28JAN09:
Q1-09 DOW: 8900
Q2-09 DOW: 7250
Q3-09 DOW: 5810
Q4-09 DOW: 3960
CITI NATIONALIZED
OBAMA GETS SICK 27AUG09:
Mini Crash 21SEP09 Predicted correctly:
Bailout=Bonuses
Demise of Bear Stearns
Demise of Lehman Bros.
Demise of AIG
Subprime would cause problems
Date of 2007 crash
CRAs were to blame
G20 riots were a party
Northern Rock run
Northern Rock Nationalization
HBOS and RBS demise
UBS really was Useless
Sometimes the rules have to be adhered to and if they are not, hell is paid. We got wind of a hedge fund that has to close down. It decided, against the flow of most other hedge funds, to stay open and offer monthly liquidity. It made 30%+ last year. So what happened next? Well as you know most hedge fund investors are fund of funds. These FOHF have investors screaming for cash, but the FOHF cannot redeem from the suspended and closed for redemption funds. So if a fund is open for redemption, they go after this one instead and redeem. So all that wonderful alpha and nobody wants it. This hedge fund manager is now closing down for good.
Irrationality and Sadness. My funds are closed at the moment but I am being beaten about so much that I will have to relent. And then what happens? Despite some solid libor +++ I am petrified that I will be on the scrap heap with all the investment bankers. So I will keep them closed as long as I can.
But on the good news front, the rents in my part of the woods are coming down. My search for new office space starts in the summer, unless I can convince my landlord to take a steep cut in rents. Let us hope by then, investors are back into investing mode otherwise a new office will not be required.
China forecasts a 6% fall in GDP and the Brits win some Golden Globes.
Warning I am flying to Chicago today. I was going via Virgin but have changed. This newsletter will now be published later than usual for the next few days.
MAYFAIR SAYS 'GOODBYE' TO GOOD OLD DAYS OF SOARING RENTS
For a decade it was the preferred location for hundreds of hedge fund managers as they deserted the City and set up shop nearer to their well-heeled clients.
Making the move to Mayfair and St James's, they would think nothing of paying more than £100 a square foot for a few floors inside a Georgian townhouse, driving rents ever higher as they bid against each other.
Property experts described the rents as “eye-popping”, but investors' money was flooding in and fee structures were designed to capture 20 per cent of the profits, so managers believed that the bills could be shouldered easily.
Fintag says Mayfair is actually cramped, dirty and full of cultural-less shopaholics. The clubs are over priced and hardly anyone speaks English. But its restaurants are the best and that is why I am here.
FOUR of London's top hedge-fund managers face a public grilling after being summoned to appear before the influential Commons Treasury committee over the role of hedge funds in the banking crisis.
It will be the first time they have been called to account by politicians in this type of public hearing. Hedge funds have been blamed in some quarters for shorting banking stocks, including HBOS, which the government pushed into an emergency takeover by Lloyds TSB late last year.
Paul Marshall, co-founder of Marshall Wace, has been invited to attend the hearing on January 27, as has Doug Shaw of the American investment house BlackRock. Both have accepted.
Fintag says Grilled eh? They better be quick or their won't be any UK hedge fund managers left to grill (why? tax, performance and death [Editor: uh?].
More interesting is this (two searches = 1 cup of tea):
times says " Revealed: the environmental impact of Google searches "
WHEN it comes to meeting with company managers, William Danoff, the longtime manager of the Fidelity Contrafund, still has the zeal of a brand-new analyst. He says he sits down for at least 500 such meetings a year — two to three each working day — and records notes on each one in a coffee-stained, spiral-bound notebook.
The executives troop to the Boston offices of Fidelity Investments in hopes of persuading its portfolio managers to invest in their companies. Mr. Danoff says he meets with them to gauge their credibility and to look beyond their public pronouncements. Fidelity's analysts arm him with reams of reports and data to inform his investment decisions, but he said that all of that could only supplement face-to-face chats.
The HFRI Fund Weighted Composite Index fell nearly 6% in October, according to data from Hedge Fund Research (HFR). The composite index declined over 16% year-to-date through October and has lost more than 12% since September 1, 2008.
Investors withdrew over $40 billion from hedge funds in October which, in addition to $115 billion in performance-based asset losses, reduced the industry capital base by $155 billion.
Fintag says Phew! With the decline in the markets and investors wanting out, this isn't so bad. Until you realise this data is for October. So guesses are we are down to USD1.2 trillion as of today.
PAULSON, BREVAN HOWARD, TOURADJI AMONG '08'S WINNERS
he average hedge fund may have lost almost 20% last year, but not all fund are merely average.
Some of the biggest names in the business actually enjoyed top-notch returns in 2008. Leading the charge is New York-based Paulson & Co., which put itself on the map in 2007 by making triple-digit returns betting against subprime mortgages. All of the firm's funds added to those gains last year. The Paulson Advantage Plus Fund added 38% in 2008, while its Paulson Credit Opportunities I Fund—which soared 590% in 2007—returned a more modest, but still impressive, 19%, according to MarketWatch.
Fintag says Three cheers! It isn't all doom and gloom and these new gods of the hedge fund world are the flag bearers our of crumbling industry.
Bernard Madoff's alleged Ponzi scheme may cost insurers who cover financial institutions more than $1 billion as they pay legal costs for investment managers who gave client money to Madoff, an industry executive said.
Insurers who sell such coverage never expected, or charged their clients, for the possibility of investor losses in such a massive fraud, said Greg Flood, the president of the management liability practice at Ironshore Inc., the Bermuda-based insurer.
Fintag says Directors and Officers insurance. Up we go ...
Some battered hedge fund investors are so desperate to get out of their positions that they don't mind selling them - for 75 percent off.
Some hedge funds lost 50 percent to 60 percent of their value in a brutal 2008 - and many have put up gates to keep investors from withdrawing their funds. That hasn't stopped the beaten down individuals or funds of funds from turning to brokers to peddle their stakes.
Fintag says Funny that? Investors see the default risk as too high and actually perpetuate the risk that the fund will be forced to liquidate. Of course the last man standing gets to pay all the liquiidation costs so best to get out first ...
deal breaker says " 2009: Year Of The Hedge Funds "
ECONOMISTS SEE LONGEST RECESSION SINCE WORLD WAR TWO
The U.S. recession will probably be the longest since World War Two and could worsen without heavy government spending, according to a closely-watched survey of economists released on Saturday.
The Blue Chip Economic Indicators poll of 52 economists from top financial firms, major companies and academia found that most expected a tepid recovery to begin later this year, with growth returning to more normal levels in 2010.
Fintag says Why didn't the headline say "Recovery to start later this year?".
new york times says " Jobless Rate Hits 7.2%, a 16-Year High "
NORTHERN ROCK FINANCE CHIEF QUITS AFTER EARNING £1M IN A YEAR
Northern Rock's chief financial officer, Ann Godbehere, is stepping down from the nationalised bank next month having earned almost £1m for 12 months' work.
Since joining 11 months ago when the Government nationalised Northern Rock, Ms Godbehere, the former finance director at Swiss Re, has been earning £75,000 a month.
Fintag says Wow. That was a good trade. And who pays? Me and my fellow tax payers. Nice.
Harbinger Capital, the activist US hedge fund headed by Philip Falcone that shot to fame in 2007 with a lucrative bet against subprime mortgages, joined the list of funds restricting withdrawals for investors a day before the end of last year, according to two investors.
Harbinger's main fund rose almost 43 per cent in the first six months of last year but lost all its profits and ended the year down 27.1 per cent. After redemptions and losses, the fund now manages about $6bn, one investor said, down from a peak of almost $20bn last summer.
Fintag says It is so easy to suspend redemption requests and so hard to open up again. Let us see how long this stays closed.
Of course the upshot of all this is Director's discretion clauses in Prospectuses will just get longer and longer. I can imagine a day when they just say "The fund is called XYC. Redemption requests are at the discretion of the Directors. You will not be allowed to sue the fund or any third party related to the fund - ever."
That will save on legal costs.
18 comments
dorisDay said ...
Give me a call
12 Jan 09 - 08:34 gmt
damiendamien said ...
I've found a nice trick to get me through these dark times. I replace unemployed/redundancies with taking it nice and easy.
"Jobless Rate Hits 7.2%, a 16-Year High" becomes "7.2% of people are taking it nice and easy"
12 Jan 09 - 09:07 gmt
anonymous said ...
Don't use Google. Use Blackle....
12 Jan 09 - 09:25 gmt
Moron said ...
just short everything!!
12 Jan 09 - 09:32 gmt
fitzcaraldo said ...
any good news except falling rents in London? Where's Mrs R?
12 Jan 09 - 13:06 gmt
fitzcaraldo said ...
Any good news except falling rents in London? Where's MrsR? How was panta's poor hedge man's dinner?
12 Jan 09 - 13:08 gmt
MsR said ...
@damiendamien: Lol..I see a whole book in that..charming
Fitzcaraldo: I am in New York for work. Very cold but altogether a favourite city. Great buildings, good food, amusing people.
12 Jan 09 - 13:43 gmt
panta said ...
Hi there...i think there's nothing much to say...I am really bored and trying to keep myself occupied...whit what I don't know...(Why nobody told me there is a world beyond finance) Poors man dinner was really good, and thanks god we were talking about everything except the markets....By the way stay with Moron...Short for life... ps moreover this rain today makes me really feeling depressed.... Pps I will keep watching that distant point on Blommy for another 4 hours...CHE PALLE!!!
12 Jan 09 - 14:14 gmt
Moron said ...
short like there is no tomorrow.....the idiot has spoken again....:))
12 Jan 09 - 16:39 gmt
Moron said ...
i have a great short idea by the way.....glg partners...anyone seen their performance attribution sheets recently....very sad:(
12 Jan 09 - 16:41 gmt
anonymous said ...
anyone follow the babson charting technique? Where are we?
12 Jan 09 - 20:14 gmt
AthenaDelphi said ...
Just checking in. Chicago?!? yuck.
Fin - I found this headline and was wondering if the guy was opening up next door to you in Mayfair?
Deutsche Bank Credit Chief To Found Hedge Fund
12 Jan 09 - 20:18 gmt
AthenaDelphi said ...
Quick question to you Londoners: Is the Saudi Arabia embassy in Mayfair?
12 Jan 09 - 20:20 gmt
AthenaDelphi said ...
OK. Either everyone is in bed or I'm being ignored.
I guess I'll google to try and find the answer and then plant a tree for carbon offset.
12 Jan 09 - 20:23 gmt
anonymous said ...
yes, the embassy is on Charles St.
do you know anything about Babson?
12 Jan 09 - 20:25 gmt
anonymous said ...
TimesOnline.uk: Anatole Kaletsky is proposing a tax on bank deposits since its necessary to force those with cash to use it productively.
Instead of reducing taxes on interest payments, the Government could tax all bank deposits and other risk-free savings. This would create a negative risk-free interest rate, encouraging savers either to invest in property, shares and other productive assets - or simply to save less and consume more.
12 Jan 09 - 23:36 gmt
anonymous said ...
Fintag - hope the windy city is treating you well. This is concerning:Time Magazine’s Ari Officer writes that there is actually a Ponzi scheme in every hedge fund. The extra challenge faced by hedge funds, however, is that the unrealized gains and losses are locked up in less liquid assets.
As a result, writes Officer, hedge funds sometimes need to rely on new investments to pay out old investors.
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