We were early in reporting the skepticism about the Pequot Capital insider trading allegations raised in the New York Times last week, and now Jeff Matthews is voicing even more reasons to be skeptical.
Now, $18 million sounds like a lot of money—and for a lot of hedge funds it might be—but given that the fund in question had, we are told, $7 billion in assets at the time of the Heller deal….then the Heller-related profits amounted to something in the range of two-tenths of one per cent of the value of the fund.
Right. And we all know that hedge funds never worry trade worth two-tenths of one percent of their value. Except that a lot of times they do. Hedge funds make lots of trades, and a lot of them aren’t ones that grow their value in leaps-and-bounds. A lot of hedge fund profits are made through lots and lots of small, incremental gains. We’re not sure “too big to be dishonest” is a very good guide to figuring out what’s going on here. We're getting skeptical about the skepticism here.
All the So-Called News That’s Fit to Print [JeffMatthewsIsNotMakingThisUp]
Posted by Charles Karasick, Jun 26, 2006 9:18PM
The most interesting point at Mr. Mathews" comments re: Pequoit had, to me, nothing to do with Art Samburg. It was the fact that he put his finger on why the hedge fund business will,if not disappear, drastically shrink with repercussions not known to mortal men. Mr. Maththews said ( I paraphrase) hedge funds w\make their money from making money on MANYThe most interesting point at Mr. Mathews" comments re: Pequoit had, to me, nothing to do with Art Samburg. It was the fact that he put his finger on why the hedge fund business will,if not disappear, drastically shrink with repercussions not known to mortal men. Mr. Maththews said ( I paraphrase) hedge funds w\make their money from making money on MANY<MANY SMALLL TRAdes..ETC. as Nassim Taleb has so eloquently said, that's eating like a chicken and going to the bathroom like an elephant. No one can do it over any extended period of time. and these infant,long-only momentum jerks will find this out now the party is over!