Another Hedge Fund Legend Returns Cash To Investors Due To "Lack Of Investment Opportunities"

Tyler Durden's picture

While hardly as spectacular as Hugh Hendry's supernova flameout, or the far more boring, slow motion conversion of the assorted other famous and less famous bears, a legendary hedge fund titan has decided he too has no use for excess capital in this broken market. No surprise then that Institutional Investors' Alpha reports that Baupost's Seth Klarman is returning $4 billion in capital to investors for only the second time in its history due to "a lack of investment opportunities." And watching how the epic farce that Bernanke's wealth effect known as the Stalingrad & Poorski trades in the last 30 minutes of every day nobody can blame him. And no, Klarman is not returning cash due to some hidden underperformance: "Baupost’s many partnerships were up 13 percent, on average, through the September quarter. Its annualized return since inception is in the high teens." This happens to push it in the top decile of all hedge funds in 2013.

Yet despite the exercise of the redemption put, Baupost, which at the end of 2013 had $26.7 billion in AUM making it the 7th largest hedge fund in the world, still will have a ton of both capital and dry powder.

From Alpha:

When it completes the capital distribution, firm-wide assets will likely be more than $25 billion, according to a source. Earlier this year we reported the firm’s goal is to keep assets at $25 billion.


This is only the second time in the hedge fund firm’s 31-year history that it is returning money to investors. The previous time was in 2010, and Baupost subsequently raised money in early 2011.


At the end of 2012, Baupost had nearly $26.7 billion under management, making it the seventh-largest hedge fund firm in the world, according to the most recent annual Institutional Investor’s Alpha ranking of the world’s 100 largest hedge fund firms.

The good news: the trickle down from Mr. Chairwoman's policies to the E-trade babies still left fighting for bid/ask scraps in this "market" with the vacuum tube HFT armies is sure to have a happy ending.

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Say What Again's picture

What's he talking bout?

There are plenty of opportunities to BTFD.

fonestar's picture

If someone can't find opportunities now they must be braindead.  Don't miss all your opportunities by hunkering down too tight because some people are going to make a fortune for themselves!

Ghordius's picture

perhaps this guy makes a difference between investing and speculating? not all do. and no, buying BitCoins might be a good or bad idea, but you can't call it investing

P.S. I buy gold, but I call it insurance

Pladizow's picture

What's the 2 n 20 on $4bil?

The excuse of "no opportunities" is to provide cover - so that he can sell without creating panic, before the collapse!

Funds of this size must get out via piece meal, they cant wait for the mad dash!

TruthInSunshine's picture

I can't remember which ZHer coined the (soon to be) legendary phrase the other day, but it's either All In [or All Out, apparently) of Beranke's Death Machine.

Bangin7GramRocks's picture

Or he got a message from the gubmint to get out now or we come after you for your past crimes. Every single hedge fund manager is guilty of insider trading. Only a select few will ever be charged.

long-shorty's picture

I'm going to go way out on a limb here, and I'm sure I'll get lots of thumbs down for this, but maybe, just maybe, Seth Klarman is returning capital to partners because he felt it was the right thing to do. I've never met Seth Klarman, but there are some people in the industry who are seriously just bright, ethical people, and it is possible that he is one of them. After all, he did write a pretty phenomenal book sharing some great investment ideas with any investor who takes the time to go find it. No good hedge fund manager writes a book to make money, and he is undoubtedly a good hedge fund manager.

Harlequin001's picture

At these prices he should sink $4B into physical gold. That would make a difference.

Freddie's picture

The dude has $26 + billion under management.  He just sent back $4 billion.  Not that big a deal.

hedgeless_horseman's picture



He just sent back $4 billion.  Not that big a deal.

On average, Bernanke monetizes $4 billion every business day.

Learn to enjoy the liquidity and Buy the Fucking Dip...

Yen Cross's picture

   Instant classic! "Stalingrad & Poorski"...

Clowns on Acid's picture

Yen+ - Tyler has mentioned it before, sharpen up dude... there is a storm coming.  

Yen Cross's picture

    What? I suggested 2-3 days ago that people take advantage of cheap P.M. prices and posted a link for xag rounds. You're preaching to the choir.

NOTaREALmerican's picture

What's the difference between "investing" and "speculating"?

Uber Vandal's picture

Delusion vs Reality per Jesse Livermore

Or was that inside information (investing) vs. speculating (guessing)

How to Trade in Stocks is a book I still turn to time and time again.

Ribeye's picture

Old Hugh Hendry did the former, new hugh Hendry does the latter,  

whateverittakes's picture

The long side of this market looks like some over-crowded ferry someplace in the turd world trying to cross rough seas. One big wave and everybody goes down screaming.

tarsubil's picture

Does anyone have any idea what is going on in reality behind all the smoke and mirrors? Is it a bunch of monkeys 'batin' it to porn or is there some kind of plan?

Clowns on Acid's picture

Why doesn't he just buy US Treasuries with that dry powder....?

ebworthen's picture

Translation:  "The big boys are gonna' crash this m'fucker soon."

Cryogenic's picture

Is the the part were the pilot should make the announcement "Please return to your seat and fasten your seat belt and assume the brace position" but fails to do so?

Bastiat's picture

All I heard was "Assume the position."

Reaper's picture

It's CYA and be the one they'll come to after.

SonOfSoros's picture

He is spot on. 

Manipulated markets take the fun out of trading and investing. Being in a HF used to be about finding market mispricings and profitting off such mispricings. However with everything manipulated by the government, mispricing just doesn't matter anymore when fundamentals can be manipulated to inflate the balloon.

It just isn't as fun as it used to be either. The markets used to be full of the best minds competing to beat either party and outplay each other. Now it's just a manipulated money bukakae by the Fed with everyone trying to frantically jerk the Fed off so that he will ejaculate more cash all over their faces.

The markets are dead really.

ToNYC's picture

Baby takes a BTFATH.