Skip to comments.Hedge Funds' World of Hurt
Posted on 08/24/2007 5:05:51 AM PDT by Hydroshock
Remember when Wall Street would obsess over the next leveraged buyout candidate, and hedge fund masters of the universe could raise ungodly war chests with just a handful of phone calls?
What a difference a few months make.
Lately, hedge fund implosions have replaced the LBO parade as the market's signature event. Investors have seen huge setbacks at funds run by Bear Stearns (BSC - Cramer's Take - Stockpickr - Rating), UBS (UBS - Cramer's Take - Stockpickr - Rating) and Goldman Sachs (GS - Cramer's Take - Stockpickr - Rating), among others, as the credit environment has grown fraught with uncertainty and lurking turmoil.
Now investors find themselves wondering how institutional investors will respond as the wheels come off the once-fast-moving credit wagon. Will pension funds and other conservative types of investors, who had just begun pouring money into these so-called alternative investment vehicles in earnest, back away from hedge funds in their hour of need?
For now, the answer seems to be no, as the damage from this summer's credit crunch has been limited. Still, there are worries that we've seen only the beginning of the problems in alternative-investment land.
"Hedge funds and private-equity firms today are like the dot-coms in 2000: Ask for money and you'll get it," fund manager Ray Dalio of Bridgewater Associates said in Barron's back on May 26. "They bid up the prices of everything. The amount of money flowing is almost out of control, and it's making everything overvalued."
(Excerpt) Read more at thestreet.com ...
I think they need some regulation.
Day one of hedge funds was 1949.
Man, that’s a real shame.
(For now) (the answer seems to be) Nice way to type a sentence and leave yourself a big back door...
Would someone please explain what hedge funds are? Keep It Simple Please.
Thanx for the info.:-)
Actually, they have it - it’s called the market place. We do not need any other regulator and we certainly do not need to bail out any of those clowns or the people who borrowed 100% (and more) on their “dream” house and risk losing it now that the bubble burst.
Hedge funds used to be funds that mitigated/reduced risk by betting in both directions — that stocks would rise and fall using two different instruments, saying, regular stock purchases against shorting a stock. They were very specialized and very few.
Today they’re just huge pots of cash — many of them in the billions of dollars — that invest in everything from traditional stocks to (get this) movies. There are something like 7,000 active hedge funds today.
Are you saying that many hedge funds today aren’t really hedging anything?
I take it hedging in the investment arena is different than putting $100 on black, $100 on red, and $5 on 00.
Not only are many of them not hedging, but they’re playing with borrowed money.
Well, looks like Bear Stearns replaced the executive who gambled on high risk mortgages .. But on another note, they might even be looking for a buyer. JP Morgan and Bank of America seems to be on that list, and this site ...
maps out connections between the companies, kinda behind the scenes look http://www.newsvisual.com/newsvisual/2007/08/click-here-fo-2.html
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