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Hedge Funds Considering Yard Sales, Swap Meets To Unload Some Stock

Times are so tough that they’re pining for the financial crisis.
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Make us an offer.

Heavily hedge-fund owned stocks are down ten times as much as the S&P 500 so investors are sufficiently pissed off and pulling money out, necessitating further fire sales.

Add more funds shutting their doors since—you guessed it—the financial crisis, and the generally unimaginative nature of the whole stupid industry, and you’ve got yourself a vicious cycle.

“This is called a risk manager’s sale,” said Colas, who worked as an analyst at Steven A Cohen’s SAC Capital Advisors LP from 1999 to 2001. “It’s not anything fundamentally wrong with the companies. It’s because other people are selling, and it’s getting pummeled and eventually someone taps your shoulder and says ‘You have to sell this….’”

“There’s just too much capital chasing too few ideas, and no liquidity,” said Benjamin Dunn, president of Alpha Theory Advisors, which works with hedge funds overseeing about $6 billion. “The problem is genuinely differentiated managers are getting crushed by deleveraging. It should be a watershed moment for the industry.”

Hedge Fund Pain Brings Malaise Worse Than ’08 for Crowded Stocks [Bloomberg]


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