Do short term capital losses offset trader-status / mtm hedge fund income?

Hello,

I have a client that plans to invest in a hedge fund that files taxes as a trader entity with market to market accounting.  The capital gains of the hedge fund are generally all short term, as required for the hedge fund to elect trader status with mark-to-market accounting.  My client would like to know if short term capital losses from securities trades held elsewhere in his portfolio will offset gains from this hedge fund investment prior to being netted against long term capital gains elsewhere in his portfolio.  

For example, if next year the hedge fund K-1 shows $100,000 net income allocated to him, he has $100,000 in other short term capital losses, and he has $250,000 in other long term capital gains will his net tax be on $150,000 of long term capital gains, with the hedge fund income and short term capital losses offsetting each other prior to offsetting long term capital gains?

Thanks

- Andy

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