Using a novel dataset, I show that hedge fund managers connected through shared employment histories hold and trade more of the same stocks than unconnected managers. A long-short portfolio of connected-unconnected overlapped trades generates 3.6% of annual alpha. Results are greater between fund-pairs with stronger social connections and longer relationships implying a socially reinforcing channel is responsible. Shock based tests confirm social channels lead to the main findings, supporting models of manager coordination. The findings identify common sources of risk and return for employment-linked hedge funds, except during severe drawdowns when common holdings are protected from fire sales.

Material private information transmits through social networks. Using manually collected information on networks of alumni reunion cohorts, we show that hedge fund managers connected to directors of firms engaged in merger deals increase call-option holdings on target firms before deal announcements. Effects are larger when reunion events for connected cohorts occur just before announcements. Independent directors, directors with short tenure, and directors with low stock ownership are more likely to transmit information. Our results are robust to confounding factors and alternative specifications. These findings highlight the role of social networks as channels of private-information dissemination.