OK, so they’re not really the Barbarians at the Gate — that was another private equity firm. But I’m today liquidating my position in Blackstone units (BX).

I bought Blackstone because I believed that they would maintain a leadership position in their core alternative asset management business — and I still think that business is an important one, and one that is likely to grow significantly. The primary driver for this is fear — fear from pension fund managers that their performance is not going to be able to provide for the massive retirement wave that will be hitting their funds in the coming decades.

The argument was, pension administrators are a generally timid lot — they won’t want to take wild chances, but they do need to goose their returns. The chances are good, therefore, that they will go with market leading firms for their asset management, particularly in alternative assets like real estate, private equity, and hedge funds of funds, all areas where Blackstone sits astride the market like a colossus.

I still think that’s true, though it may move more slowly than I foresaw, and it’s starting to look like the revolt over hedge fund fees is going to be a significant issue going forward.

So why did I sell?

First of all, I am profoundly irritated at the compensation policies at all of these firms — Blackstone, their competitors, and the investment banks. That’s not something that just happened recently, but as performance has been weak at Blackstone compensation has skyrocketed. That tastes a bit yicky.

Second, it seems to me that the resistance to high fees might be stronger than I expected — this is largely because so many private equity and asset management firms have performed so awfully over the past year that it’s much harder to stomach a 2% management fee. And on top of that, all of these firms rely on their extra share of the profit (the 20 part of the “2 and 20” fee structure), and that share looks likely to be a bit limp for at least the next several quarters, not only because there may be more resistance to fees, but because the actual performance isn’t there — and if performance is bad enough that we see clawbacks (the company being forced to “give back” some of that 20% bonus for prior quarters if ...