Former hedge fund manager Phil Falcone spoke in public for the first time in years, and slammed the industry

Former hedge fund manager Philip Falcone said that there's "an awful lot of mediocrity" these days in the hedge fund space.

On Monday, Falcone resurfaced at the Alpha Hedge East conference in Florida after he received a five-year ban from the securities industry in 2013. He was interviewed by Maneet Ahuja, CNBC's hedge fund specialist and author of "The Alpha Masters."

Falcone rose to prominence shorting subprime mortgages during the financial crisis. The trade made him a billionaire, but he has since dropped off of the Forbes list.

In 2012, the US Securities and Exchange Commission charged him with securities fraud. A year later, Falcone reached an agreement to be barred from the securities industry for at least five years.

Now, as an onlooker, he doesn't seem impressed with the talent in the industry.

"There seems to be a lot more liquidity in the market now than there was in 2008, when I was involved in 2008. There were times that it didn't - it felt like everything was going to completely collapse. And I don't ... I don't have that feeling right now," Falcone said.

He continued:

I think, obviously, with the oil and gas debacle, that's just kind of pushed the whole market lower. But I think, in general, there's an awful lot of mediocrity out there. And I think that's one of the other problems, that there's a lot of club trading where people don't have any creativity. And it's creating kind of a vacuum, because everybody's in the same names.

He also pointed out that there's not a lot of alpha, a risk-adjusted measure of the "excess return" on an investment. He added that the "2 and 20" fee structure is something that probably "should be questioned" in light of the performance.

He said:

From an investment and from a hedge fund perspective, you know, that's something, if I were giving money to a fund, be somewhat concerned about because of, you know, just the sheer number of people out there. "What have they done? Do they have their money in with it?" And, you know, "What's their background? Do they have experience with this?" And I think there's not a lot of experience relative to the number of funds.

It's a fair point. Not everyone has been through a financial crisis.

There are more than 10,000 hedge funds in the industry. Since 2009, there have been 6,825 new hedge fund launches, according to data from Hedge Fund Research. Of course, there have been many closures since that time, too.

This year, the average hedge fund is down 3.25%, according to Hedge Fund Research. Many are already suffering double-digit losses. It follows a terrible 2015, when the average fund fell 3.64%.