The Wall Street Journal tells us tonight something that is pretty obvious: hedge funds were often buyers of AIG credit default swaps, either directly, or indirectly, by purchasing structured products that had AIG guarantees, such as collateralized debt obligations. While this report falls in the camp of peeling away yet another layer of AIG’s practices, […]
Read more...Those on the hedge fund beat may recall how themasters of the universe have in most cases suffered a reversal of fortune. 2008 was a bad year for most strategies, and the perterbations of September and October made matters worse. Sudden plunges in markets lead to margin calls, and the funds would sell whatever seemed […]
Read more...This is starting to get interesting. Readers may recall that a fair number of hedge funds have restricted or barred redemptions (a classic example of “possession is 9/10 of the law” since it is contrary to the redemption policies in their investment agreements). The justification goes something like this: We the fund hold liquid and […]
Read more...Be careful what you wish for. The SEC regulated investment banks, and look what happened to that industry, Similarly, Madoff was registered, had a written roadmap from Harry Markopolos in terms of the issues that merited investigation, and did nothing. Without a serious change in priorities (and likely an upgrade in staff skills) at the […]
Read more...We posted this in June: The Wall Street Journal reports today that Citigroup is shutting down Old Lane Partners, a hedge fund started by Vikram Pandit that the bank acquired a mere 11 months ago. The bank decided it couldn’t spare the capital to shore up the struggling hedge fund. The article noted: Old Lane […]
Read more...While no one hedge fund index is comprehensive. all the reports to date point the same way: the hedge fund industry lost its clients a lot of money in 2008. While you can blame the horrid results on the dreadful environment across a host of asset classes, a very real sense, the funds became victim […]
Read more...It is hard to work up much sympathy for newly-less-well-off hedge fund managers, given how rich the good times were. Nevertheless, they face continued pressure from redemptions, and (for most) high water mark provisions mean that they will probably get no or little in the way of upside fees (the 20 of the “2 and […]
Read more...L’affaire Madoff continues to garner front-page coverage. Yet I find the stories peculiarly unsatisfying, since they are peeling the onion one layer at a time, failing to answer the questions I find most interesting: was his fund ever a legitimate operation, or was it a con from the beginning? And where did the money go? […]
Read more...So where is my bailout? Now even hedge funds can borrow super cheap if they invest in securitized consumer loans. Really, the Fed is going about this all wrong. Why let hedge fund have all the fun? Private citizens have perilous little to show for all the kazillions thrown at the financial system. The Fed […]
Read more...So how did Madoff get away with his $50 billion fraud? Time will tell when and how it started, although I’d hazard the dot com bust. Madoff may have been unwilling to report losses, and assumed (initially) that no one would be hurt if he fibbed if he could eventually trade his way out of […]
Read more...Given how dreadful September and October were for the vast majority of hedge funds, it isn’t surprising that shell-shocked investors continue to pull money out. And the withdrawals may not be entirely performance related either. Investors are shedding risk, and are likely to have lost money in other strategies, and may need to tap into […]
Read more...The Financial Times reports that hedge fund withdrawals reached unprecedented levels in October (and remember, some funds barred or limited redemptions). With the markets continuing to be very difficult and October results nearly as bad as September, more investor exits are clearly in the offing. One bit of good news: enough funds are heavily in […]
Read more...September was a world-class bad month in Hedgistan, and it looks as if October has been no kinder. With continued losses at many funds and investors increasingly leery of risk, the thinning of this herd will continue. From Bloomberg: Hedge funds capped their worst two months in at least eight years in October, as global […]
Read more...The markets in the US did not take at all well to Henry Paulson’s announcement that he wanted to get his hands on the rest of the TARP allotment (a remaining $350 billion) and spend it so as to help consumers go to the mall again. As one correspondend, Andrew, noted: 1) Is the dog-chasing-its-tail […]
Read more...A front page story in the Wall Street Journal discusses how continued forced selling by hedge funds was the proximate cause of the sharp selloff of the last two days (um, the simply lousy economic news. such as lousy payrolls, horrific retail sales, no sales of credit card bonds in the last month, and similarly […]
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