Call us crazy, but everywhere we go we hear hedge-fund failure buzz. Rumors are, of course, rumors, but the logic is occasionally compelling. Investors moving to cash, Treasuries, the VIX at 43, or to quote an old weather vane: “even the rich are bitching.” It’s not hard to see how September and October could be brutal months for hedge fund redemptions, and given the short-selling bans both hedge fund returns and investor confidence in hedge fund returns are likely to suffer. How likely are you, high net worth individual and Dealbreaker reader, to leave your money in a long-short fund, or a convertible arbitrage fund in this environment?
What’s the over-under on number of hedge fund closures/collapses in the next 60 days? Winner gets a Bear Stearns emblazoned notepad.
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35
First!
I am the CEO of a hedge fund. What is a redemption?
JASO is down 12%! damn you, creantech china co. (“ChiCo”)….you didn’t even say “solly”! bye-bye shirt…
Atticus is toast.
You heard it here first.
Greenspan Says Markets Will Recover `Sooner Rather Than Later’ From Crisis
I feel better now!
Over 1.
NOW I CAN’T LOSE! Now give me the pad EP!
How many hedge funds have to fail until the % equals the % of global investment banks / commercial banks that have failed in terms of assets?
What’s that you say? No one is stupid enough to let a hedge fund get that levered?
Ok, then, short the rumor.
Anybody here how TPG-Axon is doing this year?
MORE MONEY THAN TALENT!! WHOOP!
Atticus is Nat Rothschild’s fund isn’t it?
I have a feeling they’ll find a way to bring in some new investors even if he’s a dope.
FCX:
It’s Atticus’s largest position. FCX drove Atticus’s return upwards of 25% last couple years. Now look at the chart. Down 45% YTD.
So @5, I totally agree with you Atticus is among the most trouble of the larger funds.
Oooh, Lovey! That Ginger just about drove me to “whip the skeeter” as they say….
Thurston Howell III
Jeez. What’s with the verbal fake warner bros hack into DB today? It started with the Starbucks banner ad when I opened the page.
actually long the rumor, short the news
EP, I have a Bear Stearns black money pouch (I’m serious) from my ugrad recruiting days.
How much would you give me for that?
I take it @10 is an Aggie? I base that on the unecessary yelling, the use of all caps, and the thoughtfulness of the comment in addition to the “whoop!”
how long until fortress goes under?
They cut their dividend to “invest in distressed assets” ie: double down on their looser trades? I’m pretty sure Dick Gregory said the thing three weeks ago now he’s out on the street dancing for nickels.
so thats what Bess Levin looks like
@16
Bear black money pouch?
So you bought some CDO’s Bear under wrote and now you’re trying to pawn them off on EP. What is she the Treasury?
bp capital
TPG-Axon is down 11% YTD as of 8/31. 8/31.
900+ hedge funds will fail by year’s end.
Is there any future in equities?
23 – your post serves as the perfect buy signal. Go long all garbage equities!
A decently managed fully hedged “hedge fund” (market neutral) should have a greater chance of being up than down this year, right?
And I’m not talking about those pseudo market neutral hedge fund styles convertible and merger arb, I’m talking about more the traditional dollar-neutral equity hedge funds.
25 In theory, yes. But reality is a little different, as happens from time to time.
Someone(s) with big Brazilian exposure sure as hell blew up.
Since when I ask they won’t tell me anything, as soon as I redemption time begins, my money is coming out.
Btw, it is hard to redeem from a hedge fund as you are usually there because you are a friend.
The other problem is that most people think “they are gone” (they being the hedge funds) already.
@26
Wrong.
The fact of the matter is that most big hedge funds have significant long bias, and *that* is the problem.
The difficulty of shorting in size and the desire to be very large caused the general drift towards significant long bias over the past sixty years in the hedge fund community.
Hedge funds as they were originally conceived were market neutral, and there are still some out there, and there must be some big winners.
@28
this is why Ren Tech won’t take outside money in their funds that don’t suck. If everyone behaves like you then you will ensure that you loose money. Nice little prisoner’s dilemma you have there. Why don’t you just hedge your investment and leave it in.
London based hedge funds are running around like chickens with their heads cut off. True?
I can’t understand why institutional investors would look for alpha in a hedge fund that trades stocks – how much more correlated can you get, even if they say they’re 130/30 or whatever?
If I were looking for noncorrelated return, I would look at the FX markets. Well, maybe not EUR/JPY…
@33.
WTF?
Market neutral long-short hedge funds are out there.
The problem is that hedge fund is just a fancy way of saying “unregulated pool of locked up capital entrusted to hot shots with math geeks in office.” Remember when it became painfully obvious that one of the proprietary trade secrets of almost everyone was to own RIO long (ADR that 10th most traded stock on NYSE in a Brazilian sell off)?
There are a lot of people that don’t have a clue as to what they are doing who are allegedly in hedge funds. The term no longer has any defined meaning as to what someone is buying into.
There is also the significant issue that it’s been almost impossible for the private “accredited investor” or “sophisticated investor” to get into the real quality funds. So people who were late to the party were signing on with clowns who were also late to the party. The survival rate for baby hedgies is not exactly great, putting it mildly.
Too much bloat in the business, too much dishonesty, shell games, pyramid schemes and snake oil in the lower end of the market.
150
@35:
Lower End-> Middle tier -> Upper Tier -> Lower Tier
mean reversion is a bitch
@35 case in point – pissed off math geek
http://www.bloomberg.com/apps/news?pid=20601109&sid=a4JOcJNafRyQ&refer=home
@20
wrong, that would be nice though.
its a pouch (black) that people would put physical cash in to go deposit at a bank. got this schwag when i was looking for internships as an undergrad.
glad they dinged me :D
I had seen a Black Pool with a Lehman logo on the Street garage sale, but people from Barclay’s did pick it up first.
Our Multi-Strat FoF’s -2% for September and -6% YTD what was your guys performance like again ?
Any fund still plugging away at arb strategies in this environment deserves to have a wall of redemptions. Equities generally are so riddled with insiders and inefficiency as to be almost untradeable, a real fixed game. Good luck. Oh, and for ep would say around 10% attrition by year end (so about 1000).