Posted on 03/31/2008 6:33:26 PM PDT by shrinkermd
Hamstrung by the lack of liquidity and savaged by increasing redemptions, Griffin has had to negotiate new terms with his prime brokers, beg for patience from investors and offered his business for sale to bigger rivals, including GLG Partners.
One insider said: "Tisbury has gone from darling to disaster is a short space of time. Griffin is losing staff and probably won't get much for the sale. It's been amazing turn of fortunes."
Griffin is not alone. Some of the most successful players in the industry also have serious problems. The past month has been littered with high-profile calamities.
At the end of February, Peloton Partners, the award-winning fund run by ex-Goldman Sachs star Ron Beller, imploded. Focus Capital, another EuroHedge fund of the year, wound up days later. Then came the biggest casualty so far: the spectacular collapse of Carlyle Capital Corportation after a $16bn debt default.
Last week, it was the turn of John Meriwether, the man behind the collapse a decade ago of Long Term Capital Market. His bond fund at JWM Partners is struggling with losses of 28 per cent this month.
One industry expert told The Sunday Telegraph: "This is just beginning. Somewhere been 40 and 100 hedge funds will liquidate shortly. It's a bloodbath and it will get worse."
Already investors are showing their fury. One said: "I thought volatility was what hedge funds lived for? Making money, or at least preserving cash, during volatile times is certainly what we pay them for. They have been poncing around during the good times and are now found wanting at the first sign of trouble. It's a debacle out there
(Excerpt) Read more at telegraph.co.uk ...
People are so freaky about money that they panic things into a train wreck.
easy come, easy go...some of these hedge fund guys deserve what they are reaping.
bump
Tough times don’t last. Tough people do.
Yes, they do.
Sadly, these funds are so large, so highly leveraged, that they have the power to take down innocent bystanders with them.
Nah......it's just a flesh wound. : )
I've had worse... ;-)
“The use of a growing array of derivatives and the related application of more-sophisticated approaches to measuring and managing risk are key factors underpinning the greater resilience of our largest financial institutions.”~~Alan Greenspan, May 2005
"We're not about to go into a situation where (real estate) prices will go down. There is no evidence home prices are going to collapse."~~Alan Greenspan, May 21, 2006
“The damage from the subprime market has been largely contained. Fortunately, the financial system and the economy are strong enough to weather this storm.”~~Richard Fisher, Federal Reserve Bank of Dallas President, Apr 4, 2007
"All that said, given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system."~~Fed Chairman Ben Bernanke, May 17, 2007
I don't think we're headed into a recession. But there's no question we're in a slow down and that's why we acted with over $150 billion worth of pro-growth economic incentives, mainly money going into the hands of our consumers... The purpose is to encourage our consumers - to give 'em money - to help deal with the adverse effect of the decline in housing values.~~President George W. Bush, Feb 28, 2008
"There is absolutely no truth to the rumors of liquidity problems that circulated today in the market. Bear Stearns' balance sheet, liquidity and capital remain strong."~~Alan Schwartz, Bear Stearns CEO, March 10, 2008
haaaaaaaaa. I hope not!
LOLOL!
You can always be depended on for a dumbass comment. Go back to sleep
“Prosperity is around the corner” Herbert Hoover
“Hire your neighbor” Herbert Hoover
IOW if you have a boat hire your neighbor to caulk and paint it
actually, the ‘invisible hand’ is basically right on this one. The problem right now is panic.
The reason Bear Stearns got whacked is that their clients all demanded their money back at the same time to try to go elsewhere to seek better returns. That created a ‘run on the bank’ situation and BS(I love calling them that) couldn’t liquidate assets fast enough to cover all the demands and they then caused the assets they had to rapidly devalue as they sold them off hastily - which then led to even more illiquidity (if that is a word).
It’s the panics on the way up and especially the way down which turn recessions into depressions and downtimes into craters.
Right now, a 28% down month from a hedge fund sounds like the end of the world. I’d be pretty pissed off too since a hudge fund IS designed to profit regardless of where the market goes. But if clients pull their accounts and demand to be made liquid (ie, give me back a check for my balance), the hedge fund has to dump their stock holdings onto the market to get the cash necessary to write that cashiers check to their dissatisfied client. And every other client of that hedge fund now just lost a few percent more of their value because the stocks which just got sold in large volume are now lower (due to the large selling) and this causes THOSE clients to know feel too high a pain threshold and demand to liquidate THEIR accounts.
And now you get the cycle of collapse. If everybody where it is for the long haul, nobody would be selling off their entire equities portfolio whenever there was a bad month and we would see far less volatility. But there is an inherent danger when a fund becomes soooo large that it can essentially destroy a particular stock because it holds so much and if the hedge fund needs to liquidate it has to dump that stock at any price to get out. This may cause the D.C. Genius Club to decide that hedge funds have to be capped at a particular amount. It won’t solve the problem of stupid fund managers but it will make losses smaller.
thanks for stepping in, because I surely would have been banned over this pissant moron.
How long you are you on Wall Street, Mr. Trump?
It was Bear Sterns in March. Who will it be in the coming months?
The malicious debt overhang is enormous. Who knows where the problem will manifest next time? It manifests at the weakest link
The Fed backed the BS debt with the Feds balance sheet. But at the same time Big Ben put his crew into the offices of ALL of the wall street firms to start digging into their books. And none of them are balking because they know that the Fed move WAS unusual and the total collapse of BS would have devalued the assets of everybody elses firms and it could have cascaded into a cauldron of rancid crap.
The part that really sucks is that these assets are NOT junk. But because we are talking about real estate as a collateral no firm has the ability to liquidate it in 24 hours without writing it down to $0. It’s suicidal but it happened in the 1970s also with the S&Ls. Real Estate is a different kind of asset and it never is worth zero but it is also not liquid like equities so you can’t just cash it out. And yet that is exactly what is going on right now with all the foreclosures. Home are being sold for dozens of percentages BELOW their fair market value in order to move them prior to a cover deadline on some call option. And that kind of panic on Wall Street has created decimation in real estate in most markets.
Hopefully, real estate will respond much better this time than it did after the late 70s when this last happened. The favorable capital gains treatment is a singular, positive difference as well as the attractiveness of real estate bottom-feeding as a new possible investment category for the $3T is assets currently sitting in cash right now waiting for a sector which is undervalued and safe to run up again.
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