Crystal Ball
Wall Street Journal today...
Dear Investors, We're...
Hedge Funds Strain
To Find Words to Say
'Sorry' for Your Losses
By GREGORY ZUCKERMAN
August 16, 2007; Page C1
Running a hedge fund means never having to say you're sorry, at least not in so many words.
That isn't to say some hedge-fund managers don't have a lot to feel bad about. In the past few weeks, some of the biggest names in hedge-fund land -- Goldman Sachs Group, Highbridge Capital Management, AQR Capital Management, Renaissance Technologies -- have certain funds that lost as much as a third of investors' money as stock and credit markets seized up, and stocks moved in unexpected ways, in reaction to the spreading subprime-mortgage debacle.
None of these highly paid managers are prostrating themselves before their clients, begging forgiveness, however. Instead, in letters to clients, they point fingers at other hedge funds, once-in-a-lifetime events and their own computer programs.
Black Mesa Capital, a Santa Fe, N.M., hedge fund captured the "don't blame us" spirit with its letter last week, blaming "unprecedented market events," including "a very large or several very large trading entities, possibly very large hedge funds...liquidating massive" portfolios. The managers, Dave DeMers and Jonathan Spring, said they are taking "unprecedented actions" to fix its problems, a response to the "unprecedented market events." The fund lost about 10% in the first eight days of August. Black Mesa didn't respond to a request for comment.
Forrest Jones in Latin Trade, June 2005...
Player's Club
Hedge funds, once an investment alternative for the super rich, boom across the globe as investors take on risk
Hedge funds, once the mysterious financial playground of Hollywood types, globetrotting Wall Streeters and the Aspen ski crowd, are fast becoming accessible to simply high-income individuals.
Unlike an ordinary investment fund, hedge funds use sophisticated--and almost entirely unregulated, even unexplained--strategies to counterbalance simultaneous exotic trades around the planet, with the aim of being just ahead of the market. Russian currency, oil futures, shorting stocks, whatever is trading hot and fast is a target, and the brains behind the desk race to make bets and clear out before the rest of the market rationalizes whatever information is coming into the equation.
It's the financial equivalent of rocket science, highly leveraged, and can be very high risk if the bets are suddenly and disastrously wrong. Or, they can be an astounding source of nearly instant wealth. "When you invest in a hedge fund you are investing in that manager's skill," says Tom Hayden, manager of Chaparral Capital, which manages US$10 million in U.S. and offshore funds.
Dear Investors, We're...
Hedge Funds Strain
To Find Words to Say
'Sorry' for Your Losses
By GREGORY ZUCKERMAN
August 16, 2007; Page C1
Running a hedge fund means never having to say you're sorry, at least not in so many words.
That isn't to say some hedge-fund managers don't have a lot to feel bad about. In the past few weeks, some of the biggest names in hedge-fund land -- Goldman Sachs Group, Highbridge Capital Management, AQR Capital Management, Renaissance Technologies -- have certain funds that lost as much as a third of investors' money as stock and credit markets seized up, and stocks moved in unexpected ways, in reaction to the spreading subprime-mortgage debacle.
None of these highly paid managers are prostrating themselves before their clients, begging forgiveness, however. Instead, in letters to clients, they point fingers at other hedge funds, once-in-a-lifetime events and their own computer programs.
Black Mesa Capital, a Santa Fe, N.M., hedge fund captured the "don't blame us" spirit with its letter last week, blaming "unprecedented market events," including "a very large or several very large trading entities, possibly very large hedge funds...liquidating massive" portfolios. The managers, Dave DeMers and Jonathan Spring, said they are taking "unprecedented actions" to fix its problems, a response to the "unprecedented market events." The fund lost about 10% in the first eight days of August. Black Mesa didn't respond to a request for comment.
Forrest Jones in Latin Trade, June 2005...
Player's Club
Hedge funds, once an investment alternative for the super rich, boom across the globe as investors take on risk
Hedge funds, once the mysterious financial playground of Hollywood types, globetrotting Wall Streeters and the Aspen ski crowd, are fast becoming accessible to simply high-income individuals.
Unlike an ordinary investment fund, hedge funds use sophisticated--and almost entirely unregulated, even unexplained--strategies to counterbalance simultaneous exotic trades around the planet, with the aim of being just ahead of the market. Russian currency, oil futures, shorting stocks, whatever is trading hot and fast is a target, and the brains behind the desk race to make bets and clear out before the rest of the market rationalizes whatever information is coming into the equation.
It's the financial equivalent of rocket science, highly leveraged, and can be very high risk if the bets are suddenly and disastrously wrong. Or, they can be an astounding source of nearly instant wealth. "When you invest in a hedge fund you are investing in that manager's skill," says Tom Hayden, manager of Chaparral Capital, which manages US$10 million in U.S. and offshore funds.
posted by Greg Brown at 8:47 AM
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