May Hedge Fund Performance Update

This past Friday was the last day to submit hedge fund redemption requests for Q2, and we have heard of bloodbaths at several of the more prominent asset managers that have underperformed the S&P. Which ones these are, we will let people decide courtesy of the most recent HF performance update from HSBC. As indicated, it is not pretty, with many of the recent high-fliers now becoming fast-plungers. As expected, many of the underperformers have stopped reporting recent activity with the last documented performance date still stuck in April. If FASB 157 can be suspended for corporates, why should hedge funds be forced to report all of their red ink?

HedgeWeekly2010_No21

Comments

[Cursive]

Not just hedgies.  Can you imagine all of the out-of-work investment advisors you will see by 2012?  It's a good thing as the FIRE economy must unwind before the overall U.S. economy can regain its footing.

[Caviar Emptor]

FIRE economy will not unwind as needed so quickly, methinks. Too many political backers, still too much money to pass around. But unwind it will and probably with big seizures once it gets underway.

[Sudden Debt]

Can't you just give us the shorting candidates for today? We only got 20 min. before opening you know :)

To be honest, I only see good results in the doc.

Never  the less, I'm shorting the DO today. I'm currious to see if it drops :)

[Tense INDIAN]

BP

[jkruffin]

BP, JPM, GS are the top on my shorting list

[Sudden Debt]

I already shorted BP when it was at 51$ :)

I bought the 30$ okt. puts for 25 cents and they are now POPPING CATCHING BABY! :) 2.25$ on the screen right now :)

[Sudden Debt]

And the BO puts JUST ALREADY DOUBLED IN PRICES!! TYLER!!! YOU'RE THE BEST! I LOVE YOU! :)

[BlackBeard]

almost anything solar.  It's basically been the only place where shorts can make money over the past year.

[omi]

Wait, do I see another Madoff?

Prologue feeder fund 11% annualized return, 4% volatility, 1.59% max drawdown.

[Cleanclog]

Just heard Cashin report that cash on hand at mutual funds at a record low.  If it goes any lower they'll have to sell stocks to meet redemptions.

[cymro33]

EXTEND & PRETEND: It's Either RICO Act or Control Fraud

• by Gordon T. Long
• May 31, 2010

Now, nearly two years after the greatest financial malfeasance in history and ten years after the last public example of financial crime, the public hasn’t seen a single CEO sentenced to hard time for the financial meltdown.......

http://www.prudentbear.com/index.php/commentary

[ZackAttack]

I've never seen this question answered - in aggregate, net of fees and expenses, do hedge funds outperform an equivalent unmanaged index?

If not, why on earth would pension funds pay more than, like, 5 bp for the privilege of investing with them?

[snowball777]

Kickbacks?

[Pat Hand]

Fung & Hsieh, among others, have written extensively.

Bottom line, yes. Net of fees, investors do better with hedge funds.  However, there is dispersion among managers, and there is the "lemon" problem ...  managers who can fool investors into investing with them make disproportionate rents.

Back when Medallion was open, Simons charged something like 5% of assets + 44% of profits and had to turn people away, since NET of those fees, he was delivering > 30% annualized return.

It's not the fee, it's what you get after fee.

Long only managers charge "low" fees, but deliver mostly beta, which should be free.  Their fees for the actual value added are typically much larger than that of hedge fund managers.

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