These Are The Most Levered Hedge Funds

Tyler Durden's picture

As we remarked recently, hedge funds, especially those that have rushed into momentum, high-beta, hedge fund hotel names, have had a horrible year, mostly as a result of the double whammy of the most tightly held hedge fund positions getting slammed, compounded by what is unprecedented hedge fund leverage. Indeed, when it comes to hedge fund market exposure there are two numbers one must keep track of: net assets, which are more or less is equivalent to how much inside and outside capital a given entity is managing at a moment in time, and Gross, or regulatory assets, which also includes the impact of leverage and various off the books exposures with one's Prime Broker.

As a reminder, under Dodd Frank, regulators instructed firms to count assets that most were excluding from tallies on size, including holdings obtained through loans, short sales and hedging. Traditionally, hedge-fund advisers have quoted a net number, comprising investor capital plus investment gains and losses, when disclosing their assets under management.

As Bloomberg reported back in 2012, "This is one of the largest changes to the way assets under management are calculated historically,” said Sidney Wigfall, co-managing partner at SC Advisors-Barge Consulting Group, a Chicago-based firm that advises money managers on regulatory compliance. "The SEC wanted to be able to see firms’ asset exposure to both short side trades as well as trades that involve using leverage, regardless of the amount."

Well, now that the April deadline to file annual Form ARDs has passed (one can find the central SEC database for hedge fund records here), we can do an update for not only how big America's largest hedge funds truly are on a gross basis which includes short and repo exposure, as well as the full generosity of their Prime Brokers, but also who are the most levered hedge funds.

The results are shown below. In top place, for many years in a row, remains that HFT and quant wolf in fundamental analyst sheep's clothing, Chicago's very own HFT champion Citadel, followed closely by perpetual SAC pod-PM wannabe, Millennium which is also known for having some curiously profitable HFT pods and has gotten in hot water over its HFT practitioners.


And below is a sort of select brand hedge fund names by Gross, or regulatory, assets:

How do these compare to historical figures? The chart below uses the gross data provided by Bloomberg as of April 2012 to generate the following two year comparison. The bigest winners in terms of size increase: Bridgewater, Millennium, Citadel and AQR, all of which have regulatory assets well north of $100 billion.

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Canadian Dirtlump's picture

I'll set my lawnchair up and eagerly await the facial blowtorching that, as a silverbug, I have been forced to embrace.

firstdivision's picture

How have you been blowtorched?  An ounce is an ounce.

Canadian Dirtlump's picture

I sold on the lows and bought bitcoin on the highs. I've since dumped that for some magic beans so something better fucking break soon or I'll be using one of my maples to pay charon's obol.



AC_Doctor's picture

Come on, even the Tyler's know that the Fed is "These Are The Most Levered Hedge Funds" winner at an amazing 73:1!  Why are they left out? :)

Charles Nelson Reilly's picture

75:1 since you posted 18 minutes ago.  It'll end well for sure....

0z's picture

Isn't Mao's dynasty even more Levered!?

Skin666's picture

I hear ya brother.


On the other hand, these last couple years have allowed me to build on my stacks of shiny shiny's : )


Swings and roundabouts

Canadian Dirtlump's picture

Indeed. Resilience is the word. I've got a tube of zombucks latest 2 zombuffs and a tube of barbers coming. In an odd stroke of luck I have some dry powder so if we get an other smash I'll take a bigger position. For now, I'll chew away and take the gifts.


I still need some noah's arks and some of the new pegasus rounds, as well as I'll be getting a tube of each bird of prey selection from rcm.

Tom_333's picture

Where´s our daily bankster ? Waiting for the next absurd murder-kill-suicide sequel. Peak banksters.

Philalethian's picture

"Peak banksters."

We'll have to make up a new song when they start leaping by the dozens.

For dimon and the rest of these rothschild/rockofeller zionist bankster puppets the choice is, will it be better to leap, or be torn to shreds and eaten by the vicious and very furious angry crowds that will be clamoring to get a piece of any of the moneychangers.

Spungo's picture

I'm guessing Cramer's fund is the most heavily leveraged and has the lowest net worth.

optimator's picture

Expenses must be interesting as it take a lot of family mem, I mean, advisors to run a charitable fund.

firstdivision's picture

The rectal bleeding at Citadel is going to be epic.  Shit ton of assets + Shit ton of leverage = mass suicide should you be wrong.  Prepare for the list of dead finance players to increase shortly.

Doubleguns's picture

Rectal bleeding? I hear preperation H(ope) can fix that. 

aVileRat's picture

yup, ltcm2.0 is really going to suck for that one special snowflake who is long the zero bid illiquid toxic product. No tagbacks or bailouts this time either. Bail-ins will literally send the world back to pre-Magna Carta, so a systemic default in one entity can easily daisy chain into a huge cascade in under 3 hours due to the speed of algo-trade stop loss programs & AI's. Breakers were designed for 1937 style trading with hand signals.

Fun fact about these numbers many of the major shops are only talking about their book values at the prime. Add in their broker arms or reinsurance arms, and the total risk capital at each of those funds beyond the 10b mark is about double that number. As boss under the new regs, all of those shops must provide liquidation plans to not only unwind the asset pools (the EOD positions) but also a solution to resolving their reinsurance or dealer arms which source/provide the liquidity to the main trade book.

I totally can see one or two key primes pulling a LEH as these guys stress test their 4 sigma trades well into the deep end of the dark pools.


AGuy's picture

" Shit ton of assets + Shit ton of leverage = mass suicide should you be wrong. Prepare for the list of dead finance players to increase shortly."

You been the HF investors not the HF managers (HF = Hedge Fund). The managers will walk away with millions from fees. I betchya the majority of the HF mgrs have there money invested in very low risk investments. Rarely does a HF Mgr actually invest their savings into the crap they are offering to investors. Recall that the REITs managers made a boat load on paper profits during the housing bubble. Last time I checked, They were all still very rich living on yachts, yet their firm had long gone bankrupt.

Its the Pensions that are going to get screwed over again.



pound the vix's picture

Easy to leverage 9x when you get a heads up from the Fed before every move!!!!

alangreedspank's picture

Most leveraged hedge funds ? Where's the Fed on that chart ?

Excursionist's picture

At first I thought, "Wow.  How do the guys at Citadel sleep at night?"

Then I realized similar calculations for a majority of U.S. households would yield leverage ratios close to infinity.

In this context, I guess the good folks at Citadel sleep like babies.

observer007's picture

mysterious lights on Mars - fotographed by Curiosity


Bright spots appear in images from the rover nearly every week.

Marsians alive?


HRamos_3's picture














Ban KKiller's picture

Fortress Investment Group? Fucking losers! Where did Mr. Mudd go? Hope he stays out of tall buildings...

Mr Giggles's picture

Yes definatly, Long levers!! (Damn theives.)

NEOSERF's picture

Please tell us exactly what the top 4 HF's biggest holdings are...can't imagine they will actually buy more so should be a good short to watch from my lawnchair.

ebworthen's picture

Ponzi funds.

Thanks ZH.

Philalethian's picture

Wanna talk about some leverage, take a look and listen to the furious rage in these peoples voices as they unleash the power of the people on these feds that are trespassing, stealing, and killing this mans cattle in Nevada. When these babylonians fire the first shot, a wave of lead is coming back. Who is left will face a rapid neck-tie-noose, rancher style.


walküre's picture

Americans still got a backbone. That's what I'm talking about. The Feds are a cancer everywhere.

walküre's picture

None of these fucking assholes is putting their capital to work in the economy. It's all sitting in MOMO stocks and other bullshit paper assets that promise high returns but achieve diddly squat in the real economy. Exceptions withstanding, this is the reason why CapEx is low and why businesses are soon starving on the vine and people can't find decent work.

kevinearick's picture

It's the middle class that is going to get whacked...

On a mortgage, when does the interest get paid and when does the principal get paid, and how many times does the bank generate a mortgage, print money, on the same house?

Why can’t a worker print as labor is generated? Banks do not create wealth; why do they distribute it?

Why must grandma turn to the real estate agent instead of renting directly to a young couple in the neighborhood, and what kind of automaton rents for the privilege of being so bankrupted, by law?

What is the DNA threshold?

The middle class is its worst enemy.

Why can Warren Buffet print money with nothing more than his signature, discounting your purchasing power, and yet cannot beat his own market? Why can’t he retire and walk away? What does that vortex really look like?

WB wins at money, by discounting life, spoiling the well for all that follow. El Erian caught on, didn’t he?

Kool Aid anyone?

The cost of the banking intermediary is ignorance, and the benefit of the banking intermediary is ignorance. The whole point of money is to avoid work, by getting someone else to do it, trading promises, future labor, with no representation but government under Family Law, for natural resources, with shiny objects to present labor, which nets intelligent labor out, leaving only acceleration of natural resource exploitation, driving demographic booms and busts, along with climate variability.

A trap is a bomb, and a bomb is a trap.

Would you be stupid enough to trade a redwood for a Tesla?

The critters are caught in their own automation, trying to replace intelligent labor.

If a corporation is a person, why can’t it robosign mortgage transactions?

If computers are gobbling up the market, there is no such thing as security, and dc is a one-way ride…Whatever you do, maintain those one-way trade barriers with State licensing / MAD extortion.

What is Yelp doing now?

Yep, the middle class can replace labor with a c-clamp all right.


walküre's picture

Not a problem. That kosher kid Levin from Och Ziff is going to rescue the bunch and hand 'em all triple digit million Dollar pay days. Simple stuff. Och Shyte.