Hedge funds are in danger of losing huge amounts of investors

Hedge funds are getting hit by a double whammy of declining performance and fed-up investorspulling their money.

While the first problem may be a function of short-term market troubles, the second problem may be the result of a structural shift, according to some investors.

"You've seem some of the California pensions, some New York pensions, and even todayMetLife said they are walking out of a $1.8 billion hedge fund allocation," Michael Gregory, chief investment officer at Highland Alternative Investors, a division of the firm Highland Capital Management, told Business Insider on Thursday.

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