The theme du jour, at least in the world of Dow Jones, is the sorry condition of the financial services industry. While the basic thrust is nothing new, some of the data point are revealing. The Journal’s Heard on the Street column tells us that banks like Citigroup and HSBC are likely to sell business […]
Read more...On top of Bear’s subprime losses, hedge fund woes, and pending lawsuits and investigations, what else could go wrong? Answer: one of its big earnings engines seizes up. The Financial Times reports that Bear Stearns will announce that it has lost market share in prime brokerage. Prime brokerage is something of a misnomer; hedge funds […]
Read more...A Bloomberg story reveals that municipal bonds have lagged other fixed income investments, mainly because important investors, namely hedge funds and banks, are directing capital to other uses (as in saving their hides). Due to their tax-deductible status, munis trade at a lower yield than Treasuries, but that differential has narrowed markedly. Are munis a […]
Read more...The odd thing about former hedge fund manager Ralph’s Cioffi’s departure from Bear Stearns isn’t that it has happened, but that it is taking place now. The decision to keep him on as an advisor was inexplicable, unless there was some convoluted legal reasoning, for example, that keeping him in the Bear tent would lead […]
Read more...If this story proves to be valid, Bear has a major mess on its hands. Business Week reports that the SEC and the US attorney’s office in Brooklyn are looking into whether Bear permitted insiders to withdraw their capital in February and March from the two Bear hedge funds that failed later in the year. […]
Read more...November was a bad month for the hedge fund industry. A Bloomberg story reports on further losses at quant funds Global Alpha and AQR, as well as declines at non-quant funds: Hedge funds run by Goldman Sachs Group Inc. and AQR Capital Management LLC fell in November as swings in financial markets confounded the computer-driven […]
Read more...November was a bad month for the hedge fund industry, although most reports indicate the pain was distributed more broadly than in August (readers may recall the quants took some stunning losses that month). The New York Post reports that one of the once-highly-regarded quant funds, ex-Goldman Cliff Asness’ AQR, continues to have a bad […]
Read more...Many commentators on the bailout of E*Trade by hedge fund Citadel focused on either the terms of the deal (costly to E*Trade) or the fact that Citadel, like some other risk-minded investors, are starting to pick and choose among distressed mortgage assets, a sign they believe that the bottom is nigh. But a Reuters story, […]
Read more...The most successful fund in the “bet against subprime” game is Lahde Capital, established last year by Andrew Lahde, is up 100% after fees. However, the fund is so small that the article in the Financial Time on its results didn’t say how much has under management. Firms that produce such dazzling returns can turn […]
Read more...Quants take it on the chin again. This time, the miscue was a wrong-footed bet on stock price appreciation. From Bloomberg: Some European quantitative funds that bet on rising stock prices may have lost 15 percent this month as equity markets declined, according to strategists at JPMorgan Chase & Co. Fund managers using mathematical formulas […]
Read more...Goldman’s high profile and formerly highly successful quantitative hedge fund, Global Alpha, was one of the biggest casualties of turbulent markets in August, shedding 22.5% of its value. The firm orchestrated a shorting up of another one of its quant hedge funds (Global Equity Opportunities), putting in $2 billion of new Goldman money and raising […]
Read more...Did you think the Bear Stearns hedge fund drama of the summer was over? We may see a low-budget sequel. The Financial Times reports that aggrieved shareholders of one of the failed Bear funds, High-Grade Structured Credit Strategies Enhanced Leverage (Overseas), have assumed control. US based investors get to vote on Friday (no guess as […]
Read more...According to the New York Post, not only has famed hedge fund AQR, operated by former Goldman trader Cliff Asness, shown a 6% fall in value, but some investors are seeking to redeem funds, which says they have lost faith in the manager’s strategy. As a result, the fund has scuttled its plans for an […]
Read more...The IRS is turning up the spotlight on hedge funds and private equity firms. It appears that some may have been taken what might politely be called overly aggressive tax positions. It’s going to be pretty hard for these captains of capitalism to convince the public that they need to keep their favorable tax treatment […]
Read more...Hedge funds charge vastly higher fees than other money managers because they allegedly deliver better investment returns. Yet when you look at most hedge fund indices, they don’t look much better, and are sometimes worse than simple long-only strategies. And remember these indices almost certainly overstate performance, since they exhibit what is called “survivorship bias.” […]
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