Yes, yes, we know, hedge funds are super-evil now, seriously out of favor, and their leaders subject to mob-lynchings if caught in public by any group larger than 10 (or a group of any size containing any member of Henry Waxman's staff). Despite this, conditions are ripe for a boom in hedge funds. Consider:
1. After this panicked flight to treasuries subsides, there is a lot of cash sitting around with some serious return catching up to do.
2. There's been a serious manager culling, and lots of redemptions. That money is likely to get hungry again.
3. A massive restructuring of the banking sector is killing any number of proprietary desks. There's actually a lot of talent around. To wit:
Deutsche Bank AG's co-head of global credit trading, Boaz Weinstein, is leaving Europe's largest investment bank to set up his own hedge fund following trading losses in his group at the end of last year.The departure comes as the Frankfurt-based bank winds down its proprietary credit trading operations. Weinstein, 35, plans to take about 15 colleagues to his new fund early in the second quarter, according to Michael Golden, a company spokesman in London. Colin Fan, who co-led global credit trading with Weinstein, will assume sole responsibility for the unit.
This follows the departure of one of Paulson & Co's senior professionals to start a fund of his own. Yes, yes, ok, ok, maybe Weinstein isn't exactly "talent." Who knows.
4. No one trusts large institutions anymore. Ironically, even Made-off fit that bill. Small, dedicated capital pools with defined strategies, third party administration and even moderate track records are positioned to do very well.
5. All the really big winners in 2008 (ironically) were hedge funds. (E.g., Paulson & Co.)
You heard it here first.
Deutsche Bank's Weinstein to Leave, Start Hedge Fund [Bloomberg]
Posted by guest , Jan 09, 2009 2:54PM
What talent. Bberg say Weinstein lost $1B in 08 vs. makeing 600 or 700 in each of 06 and 07. That is hardly talent.. perhaps you can shed some light.
Posted by guest , Jan 09, 2009 3:08PM
WSJ reporting that Rubin is leaving Citi. FINALLY!
Posted by guest , Jan 09, 2009 3:10PM
EP you are so right. No clue if it happens in '09 or '10 or what, but one day you're going to be hearing about the panic buying.
We're going to hear about how it's 'different this time' and suckers -- err -- investors are going to be climbing over each other to pay 3-and-30 for access to 29 year old hedge fund managers who are alumni of Lehman or Bear.
"There was real value there - we just didn't see it during the liquidity crisis. We have real risk controls in place now. Leverage isn't so high..."
Blah, blah, blah. Same scheme different year.
Posted by guest , Jan 09, 2009 3:11PM
Starting a fund on leaving after making a bundle is not easy. Trying to start after blowing a billion? Good luck on that one.
Posted by guest , Jan 09, 2009 3:15PM
@3 yes, of course. nothing ever changes.
viva la queefe.
Posted by guest , Jan 09, 2009 3:17PM
Yea, flim flam Rubin and all is well. Bye.
Posted by guest , Jan 09, 2009 3:18PM
The litmus test now is did you make money in 2008. If you were positive in 2008, you still have a career. If not, shut your fund down & Game Over. That's why the 2008 winners like Paulson & Co. or Brevan Howard will only get bigger (to $100 Billion). The $10-12 Billion funds will have to consolidate or go out of business from FOF redemptions.
Posted by Investorcluzo , Jan 09, 2009 3:27PM
this guy loses $1bn and will likely get funded. question for the peanut gallery - what strategy is he selling to potential investors? you're only as good as your last trade and I'm pretty sure I could lose $1 bn without paying him 2 and 20...
Posted by guest , Jan 09, 2009 3:28PM
@4
I just lost you $600,000.00, nobody wants to make that back for you more than me.
Posted by guest , Jan 09, 2009 3:30PM
Probably the main cause of the poor performance of hedge funds has been the flood of former sell-side traders, with over inflated opinions of themselves, setting up funds and the clueless fund of funds that give them noney.
A chimp can make money as a sell-side trader in a bull market and ripping off clients. This Weinstein sounds typical, makes some money in a bull market, blows up in a bear market and goes somewhere else to do it all over again. It will be interesting to see how much money he raises. I wouldnt give him a dime.
Posted by guest , Jan 09, 2009 3:42PM
i'm super skeptical guy posting super skeptical comments. i'm so smart/ everyone else is so stupid as is clearly evidenced by my being more skeptical than anyone else. blah blah
Posted by guest , Jan 09, 2009 3:49PM
it is always the fault of the sell side, always.
Posted by guest , Jan 09, 2009 3:50PM
@11
A little bit more skepticism on the part of investors in Madoff, LEH, BS, C.....would have saved them only a few hundred billion
Posted by guest , Jan 09, 2009 3:52PM
Glad to see hedge fund humility lasted all of 9 days.
Posted by guest , Jan 09, 2009 3:55PM
@13 you have never successfully made real money on an investment in your entire lifetime. you know it; i know it.
Posted by guest , Jan 09, 2009 4:02PM
The interesting question will be how will investors react if Paulson and the other few heroes of the day prove to be one-hit wonders. After all, pre-subprime, Paulson was distinctly small and middle of the pack in terms of performance. Most dedicated shorts have been taking it in the shorts for years, too, up until recently, no?
Posted by guest , Jan 09, 2009 4:03PM
@15
you are right, I never made money other than shorting LEH, BS, C......morons like you make making money too easy
Posted by guest , Jan 09, 2009 4:08PM
interesting post, EP. How is your fake PE fund looking for 2009? Are your fictitious "deal" stories going to continue to decorate your blog (and, presumably, the inside of your head)? Or, will your fantasy fund "wind down" operations, allowing you to "work" full-time as a blogger?
Posted by guest , Jan 09, 2009 4:52PM
I don't know - hedge funds are a bunch of unrelated investment strategies - they are not an asset class, per se. Some strategies work, and some don't. And the ones that are going to make money going forward are the ones that don't rely on leverage. As an asset class, I think hedge funds relied hugely on leverage, and they won't come back quite so easily.
Posted by guest , Jan 09, 2009 5:02PM
Actually, the rumor among people in the know is that the Deutsche prop credit losses are closer to $2bn, and if they had to liquidate the book today, they'd probably take another $500mm-$1bn hit given the poor liquidity.
Posted by guest , Jan 09, 2009 5:02PM
Hey, did you know that hedge funds are thinly regulated investment vehicles for the wealthy?
Posted by Equity Private , Jan 09, 2009 6:35PM
"interesting post, EP. How is your fake PE fund looking for 2009? Are your fictitious "deal" stories going to continue to decorate your blog (and, presumably, the inside of your head)? Or, will your fantasy fund "wind down" operations, allowing you to "work" full-time as a blogger?"
Most of these are answered in the interview I did for Marketplace / NPR last week. More than that, well, you'll just have to wonder.
Posted by guest , Jan 09, 2009 8:18PM
http://marketplace.publicradio.org/display/web/2009/01/02/pm_private_equity/
interesting. EP sounds like a troll living under a bridge.
Posted by guest , Jan 09, 2009 8:23PM
So, if you're on a sabbatical, why don't you just come out of the blogging closet????
Posted by guest , Jan 09, 2009 9:09PM
the puzzle piece are falling into place...
Posted by VOL IS KING , Jan 09, 2009 9:20PM
WOW ep comes out of the freakin closet. No way to put this cat back in the bag. You've gotta wonder, why she doing all this just to be a second rate tim sykes wanna be.
Posted by VOL IS KING , Jan 09, 2009 9:24PM
funny thing is, Market Place is a terrible fucking show those guys make CNBC look like a brain trust, I can't imaginge, even with ep's limited acumen she could tolerate listening to it for more than a minutes or so.
Posted by guest , Jan 09, 2009 9:31PM
Super Cool. Like wow you guys are all so smart and rich I bet.
Posted by guest , Jan 10, 2009 2:13AM
V.I.K: You might consider putting a sock in it.
The totality of your ramblings here lends your periodic utterances a lot of whatever is the opposite of "credence".
If EP didn't exist, right-thinking people would seek to invent her, and your anti-fascination with her fits well with your self-admitted socially retarded tendencies.
Posted by StupidEquityGuy , Jan 10, 2009 3:37AM
V.I.K.,
Grow up. Some secrets are not worth knowing. Even I gave up on the holy grail, and she gave me hint's.
She kicked my ass at Chess, a game she hates, and only played to amuse me.
She is human and real and does not need to be stalked. Let it go. Why can't you accept a mystery? Sometimes, they are good things.
~SEG
FWIW, Stupid Equity was up double digits in 08, so while we didn't kill it like you, we did peg a positive year.
Posted by VOL IS KING , Jan 10, 2009 3:37AM
31:
Maybe my ramblings only seem incoherent because you lack the faculties comprehend them. I have no particular anti-fascination with her, its just that her ideas are mostly intellectually bankrupt. The people whom you would consider right thinking, I would mostly likely consider morons. There's a very serious flaw in libertarian philosophy which relates to the short comings of human perceptions and knowledge. Because, of these limitation rational behavior is impossible to define and impossible to achieve. And with the removal of that thread, the free market mantra unravels. Most policies of economic liberals I do not agree with perse. I'm all for markets, all for capitalism. But lets understand the properties of the system we're dealing with here before we pronounce it as the solution to problems it cannot possibly address.
Posted by VOL IS KING , Jan 10, 2009 4:00AM
@32 SEG:
Where, to begin. If you're up for a game of chess let me know. i'm always down to ride, as the kids say.
"She is human and real and does not need to be stalked."
1) I have no respect for humans.
2) If she didn't want her identity revealed she shouldn't be posting on blogs, and definitely shouldn't be giving radio interviews.
I have no interest in discovering her identity for my own consumption only in its revelation to the world at large. Chalk it up to a general contempt for humanity and not being a particularly nice person on my part. Besides that I definitely don't give a fuck who she is.
Posted by StupidEquityGuy , Jan 10, 2009 4:30AM
@V.I.K,
I once had to experience a death watch, while someone very close to me was dying of cancer. Someone I could not acknowledge (I am not of your tribe, trust me.) was dying and was about to be gone. In our tribe, nothing was to be said, until after they leave.
When your torn with honoring yesterday, and not acknowledging the reality of tomorrow, because today your family dies. Its hard to share what you experience.
If you understand even basic humanity, you understand the comments I am making.
EP, was a friend who kept me distracted while blood that runs through my veins died. She was real enough to be there for me, when I needed her...
Now we talk of today, and not of yesterday...
So you talk of Evil, kid, you don't have a fucking clue about death, let alone evil and the act of what that means. Trust Me.
My family kills people for a living, these people live in Iraq & Afghanistan currently, but we will kill people where ever the US sends us.
Just so you can be a smart ass. Not a Joke.
The US deploys killers on her behalf, my family serves in that roll. Every generation, since this place was a colony. We whack people for a living.
I have been the best man in two weddings. One of them is about to leave on his 5th combat tour since 9/11. He could have retired years ago, but our nation pays him 85k + per year tax free, outside of his base salary to kill people.
Why? Because he "Kills People" for this nation, its his job.
So before you take your egotistical nonsense about a reality you have never experienced and smoke it between your dumbass fingers...
ponder reality...
some people kill people... cause its their job, to protect dumb fucks like you...
Peace,
~SEG
Posted by VOL IS KING , Jan 10, 2009 7:14AM
@SEG:
You're right. I don't understand. I'm not close enough to anyone to really be upset if they died. You're trying to evoke emotions which, I simply do not have. I don't know what to tell you. I'm might have considered joining the armed forces myself, but all of my experience in life tells me I would end up getting intentionally shot by one of my fellow servicemen. I wouldn't mind living in a cave in afghanistan the fuck away from everyone else, though.
You did however succeed in making me feel bad about wanting to reveal ep's identity just for spite.
Posted by guest , Jan 10, 2009 2:53PM
EP, I am perhaps missing some of the assumptions here, but are you proposing that these institutions that lost a mint in hedge funds and moved liquid investments into cash in 2008 are going to then plow substantial portions of it right back into hedge funds?
"1. After this panicked flight to treasuries subsides, there is a lot of cash sitting around with some serious return catching up to do."
Posted by guest , Jan 10, 2009 5:41PM
I'd rather see Henry Waxman AND 10 of his staffers lynched.
Along with Barney Fife Frank, Chris Dodd, Jamie Gorelick, Franklin Raines and Jim Johnson.
Posted by guest , Jan 11, 2009 4:21PM
@VIK- "why she doing all this just to be a second rate tim sykes wanna be"
that would've been a better dis if you weren't a regular reader of a blog she writes for.
Posted by guest , Jan 11, 2009 8:08PM
long live the truffle pig - the foundation of hedge fund superiority.
Posted by Anal_yst , Jan 11, 2009 8:47PM
@ VIK/other nosy peoples:
Simma down nah.
Anonymity is what makes DB, and several other forums possible, don't let your curiosity get the best of you.
Posted by VOL IS KING , Jan 11, 2009 9:10PM
@41:
I started reading this blog the day Elizabeth Spiers started writing it. I get my news from dealbreaker, mostly from bess. The other problem is EP's routine became thread bare years ago. Lastly she's not nearly as smart as she thinks she is. If I detected a flicker of original thought in that skull of hers, I would probably let everything else slide.
Posted by guest , Jan 11, 2009 9:42PM
Contrarian strategy managers are the ones who made money in 07 AND 08.
Posted by guest , Jan 11, 2009 10:02PM
How do you think these new P2P sites this guy talks about at www.crashmarketstocks.com talk about effects gs and ms? Freak, with these kinds of returns I dont know if I will use a bank again, thoughts?
Posted by VOL IS KING , Jan 11, 2009 10:15PM
@48:
You see this is why I hate people. Life should not be an endless attempt to manage the perceptions and expectations of others.
Posted by Equity Private , Jan 11, 2009 11:01PM
That will be quite enough stalking, people. Cool it.
Posted by guest , Jan 11, 2009 11:06PM
I would make a comment but I am sure it would be erased, after all this is the USSA.
Who needs simple things like the constitution... or freedom of speech when we can obviously erase reality to make it what we want.
I would say more but this message will self erase in 5, 4, 3, 2, 1 Minutes...
Posted by Equity Private , Jan 11, 2009 11:11PM
Comment all you want. Airing the personal tragedies of folk not managing over 500 AUM is out of bounds.
Posted by guest , Jan 11, 2009 11:33PM
looks like this is Sunday Bloody Sunday. The great comment massacre of 2009.
Posted by guest , Jan 11, 2009 11:35PM
@45- don't be an obtuse half-wit. the only comments that get deleted on DB are ones that harass non-senior employees that posts have nothing to do with (which seems to be popular lately) or ones that demonstrate extreme ignorance. why dont ou tell us which of your comments was deleted and we can judge. and spare us the invoking of the constitution when you are commenting on a blog not owned by you. this is not your house, you are merely a guest here. you want free speech? start your own site.
Posted by Equity Private , Jan 11, 2009 11:39PM
Let's make this clear again: getting at me by digging out tragic deaths in the family or the school attendance (I mean seriously, are you kidding me? Grow up) of someone who by trick of fate happened to be a classmate of mine is out of hand. That will get your comment deleted posthaste. Beyond that, well, you have to look at yourself in the mirror every day. That I cannot help you with.
Posted by guest , Jan 11, 2009 11:41PM
My comment was a positive statement about someone who's name shall not be said. It was in no way attacking said individual.
He happens to be someone I would do business with in the future, if he was interested, and we could close the deal profitably. I respect his thoughts and comments.
Said another way, I respect the fucker.
I realize I am a obtuse half wit, check the freaking IP, you know who I am.
Where the hell is the forehead slapper?
Posted by Equity Private , Jan 11, 2009 11:45PM
*forehead slap*
Posted by Phobos , Jan 11, 2009 11:50PM
I'm wearing a polka dotted man-thong.
Posted by guest , Jan 11, 2009 11:59PM
Phobos,
Call Me
You Ding o Ling...
~NOT SPODE
Posted by Anal_yst , Jan 12, 2009 12:00AM
The maturity and professionalism here today is just remarkable, and coming from me, admittedly, that's saying something.
Goodnight!
Posted by guest , Jan 12, 2009 12:06AM
Now if I could only find a friend who could mix some music...
Anyone take odds on that?
Posted by guest , Jan 12, 2009 11:48AM
All we know for sure is that EP graduated from Chicago Booth School of business sometime around 2005. Or maybe Georgetown law in the mid-1990s (but that seems more unlikely).
Posted by guest , Jan 12, 2009 1:36PM
I am going to go out on a limb and say no, the opposite will occur. Although your reasoning is sound and these factors would otherwise prevail, you forgot about the Black Swan. Check the FASB's web site. A whole slew of accounting regulations just went into effect, and at least one looks to be directly targeted to hedge funds. Expect Write-Down Death Spiral II in 3, 2, 1...
--Wendy
P.S., good luck. I sincerely mean that.
Posted by guest , Jan 12, 2009 1:39PM
I am going to go out on a limb and say no, the opposite will occur. Although your reasoning is sound and these factors would otherwise prevail, you forgot about the Black Swan. Check the FASB's web site. A whole slew of accounting regulations just went into effect, and at least one looks to be directly targeted to hedge funds. Expect Write-Down Death Spiral II in 3, 2, 1...
--Wendy
P.S., good luck. I sincerely mean that.
Posted by guest , Jan 12, 2009 1:43PM
I am going to go out on a limb and say no, the opposite will occur. Although your reasoning is sound and these factors would otherwise prevail, you forgot about the Black Swan. Check the FASB's web site. A whole slew of accounting regulations just went into effect, and at least one looks to be directly targeted to hedge funds. Expect Write-Down Death Spiral II in 3, 2, 1...
--Wendy
P.S., good luck. I sincerely mean that.