Posted on 02/22/2008 10:48:01 PM PST by TigerLikesRooster
Hedge Funds Feel New Heat
By GREGORY ZUCKERMAN
February 23, 2008; Page A1
The past decade has been the era of the hedge fund, as investors snapped them up for their track record of beating the market with often highly complex trades.
But now, as the credit crunch upends financial markets, that very complexity is coming back to bite some of them.
In the past year, shares of Fortress Investment Group LLC -- which became the symbol of hedge-fund success when it went public last February -- are down 50% as investors wring their hands about the value of its real-estate, debt and other holdings. A Fortress official declined to comment.
A pair of $2 billion funds run by AQR Capital Management Inc. are down about 15% this year. And yesterday Citigroup announced a bailout of an in-house hedge-fund group clobbered in part by bad bets on highly complex mortgage-related securities. (See related article.)
Last month alone, so-called "quantitative" hedge funds (which make investments based on sophisticated mathematical formulas) fell 6% as a group, according to data-tracker Hedge Fund Research Inc.
Other funds have hit the scrap heap. D.B. Zwirn & Co. and Sailfish LLC have both seen investors rush for the exits, forcing each firm to close big funds.
In recent weeks at Zwirn, clients have moved to withdraw some $2 billion from the firm's $5 billion in assets. That follows disclosures of improper accounting that delayed an outside audit of its returns. Zwirn will sell $4 billion of investments over the next few years from its two largest hedge funds.
(Excerpt) Read more at online.wsj.com ...
Ping!
Hedge funds ought to be flatly outlawed. They are run by crooks, for the crooks and the piper must now be paid.
D.B. Zwirn accused of improper accounting?
Anybody check Sandy Berger’s pants?
Unregulated thieves with unimaginable leverage.
When one of their leveraged vehicles fail, and their derivitive ‘insurance’ does not perform, we all lose, and we lose huge. Witness BeareStearns effect on the entire market when one, then a second hedge fund failed. It wasn’t just Beare Stearns that lost...the entire market tooka 1000 point dive....that is your retirement fund taking in the rectum. It is just beginning. One year from now we will see today as the good ole days.
A lot can happen in the next 12 months. We are close to the tipping point. Many apparently try hard to move it down the road as much as possible. How much time they can buy with their efforts? The rate of return for this endeavor could be quite low.
Just asking...
Everybody is always looking for the next sure thing that pays more than everything else. There is a reason the sure things don’t pay especially well. The Hedge Funds have had to learn this over and over since the collapse of Long Term Capital Management.
But as long as greedy people will seek something for nothing, you will have fools investing in things like hedge funds, that prosper long enough to suck in many people and then collapse like a house of cards.
Add this to my list of bullish prospects guaranteed to avoid a recession. I’m so bullish!
Furthermore, I don’t want to put my money anywhere that can tell me, “sorry, you can’t take your money out right now.” That is pure BS.
Why do you assume he is not already short?
The SEC publishes studies on short-selling either every year or every other year (sorry, can't recall just now).
True, our colleague might indeed be short, but A) my view is much the long end of the bet, and B) were he short, I should have expected to hear from him about it (whether snidely or not is irrelevant).
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.