IIt's definitely not a good sign when a hedge fund has to say it "has no plans to cease operations." Let's call that the Amaranth line, and acknowledge that when you have to keep saying you're still in business you might not be for very long.
Following up on rumors Dealbreaker first reported yesterday, the Wall Street Journal gives us the skinny on Vega. The shorter version: assets under management down to $3 billion.
The latest to falter: Vega Asset Management. One of the world's largest hedge funds a few years ago, Vega has suffered losses from a bad bet against U.S. bonds, and is now down roughly 75% from its peak two years ago to about $3 billion in assets. The firm says it has no plans to cease operations...
Vega, which has offices in Spain, London and New York, managed about $12 billion a couple of years back and about $6 billion as recently as January. It once was seen as a winner in the growing popularity of hedge funds among large institutions.
But Vega has suffered a series of losses in various markets in the past few years. Most recently, Vega placed a big wager that the price of U.S., European and Japanese bonds would fall, a Vega executive says. Instead, the bond market has rallied sharply in recent weeks, amid signs of slowing global economic growth, leading to losses as bond prices rose. Vega's largest fund, Vega Select Opportunities fund, which manages about $1.4 billion and is run by star trader Ravinder Mehra, lost about 11.5% of its value in September -- much of it coming in the last week of the month -- and is down about 17.5% so far this year.
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Despite Blue-Chip Gains, Hedge Funds Increasingly Are Faltering and Closing