolio transparency and protection of a manager’s proprietary information and investor perspectives on enterprise risk management by managers.  See “FRA Conference Juxtaposes Manager and Investor Perspectives on Hedge Fund Due Diligence (Part One of Two),” Hedge Fund Law Report, Vol. 6, No. 22 (May 30, 2013).