Hedge funds ready to blow as positions liquidated (hedge fund death watch)

The Australian ^ | 09/06/08 | Adele Ferguson

[TigerLikesRooster]

Hedge funds ready to blow as positions liquidated

Adele Ferguson | September 06, 2008

DEBT-GORGED hedge funds are the next ticking bomb in the global credit crisis as they liquidate their positions in equities and commodities ahead of an expected spike in quarterly redemptions by investors throughout September.

The first hedge fund victim was Ospraie Management, which announced earlier this week it would close its flagship hedge fund and liquidate its stock after it plunged 27 per cent in August due to losses in energy, mining and natural resources equity holdings.

Other hedge funds are expected to topple as investors seize an opportunity to withdraw their poorly performing investments at the end of the September quarter. If there are too many redemptions, it will cause a run on hedge funds and create mayhem.

Some hedge funds are trying to pre-empt a run on their funds by liquidating their stock positions ahead of some of their rivals, or are trying to make money shorting stocks held by other struggling hedge funds.

[Broker]

FNMA and FHLMG: This short term fixeroo has trumped the hedge fund bears:

“Effectively, the federal government has now become the nation’s mortgage lender,” he said. “This takes a major financial threat off the table.”

Futures on all major stock indexes rose about 2 percent in electronic trading Sunday night, another sign of investor relief about the takeover plan

[q_an_a]

Thanks - I still think that the % those “funds” you mention would be small, say 5%. This may be a billion dollars for some of the funds, but not enough for a meltdown...I hope.