The Hedge Fund Report: Vultures Feed at Dana

But the richer they are, the more bullish investors are on alternative investments. Affluent individuals with more than $5 million have 28% allocated to alternative assets, with the bulk of it in real estate funds (18%), followed by private equity (7%) and hedge funds (3%.)

So it's not a myth that hedge funds remain the baby of institutional investors. But things are changing.

One-Way Street

The securities industry brain drain picked up speed last week, with two London-based Morgan Stanley honchos defecting to hedge funds.

Stefano Russo, co-head of sales for investment management for Morgan Stanley in London, is leaving for Renaissance Technologies, a $5 billion hedge fund staffed by scientists and nerds who use math to predict the market. Renaissance has averaged a 35% annual return since 1989.

Davide Serra, head of the European banks team, is leaving to partner with The Children's Investment Fund Management, a corporate-activist manager that played a key role in blocking the merger between Deutsche Boerse and the London Stock Exchange last year. The fund generated a 50% return last year.

On a more adventurous note, Charles Kirwan-Taylor, chairman of U.K. corporate brokerage at Credit Suisse First Boston, is leaving to set up his own hedge fund.

Moguls

IntrawestIDR , the Canadian resort operator, is under pressure from Pirate Capital to sell. The company announced last Tuesday that it hired Goldman Sachs to review its strategic options. The stock rallied on the news, gaining approximately 13% to close Friday at $33.

In the aftermath of the news, the hedge fund activist disclosed in a regulatory filing that it had increased its stake to 11.83%. In the filing, Pirate "commends" Intrawest for hiring Goldman Sachs and says it should use its expertise for "initiating a sale of the entire company."