Andy Kessler on the Lays theory of investment banks and the institutionalization of hedge funds:
The institutionalization of hedge funds has begun and there are trillions of dollars at stake. Either way, think of Lays Potato Chips (or cockroaches, depending on how you feel). You can’t have just one. Goldman Sachs, the lead underwriter for the Fortress deal and the lead source of the Fortress talent pool, is also probably their biggest competitor. Strange, huh?
Not really. Wall Street has forever been circular. Remember, there are more mutual funds—over 8,000 of them—charging 1%-2% fees investing in stocks than there are stocks on the New York Stock Exchange and NASDAQ combined. I might as well start another crop circle—a hedge fund buying and shorting other hedge funds (I’ll start with those that fund Hollywood movies). How cool is that? I only wish I had the chance to short failed hedge fund Amaranth.
[Editor's note: Just in passing, we want to point out the further "symbolization" of Amaranth. Increasingly, Amaranth is not a word signifying anything that actually happened at the fund but a word signifying something larger and more abstract. Amaranth more or less now stands for "everything that is wrong with hedge funds."]
WSJ: Circular Hedge Fund [Andy Kessler]