Rumor Mill: Quant Bloodbath, Merrill Exiting Private Equity Investments?

Publish date:

It was another huge day of losses on the stock market today, and the rumor mill is spinning at full tilt.
•Shades of August: We’re hearing from a usually knowledgeable source that one of the quant big funds that saw serious losses back in July and August may in trouble again. The specific fund being attached to this rumor is AQR Capital, although last time around we learned that the strategies of all the quants were so closely aligned that where one fund ran into trouble, they all did. Keep in mind that while our source is well-informed he is not directly connected with AQR. AQR did not respond to our request for information.
•Private Equity Profit Taking at Merrill Lynch: Merrill Lynch is said to be exiting some of its investments in private equity funds, including two Blackstone funds. We’re not sure what to make of this rumor. Is it that Merrill is desperate for cash? Or that Blackstone’s funds are underperforming? Or is it a big, mayo covered baloney sandwich?
•Citi Sized Losses: There’s also talk that Barclays Capital might be looking at Citi-sized losses from credit write-downs. And that might be an optimistic scenario.
This should be obvious but we'll say it again: exercise caution when reading these rumor mill posts. We can’t vouch for accuracy of the information or the credibility of the sources beyond what we explicitly state above. We weed out the implausible and the clearly self-interested but haven’t otherwise verified any of the above. People are talking, and know you know what they’re talking about.