• BullionStar
    05/30/2016 - 21:24
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Slaughter: Hedge Funds Have Worst Day Since June 2012

Tyler Durden's picture


Update: As CNBC just reported moments ago, tech fund Coatue is returning $2 billion of $7 billion to investors, citing "difficult market conditions." Just wait until the "difficult market" drops more than just 3% from all time highs...

Over the past few days we have been following, with great interest, the events in the most popular "hedge fund hotel" names on both the long and the short side. Specifically, over the weekend we learned that the mauling that hedge funds suffered in the last week of March, which was also the worst week for HF performance since 2001 excluding "world ending" weeks such as Lehman and the US debt crisis, spilled over into last week as well.

As a reminder, for those with Bloomberg (and the proper permissions) the easiest way to track the performance of the most popular hedge fund names is using the BBG ticker GSTHHVIP, and especially its performance against the S&P. But for those who don't have access, or are too lazy or depressed to type anything into their terminal today, here it is, straight from Goldman's sales and trading mouth, summarizing yesterday's market poundage:

Our HF VIP basket underperforms the SPX by over 100bps, 3 standard dev move and the worst since June 2012.


And since we enjoy being helpful, for those who want to keep the pain on the hedge fund space the easiest way to do this is to keep selling and/or shorting the names the comprise said Goldman GSTHHVIP basket, something we suggested is the right trade two weeks ago. The breakdown is as follows (sorry General Motors and your latest airbag inquiry):


Why trade this? Because recall that hedge fund leverage, as indicated by the following leverage table of one of the "more" levered smart money participants, Balyasny, has never been greater and is now 3.5x - 4.0x.

In other words, either hedge funds rapidly deleverage once the margin calls finally slam the hammer on the smart money, which will crash stocks further, or hedge funds sell the widest held stocks over fears of what other hedge funds do, which also will crash stocks further.

Unless, of course, the Fed's plunge protection team finally steps in as it has always done at key market inflection points in the past 5 years and restores upward market momentum.

Then again, with the market at the same forward multiple as at the last bubble peak, and with increasingly more Fed members screaming "bubble" this time may be different...

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Tue, 04/08/2014 - 08:07 | 4635075 slaughterer
slaughterer's picture

ZH is really using the word "slaughter" alot lately.  Bottom tick sign?

Tue, 04/08/2014 - 08:10 | 4635083 max2205
max2205's picture

The only reason there is a std dev is because the fed is propping up SPY

Tue, 04/08/2014 - 10:11 | 4635429 redpill
redpill's picture

Hedge funds aren't really hedge funds anymore.  They should be called sheep funds since that's all they are these days in a desperate bid to follow the momentum.  If your "hedge" performs in step with the broader market, chances are you're just overpaying for an index fund of usual momo suspects.

Tue, 04/08/2014 - 10:40 | 4635504 Remington IV
Remington IV's picture

"hedge" =  leverage your portfolio 200% + in the    2 and 20 world of compensation

Tue, 04/08/2014 - 08:11 | 4635084 Tyler Durden
Tyler Durden's picture

The bottom tick sign, if any, is that Gartman just went mega bearish... a week after saying "experience tells him to stay bullish on stocks"

Tue, 04/08/2014 - 08:13 | 4635091 theliberalliberal
theliberalliberal's picture

Gartman's tombstone should be a giant thong

Tue, 04/08/2014 - 08:15 | 4635093 GetZeeGold
GetZeeGold's picture



... a week after saying "experience tells him to stay bullish on stocks"


It's so unlike Dennis to change his mind.

Tue, 04/08/2014 - 08:29 | 4635113 Winston Churchill
Winston Churchill's picture

Stolper & Gartman should start an inverse consultancy biz.

Tue, 04/08/2014 - 09:08 | 4635241 wallstreetapost...
wallstreetaposteriori's picture

Hey, even a blind dog like Gartman gets a bone every once and while...

Tue, 04/08/2014 - 09:11 | 4635248 agstacks
agstacks's picture

bearish in Yen terms?

Tue, 04/08/2014 - 08:11 | 4635086 theliberalliberal
theliberalliberal's picture

its supposed to be "laughter" but tyler is drunk and slurring his words

Tue, 04/08/2014 - 08:09 | 4635076 GetZeeGold
GetZeeGold's picture



That was awesome! Can we do it again?


Tue, 04/08/2014 - 08:09 | 4635077 theliberalliberal
theliberalliberal's picture

biggest mover airlines?!?!?

Tue, 04/08/2014 - 08:12 | 4635088 firstdivision
firstdivision's picture

That's a sure sign to sell then.

Tue, 04/08/2014 - 08:10 | 4635079 firstdivision
firstdivision's picture

That's what the 2 & 20 is for.  Any fool can track an index with SPY, but we pay extra for the insight of the 'masters of the universe'.

Tue, 04/08/2014 - 08:13 | 4635087 Sudden Debt
Sudden Debt's picture

Tesla, Netflix, Amazon,Facebook,... now what do you know... I'm shorting all of them :)

Tue, 04/08/2014 - 08:15 | 4635095 Took Red Pill
Tue, 04/08/2014 - 08:19 | 4635101 GetZeeGold
GetZeeGold's picture



We could just kill all the golfers.....I'm sure some of them are bankers....and presidents.....you get the picture.


Tue, 04/08/2014 - 08:24 | 4635105 firstdivision
firstdivision's picture

Including those of us that have to play on public courses?

Tue, 04/08/2014 - 08:25 | 4635108 GetZeeGold
GetZeeGold's picture



Naw.....I wouldn't go that far. I'm sure a lot of those people are completely innocent.

Tue, 04/08/2014 - 08:42 | 4635142 MeMongo
MeMongo's picture


HaHa thanks for the morning laugh :-)

Tue, 04/08/2014 - 09:38 | 4635329 TeamDepends
TeamDepends's picture

Carl Spackler: [preparing to dynamite the gopher tunnel] In the immortal words of Jean Paul Sartre, 'Au revoir, gopher'.

Tue, 04/08/2014 - 08:16 | 4635098 I am a Man I am...
I am a Man I am Forty's picture

it doesn't matter, hedge funds are in cahoots with pension funds, etc., nothing but a scam, nobody would pay for 2 and 20, or make that just the 2% this year

Tue, 04/08/2014 - 08:16 | 4635099 101 years and c...
101 years and counting's picture

if a 1% move down in stocks causes that, cant wait to have the big 4-6% down days we'll soon be seeing:)

Tue, 04/08/2014 - 08:20 | 4635103 NoDebt
NoDebt's picture

That's what's missing here.  A big ka-thump.  This is the latest in a long line of the most tame, orderly, well-managed sell-offs I've seen since the one before.

Tue, 04/08/2014 - 08:33 | 4635117 101 years and c...
101 years and counting's picture

its only been 2 days.  give it some time.  once we start cutting into margin, the selling will accelerate at a ferocious pace.

Tue, 04/08/2014 - 08:17 | 4635100 mayhem_korner
mayhem_korner's picture



Margin calls are nice.  They are contagion accelerants, like trans-pacific flights during flu season.

Not convinced that this will break the dyke (something eventually will in fantasyland).  Real question is what will the CBs do when the 6+ year print-fest is faded?  They only have one key to press on their terminals, right?

Tue, 04/08/2014 - 09:12 | 4635109 Dr. Engali
Dr. Engali's picture

It sure seems like a lot of digital currency will have gone to waste to let it all crash now. Maybe they are going to try the unwealth effect since the wealth effect clearly didn't work.

Tue, 04/08/2014 - 08:26 | 4635110 new game
new game's picture


Tue, 04/08/2014 - 08:34 | 4635119 A_Nejad
A_Nejad's picture


Tue, 04/08/2014 - 08:38 | 4635134 AdvancingTime
AdvancingTime's picture

Over the years we have witnessed the type of market reversal the big banks supported by the Fed can generate with a concerted effort to buy S&P 500 index futures at crucial support points late in the day. This has proved more than enough to turn the markets from red to green in the blink of an eye.

This is a reason for caution!  If it looks like a Ponzi scheme, sounds like a Ponzi scheme, and feels like a Ponzi scheme, then it is probably a Ponzi scheme, but that does not guarantee that it is over. More about this subject in the article below.


Tue, 04/08/2014 - 08:43 | 4635143 NoWayJose
NoWayJose's picture

Can you really trust 'anything' from Goldman?

Tue, 04/08/2014 - 09:12 | 4635255 The Shootist
The Shootist's picture

Annihilation of hedge funds, someday...

Tue, 04/08/2014 - 09:12 | 4635256 ElvisDog
ElvisDog's picture

I love how these retards throw around phrases like "3 standard dev move" as if this little blip in the stock market is such a rare and unforseen occurrence. "We're sorry we lost your money, but this was a 3-sigma event....". I'm sure their "Monte Carlo" simulations didn't predict this either.

Tue, 04/08/2014 - 09:21 | 4635288 Save_America1st
Save_America1st's picture

Maybe these hedge fund idiots should read more Zero Hedge and hire Ann Barnhardt as their consultant.  In case they hadn't heard...Ann recommended long ago to get the fuck outta this criminal, fraudulent, manipulated system.

And it's going to be multiples worse than anything they can imagine when it all comes crashing down around them.

I hope they've chosen a nice high building to be thrown off...um, I mean to jump off of. ;-)

Tue, 04/08/2014 - 09:22 | 4635290 NOZZLE
NOZZLE's picture

and to think that only a month ago the talking heads and the leg crossers were crowing  about how the Russian stock market was down 10 percent and Putin would have to throw in the towel

Tue, 04/08/2014 - 09:25 | 4635295 Algosaurus Rex
Algosaurus Rex's picture

A couple down days and a hedge fund cites difficult market conditions?

This must be the new breed of wuss-class hedge funds. FFS...

Tue, 04/08/2014 - 11:48 | 4635772 Chuck Knoblauch
Chuck Knoblauch's picture


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