Pequot Capital: Time To Get Skeptical About the Skepticism?

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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.
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