From Bloomberg: U.S. stock exchanges may seek to impose a temporary ban on short sales for individual stocks that plunge as regulators seek to rein in short-selling. The New York Stock Exchange and Nasdaq Stock Market may file their proposal with the Securities and Exchange Commission as soon as today, said three people who have […]
Read more...Nouriel Roubini has been almost freakishly accurate in calling the progression of the credit crisis, with his only major failings being predicting its onset on the early side and his fondness for an apocalyptic writing style, which now seems fully justified. Even by the standards of his alarming missives, his latest is truly troubling. Roubini […]
Read more...John Cassidy, in the New York Review of Books, discusses George Soros’ latest book, The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means, emphasizing how the storied investor’s views differ from those of the efficient markets/rational expectations school of economics. It also weaves in a wide-ranging discussion of the […]
Read more...Traders play to win, and hedge funds are unconstrained by big-firm considerations, like turning your clients into your next meal is probably not a good strategy for long-term survival. But even then, brokers are widely believed to play dirty. Hedge funds avoid revealing their positions to their prime brokers (funds of any size have two […]
Read more...We have noted several times in the last few weeks that hedge fund redemptions were likely to produce another ratchet-up of intensity of the financial crisis. Nouriel Roubini has also called it as the next domino to fall. Hedge fund have had not-so-hot returns so far this year, on average delivering losses despite promises to […]
Read more...We wrote earlier that the hedge fund industry was facing significant redemptions due to lousy performance and the desire of many investors to reduce their risk exposures. The Lehman bankruptcy, the biggest to date, is pouring gas on that fire. Hedge funds in the US report their net asset values monthly (evidently the convention in […]
Read more...Nouriel Roubini predicted that hedge funds closures would be the next leg of the financial crisis. Large scale redemptions force hedge funds to sell assets at a time not of their choosing. More assets being dumped at a time of risk aversion is likely to lead to distressed prices, putting pressure on other players, since […]
Read more...One sign that the credit crisis is accelerating: Nouriel Roubini’s forecasts are coming to fruition faster. In the past, Roubini has too often played the role of seemingly mad prophet in the wilderness until he is proven correct. His calls that the housing bubble would collapse in a nasty way, that subprime was most certainly […]
Read more...One of the reasons that Bear Stearns unraveled so quickly was that hedge fund customers and trading counterparties started reducing their exposures out of fear that their funds would become subject to a bankruptcy proceeding, leaving them unable to trade them. Worse, as some hedge funds are learning, customer agreements permitted Lehman (as most other […]
Read more...As we noted in a post yesterday, the assault on the evil shorts may wind up being a case of unintended consequences, since the investors targeted, mainly hedge funds, often use leverage supplied by their friendly prime broker (Goldman and Morgan Stanley are far and away the biggest in that business). If funds take big […]
Read more...The Wall Street Journal tells us that some less-than-nimble-footed hedge funds wound up not moving their prime brokerage accounts quickly enough out of Lehman to avoid having those assets frozen in the bankruptcy. Most readers will probably find it hard to work up much sympathy for these Masters of the Universe. Despite the name “prime […]
Read more...We’ve remarked from time to time this year that a lot of hedge funds aren’t having a particularly good time these days. The volatility that has punished mere mortals has also taken a toll on many Masters of the Universe. The Wall Street gives an update, showing that even some of the biggest names have […]
Read more...While there are no doubt some hedge funds that have managed to navigate the minefield of turbulent markets successfully, the sudden, sometimes violent reversal of trends and breakdown of correlations had made the hedge fund operator’s life particularly difficult. The UK’s Times (and remember London is an even bigger hedge fund center than the New […]
Read more...Full disclosure: I have a great deal of respect for both Tim Duy and the hedge fund manager Scott who is also quoted in this post. As you will see, Duy wrote an interesting post addressing a question posed by Brad DeLong, in essence “Since we are in the midst of the worst financial crisis […]
Read more...When I read this Bloomberg story, “Blackstone Risks Hedge Funds’ Return as LBO Lending Evaporates,” my first reaction was “conflict of interest”. My second was “lawsuit”. Everyone casts a blind eye at arrangements like this until the returns falter. My third was that everyone interview seemed extremely reluctant to say anything critical of Blackstone. That […]
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