Thursday, October 23, 2008

NYTimes: Investors flee as hedge fund woes deepen

"The gilded age of hedge funds is losing its luster. The funds, pools of fast money that defined the era of Wall Street hyper-wealth, are in the throes of an unprecedented shakeout. Even some industry stars are falling back to earth."

"This unregulated, at times volatile corner of finance — which is supposed to make money in bull and bear markets — lost $180 billion during the last three months. Investors, particularly wealthy individuals, are heading for the exits.

As the stock market plunged again on Wednesday, with the Dow Jones industrial average sinking 514 points, or 5.7 percent, the travails of the $1.7 trillion hedge fund industry loomed large. Some funds dumped stocks in September as their investors fled, and other funds could follow suit, contributing to the market plummet.

No one knows how much more hedge funds might have to sell to meet a rush of redemptions. But as the industry’s woes deepen, money managers fear hundreds or even thousands of funds could be driven out of business.

The implications stretch far beyond Manhattan and Greenwich, Conn., those moneyed redoubts of hedge-fund lords. That is because hedge funds are not just for the rich anymore. In recent years, public pension funds, foundations and endowments poured billions of dollars into these private partnerships. Now, in the midst of one of the deepest bear markets in generations, many of those investments are souring.

Granted, hedge funds are not going to disappear. In fact, some are still thriving. Even many of the ones that have stumbled this year are doing better than the mutual fund industry, which has also been hit with withdrawals that have forced their managers to sell."

9 comments:

K Curtis said...

Poor Hedge fund managers... They're income will deteriorate down to a measly $250M.

Sour grapes? You bet! I wish I could complain about a 50% decrease in pay and still make over $100M... A YEAR!!!

I just need Google to acquire our live chat software.

KCurtis
www.ngagelive.com

Gordon said...

The richest one percent of this country owns half our country's wealth, five trillion dollars.

One third of that comes from hard work, two thirds comes from inheritance, interest on interest accumulating to widows and idiot sons and what I do, stock and real estate speculation. It's bullshit. You got ninety percent of the American public out there with little or no net worth. I create nothing. I own. We make the rules, pal. The news, war, peace, famine, upheaval, the price per paper clip. We pick that rabbit out of the hat while everybody sits out there wondering how the hell we did it. Now you're not naive enough to think we're living in a democracy, are you buddy? It's the free market. And you're a part of it. You've got that killer instinct. Stick around pal, I've still got a lot to teach you.

Anonymous said...

Bayou Management, which used made-up financial statements to lure $450 million from investors.

Bayou managed to lose money every year since 1997.

Now all that's left is about $100 million, seized after bank employees inquired after suspicious wire transfers.

Anonymous said...

How a Goldman hedge fund shrank a third in a week

The strategy of using debt like a steroid to boost returns on investments came back to haunt some hedge funds in a big way last week.

That was made clear to investors on Monday when the Goldman Sachs Group (GS.N: Quote, Profile, Research, Stock Buzz) said two of its hedge funds had sustained losses of about 30 percent.

The so-called quant funds used strategies based on computer models to seize upon market anomalies and boost returns through high leverage, or investing with borrowed money.

Goldman's Global Equity Opportunities (GEO) fund -- which last week shed over a third of its value -- employed leverage of about six times equity capital, Goldman Chief Financial Officer David Viniar told analysts on a conference call on Monday.

Anonymous said...

Gordon Gekko: Fox, where the hell are you? I am losing MILLIONS! You got me into this airline and you sure as hell better get me out or the only job you'll ever have on the Street is SWEEPING IT! You hear me, Fox?
Bud Fox: You once told me, don't get emotional about stock. Don't! The bid is 16 1/2 and going down. As your broker, I advise you to take it.
Gordon Gekko: Yeah. Well you TAKE IT!
[shouts]


Gordon Gekko: *Right in the ass you fucking scumbag cocksucker!*

Anonymous said...

You're an idiot.

Buy some gold and shove it up your fking ass.

Ramesh O said...

I've already put my 30% down for my own foreclosed washed up investment banking coverage officer.

RIP good old days bitches!!

Anonymous said...

who's the bsd now?

Anonymous said...

PCs: Goldman Cuts ‘09 Unit Growth View To 4% from 10%
Posted by Eric Savitz
Goldman Sachs hardware analyst David Bailey today cut his 2009 PC unit forecast to 4% from 10%, citing expectations for a “a more significant slowdown in PC demand in emerging markets, in addition to ongoing weakness in the U.S., Western Europe and Japan.”

Bailey thinks emerging markets unit growth will decelerate to 10.8% from 19.3%, with a year-over-year decline in mature markets. Notebooks should remain a bright spot, with 16% year-over year growth. Bailey adds that netbooks will emerge as a growth driver, benefiting both Asus and Acer. He sees netbook shipments of 12 million this year, and 23 million in 2009.