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World's One-Time Largest FX Hedge Fund On Verge Of Shutdown
There is a reason why John Taylor of FX Concepts, founded in 1981 and which once upon a time was the world's largest FX hedge fund, has kept a very quiet profile lately despite his often bombastic prognostications in 2011 and 2012: the firm may be on the verge of shut down following a recent surge in redemptions resulting from woeful performance in the past three years. FX Week reports that AUM at FX Concepts "have continued to fall and the fund's chief strategist confirms the board's ideas haven't worked so far." It adds that the hedge fund is in "dangerous territory after the departure of several major clients and falling assets under management, prompting the firm's board to rethink its strategy, officials have confirmed." As a result of a surge in redemptions, assets under management have declined from a peak of $14.2 billion in 2007 to less than $1 billion this year, having been at $4.5 billion in early 2012.
Earlier this year, FX Concepts saw the exit of two major clients – the Pennsylvania Public School Employees' Retirement System and the Bayerische Versorgungskammer pension fund – but further clients are understood to have left in recent weeks.
The culprit: the same affliction that is currently impairing all other hedge funds in a centrally-planned market - underperformance. FX Concepts' flagship multi-strategy fund is down 11.35% this year through August. It was down 14.47% in 2011 and down 3.11% in 2012. Overall, the fund's annualized returns since January 2002 are a paltry 3.74%, CNBC reports.
It also fell 14.47 percent in 2011 and lost 3.11 percent in 2012. The fund produced net annualized returns of 3.74 percent from January 2002 through this August.
"FX Concepts has lost a number of investors. We're still an ongoing business, but there is clearly a lot of pressure on us to rethink our strategy and come up with a way out. The performance of our headline fund has been very frustrating this year," says Bob Savage, chief strategist at FX Concepts in New York.
Savage, who joined FX Concepts a year ago after selling his research business to the firm, declined to name the latest client to leave, but confirmed that a number of major clients have been closing out their positions with FX Concepts. "We're winding down some positions in the headline fund in an organised and professional fashion," he says.
But while Savage is hopeful that a rebound may take place and the firm will bounce back, the firm's fate may have been all but sealed when one of its last remaining large institutional clients, the San Fran Employees' Retirement System, voted on September 11 to pull its funds. CNBC's Lawrence Delevingne reports:
"The Board approved reducing its currency overlay program target to zero percent," Huish said in an email to CNBC.com. "There is no intention at this time to redeploy the currency overlay mandate to any new currency managers."
San Francisco had more than $450 million with New York-based FX Concepts, a majority of the $661 million the firm reported managing overall in its latest Securities and Exchange Commission filing.
That redemption may have been fatal.
The sad but inevitable conclusion follows:
According to two people familiar with the situation, FX Concepts is in the process of liquidating its hedge funds and laid off most employees in recent weeks.
Sadly as more and more HFT algos move from the barren wasteland that is now stocks to dominate FX trading, yet another old-school, carbon-based investor is pulling out, meaning all those ridiculous moves we have grown to know and loathe in stocks land are about to dominate FX. The only problem is that 1000 pip moves in FX are not quite as easy to undo as a flash crash taking down any one individual stock, ETF or index to 0 or alternatively sending it to infinity.
The good news: the circus that are capital markets under Ben Bernanke is about to get that much funnier.
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Times is tough.
Poor guy never learned to cheat like boys.
"taylor" ... definitely expendable ... thinning time
Proud Muppet
How difficult can it be?
Just BTMFD!!!
Ever get frustrated about America's backward attitudes on firearms and healthcare? Ever wonder how best to make America a more progressive place? Today's article at the Accredited Times explains why education is the key to creating a progressive society:
http://accredited-times.com/2013/10/07/why-education-is-the-key-to-creating-a-progressive-society/
No, I actually never get frustrated about that stuff.
I will agree with you about one thing, though. When we lost any shred of conservative ideas in the education system, it was only a matter of time before we lost them everywhere else. Welcome to "today."
Ever wonder why all the Euro countries are broke? By education don't you mean indoctrination? If you don't like America's bacward attitudes why don't you go live in Cuba?
Ever seen an 8th grade test from 1910? I don't think the new progressive education is doing Johnny much good.
Had a recent interview with a small but very profitable consulting company that normally hires young MBA types. They gave me a "test" to see if my analytical skills were good enough. I was stunned when I saw it...I went looking for a "Where do they bury the survivors" type trick but it wasn't there...it was not even 8th grade stuff. The interviewer was impressed that I scored 100% and did it so quickly. "So you probably won't have any problems doing the analytical work with a spreadsheet..." My response was "I don't think I'll have any problem...I may be trained as an experimentalist but I do have a Physics Ph.D. and have taken my share of math courses." That blew right past her...she had no idea wtf I had said...we are in deep shit.
the test was designed so that women could pass it.
Their customer's asses must feel like this is a Wedge Fund.
I never get frustrated. My local gun shop always has plenty of 5.56 and 45 ACP in stock.
...so they pulled their funds...were they gonna put them.....they are just as fucked as the rest of us.....
misery loves company....if you are just an aware average slub, our choices are severly limited...i like my metals as opposed to my rentals cause they never call me, or need a furnace or roof....looks like its a big club and were all in it...
University of Texas had the right idea, until they liquidated their gold holdings (if I remember correctly).
ot question...am i the only one that all u tube attempts are muted and i have to reset the volume?...if so, any idea why?
@smlbizman
Yeah, I just starting getting that problem last week. I think it's some defualt that GOOG started and it's probably cookie controlled. Do you block cookies?
yeah...cookie blocks, ad blocker, running firefox...
@smlbizman
I think that's our answer...I prefer open-source Chromium to FF. Adblock is built-in and the cookie, pic and JS blocking admin is super-easy.
Two years ago, Texas University shocked the gold community by taking delivery of $1 billion in physical gold from the COMEX, under the guidance of Texan hedge fund titan Kyle Bass.
Bloomberg reports this morning that the University’s Endowment fund has just liquidated $375 million of its physical gold position over the past 3 months, and will plow the proceeds…back into the PAPER GOLD FUTURES MARKET (along with general equities).
Nothing like identifying a coming trend and getting out of Dodge in time…just to come running back and jump into the fire when the game actually starts heating up!
Somehow we suspect that Mr. Bass was not consulted on the University’s latest financial decision…
Two years ago, Texas University shocked the gold community by taking delivery of $1 billion in physical gold from the COMEX, under the guidance of Texan hedge fund titan Kyle Bass. Bloomberg reports this morning that the University’s Endowment fund has just liquidated $375 million of its physical gold position over the past 3 months, and will plow the proceeds…back into the PAPER GOLD FUTURES MARKET (along with general equities). Nothing like identifying a coming trend and getting out of Dodge in time…just to come running back and jump into the fire when the game actually starts heating up! Somehow we suspect that Mr. Bass was not consulted on the University’s latest financial decision…
I had the same problem on a desktop I don't use often. My laptop was ok. Go to settings and make sure chrome is up to date on the current version. I updated the desktop and problem solved.
I read they still had $1.4 Billion:
The University of Texas Investment Management Co., the third-largest U.S. academic endowment, sold $375 million in gold bars from holdings of about $1.4 billion and reinvested the proceeds in gold futures and equities.
http://www.bloomberg.com/news/2013-04-24/texas-university-fund-sold-375-...
They must have sold a little to pay their football coach that $5 million salary x 5 years.
And BTMFATH !!! Double penetration of the muppets !!!! MOOOOAARRRR !!!!!
Skynet is now self-aware ! Carbon based traders must be terminated !!
How you like that QE now?
1st world problems.
how about 0.001% problems?
99 problems but a bitch-ass hedge fund ain't 1.
Currency trend-followers--a graveyard for speculators since the central banks have taken control.
They have already gone to Zero.
No Alpha for you!
Now if they could shut down Dalio and Singer and redistribute their stolen wealth maybe Bernanke could up my FASFA.
So if you are another hedge fund who is either net short, or just dragging ass because of large hedges in place causing underperformance, and you see what just happened here, what are you going to do?
This is why the S&P may be at 4,000 before long, and why being early may bankrupt you before you may ever end up being right. It's why even though spotting bubbles may seem obvious in hindsight, profiting from them by trying to pick their demise is usally a fools game. Ride the wave, or don't play at all.
At some point in time these guys are going to realize that the only play is to be long the market, no matter what the cost.
And then the real ass rapings commence.
There is no doubt that's in the cards.
I'm 65% long, 35% cash, 20% gold, 25% real estate and 10% antiques, art and collectible beanie babies. I got ALL my bases covered.
all 155% of them, you've lapped yourself
Hey Doc, thought you would find this funny. Apparently anwhere from 2-5 of those motorcycle thugs have turned out to be off duty cops.
I read that. The comments about this whole thing is what gets me. I can not grasp how people think that the guy in the SUV with his family is just going to start fucking with a group of 50 bikers.
The bikers were the victims doc. That guy in the suv is a menace. Gloria Allred told me so. Her compassion is just overwhelming for their families.
http://www.google.com/imgres?imgurl=http://assets.nydailynews.com/polopoly_fs/1.1476605.1380953915!/img/httpImage/image.jpg_gen/derivatives/landscape_635/bikers5n-10-web.jpg&imgrefurl=http://www.nydailynews.com/new-york/celebrity-lawyer-gloria-allred-represents-biker-injured-suv-driver-attacked-upper-manhattan-article-1.1476093&h=422&w=635&sz=29&tbnid=SvWVdyuqgjp3EM:&tbnh=123&tbnw=185&zoom=1&usg=__QDo7y1Nr6q4GHJTAGY0f7zvoHoE=&docid=yqzXhWc75NmfyM&sa=X&ei=JNNSUo-XNtW-4AOYmICgDQ&ved=0CDMQ9QEwAA
Hey Fonz that explains why a portion of them didn't have Motorcycle licenses or were using license plates off of stolen or unmatching bikes. Last time I checked it was illegal to operate a motor vehicle without a license and proper registration.
If that's the case then the the fuckers(motorcycle thugs) shouldn't have been on the road in the first place, and the incident never would have happened.
you may be right Yen but Gloria Allred was hugging that woman so.....I just don't know what to think....
There goes margin. thanks
When the major indexes outperform you, you are no longer viable.
Of course, neither is the market or capitalism itself, but who's counting?
crony capitalism
The Bukkakee Ben Moar Schnozzle only splashes the chosen ones with his liquidity......
All your alpha are belong to us- The Central Bankers
He should have stuck to playing bass in Duran Duran.
Meanwhile almost back over 15,000.....so god damn aggravating.
As long as they don't knock gold and silver down, I'm good with the Dow going above 15000.
why do you not want paper silver and gold to go down? I'd like to keep it on sale for as long as possible to keep stacking.
You're not playing in their corrupt little paper games, are you? tsk, tsk.
stack phyzz and phyzz only :-)
Nah, I can't keep stacking for lack of income.
ok...I hear ya. Well, save dry powder for those dips. But IMHO any silver to be gotten under 30/oz is a great discount at this point. I stack a little at a time just in case a big slam is around the corner (which usually occurs AFTER I buy more phyzz, haha), so as long as they keep it under 30 I just buy a little at a time...waiting, waiting, waiting...always waiting and being patient. Good luck to you though and keep stacking no matter what! :-)
No Market for Old Men
No free market ... for anyone.
No market
Get off my alpha.
Wow, from 14billion to less than 1billion. Like I fuckin' care. Douche.
A snake in wolf's clothing.
America could soon be that hedge fund and the world could be reading a similiar headline shortly. Change $B to $T's.
*golf clap*
Thoughts on this one, anybody???
Forget the Shutdown! US Economy About to Hit the Vortex of a Structural Traphttp://www.minyanville.com/business-news/markets/articles/structural-trap-liquidity-trap-tarp-the/10/7/2013/id/52103#ixzz2h2m0YR8t?refresh=1
i love vortexes in the morning
Just remember when you're this far up the river past the Dolong bridge, never get out of the fuckin boat...never know when a sudden tropical shiticane can hit.
Maybe. Or maybe ZH will make more space for advertising?
Now that ZH is mainstream, I miss the pros that used to comment here when statistical analysis was bar none the best. Now? Catering to tin-foil-hatters and "Doomers" (as pages long comments on anything Doomer). My guess is that ZH sold out when the ad revenues started pouring in, the industry pros that are left don't post or headline much anymore.
Most of the conspiracy crap has been blown out of the water in the courts (i.e. silver manipulation). What the belief is doesn't matter, even if it's corrupt, it's what can be proved. If commentators are going to continue to the conspiracy bullshit, then please post some evidence and analysis.
So what if another hedge fund bites the dust?
Well, why don't you just fuck yourself off then?
Northeaster must have been nuked by Tyler for that little gem of insight. Can't access his page. LOL.
Conspiracy crap first posted on Zero Hedge like POMO manipulating markets (now also admitted by the Treasury), like HFT making a mockery of price discovery and breaking markets (now admitted by everyone), like vast LIBOR manipulation which can never obviously happen (now admitted by every bank that participated), like rigged FX markets (now investigated in Europe) like JPM engaging in criminal manipulation of commodity and mortgage markets (with JPM now admitting securities violation fraud)?
Don't let the door hit you on your merry way to Business Insider where you will find the regurgitated and politically admissable content much more to your liking.
......sound of flushing toilet as yet another log is dispersed into the sea of liquidity <sounds of Tyler whistling in the stall with satisfaction>
toodle loo_ Norwaster
BOOM!
the commenter should go ahead and hand his money to Madoff or Corzine to manage. No corruption anywhere! Just good hard working professionals doing honest analysis and trading for the benefit of their clients!!!!
Of course there is no insider trading or frontrunning clients. nope, these people are ethical professionals!
Well I guess people don't have to keep on writing the same stuff over and over, by this time, for those who've been loyal followers of ZH, certain subjects are nonetheless understood and well known.
Sometimes though, it is worthwhile to repeat certain names by which we call certain center bankers. In that case, repeating is not redoundant.
"Most of the conspiracy crap has been blown out of the water in the courts (i.e. silver manipulation)."
Tells us all we need to know, really. Presumably you are also a big fan of the Warren Commission Report, as well as The 9/11 Commission Report.
'All tinfoil hatter 'Doomer' conspiracy stuff has been blown outta the water'......Bernank, is that really you?
Damn....I thought this was going to be about the FED closing.
Nothing but hot air.
Well, the laugh is always on the loser.
Everything is now entertainment.
That's not a hedge fund, that's a ditch fund.
Who needs a hedge fund broker anyways?
No problem here. Old enough to retire and I'm sure he has a large enough nest-egg from fuckin everyone through the years.
Should take his $$ and run while no one is looking and he still can ............
Nobody cares. The dollar/yuan is completely manipulated. Go ahead and algo that morons. Don't even get me started on dollar/yen let alone Cable. If fx was all in on yen collapse following Fukushima (and they are not alone if they were) say hello to London and the Empire first. I mean Amazon keeps soaring, Facebook is at 50, Tesla is heading to three hundred and you folks are still all about the Big Short. The USA will be producing ten million barrels of oil a day by next year that will be SHUT IN production. Natural gas has already collapsed in price. Solar has soared and wind will now come on line en masse. Why trade in fx period? I mean gold price? Really? Buy a gold mine and run it profitably instead. Start thinking big for a change.
Well that's the problem and I'm a bit familiar with it as I live by some gold mines and have friends who work them....the gold is there sure, but getting it at a profit is the issue when you have to go for volume which means using front end loaders with buckets as big as a house and 2 story tall dump trucks. Expensive.
Hedge funds are 80's era dinosaurs, overdue for extinction in the new BTFATH era.
IMO hedge funds are an artifact of the effort to obscure international bank involvement in managing and manipulating markets. Willing cronies got rich by carrying the water for Goldman and others.
BET AGAINST THE FED! CAN'T LOSE!
Achtung, Herr Taylor is simply another example of our überlegen printing techology.
Remember only the weak will perish from the BRECHDRUCK of our OODLEBERG printers. Hubschrauber? Nein Uboots. You will NEVER SEE THEM COMING until it is too late Ha ha ha ha!!!
Gruß, Commandant Bernank
Betcha John Taylor is not hurting finnancially. He has "taken" his swag and left his clients holding the bag.
John "Parity" Taylor. No wonder he´s in troubles with euro heading to 1.40. Completely misread that one.
Forex aint' what it used to be!
I knew this was coming a year ago when he started showing up in the news with trade ideas apparently oblivious to how FX actually works. Paper currencies stay in agreed to set bands which are enforced by central bankers. If you think one fiat currency is going to be allowed to have a tail event in any direction, you need to cancel your FX account. they are all going to lose purchasing power while they all stay in their allowed bands. It is all the same meaningless garbage as long as the Fed says it will print and give you X USD for X Yen all day and twice on Sunday. There is no FX market. The FX market is own real gold or take the other side and own paper anything. There is only a limit on one kind of money, and it isn't the paper kind. Banker haters gonna hate.
Bingo.
The X USD to Z YEN will always be there - even when gas is $7.75/gal - then $12.95/gal - then gas is unavailable.
But, you can still get your FX quotes!
In a sane world they probably would have done great.
But, this is insane territory - where $85 Billion per month is handed to Wall Street and cut backs to Food Stamp programs of $79 Billion over ten years are made.
$17 Trillion in debt, and the spending just goes on as fewer and fewer people have career employment.
FX Concepts didn't BTFD in Netflix, Yahoo, and Bestbuy - so they are getting crushed for not playing the game.
I'm not laughing.
If Obama had a hedge fund, it would look like FX Concepts.
Must have been short the mighty Euro!... the Banksters favorite bastard child.
Taylor was an outsider. He didn't drink at the Club Fed bar. I would think that he never thought that the Int'l markets would put up with the insanity of the ECB and US Fed.
He has only come to realise how far feckin' gone the Bernank and his cabal of short fingered, cultural barbarians have infiltrated the global system.
Relax, and try to enjoy life John... you had a good run.