This page has been archived and commenting is disabled.
Everest Macro Hedge Fund Blows Up After Nearly $1 BIllion In Swiss Franc Losses
Yesterday, when we got the first news of huge P&L losses at various publicly-traded banks not to mention the collapse of several retail brokers culminating with the bailout of FXCM by Jefferies, we reminded that seconds after the SNB shocker, we tweeted what was quite obvious to anyone who realized that speculators were most short the CHF since the summer of 2013:
The SNB just blew up countless macro hedge funds
— zerohedge (@zerohedge) January 15, 2015
We also added that "We have yet to find out just which hedge funds were blown up yesterday", for the simple reason that unlike public banks who have an obligation to reveal news, especially bad, to their shareholders, hedge funds PMs hope to avoid the LP firing squad until the last second. Alas, there is only so long that the day of reckoning can be delayed.
One such fund is the Everest Capital Global macro fund, which went from just shy of a billion to zero in milliseconds as a result of a near wipe out due to a massive CHF-short position. Bloomberg reports:
Marko Dimitrijevic, the hedge fund manager who survived at least five emerging market debt crises, is closing his largest hedge fund after losing virtually all its money this week when the Swiss National Bank unexpectedly let the franc trade freely against the euro, according to a person familiar with the firm.
Everest Capital’s Global Fund had about $830 million in assets as of the end of December, according to a client report. The Miami-based firm, which specializes in emerging markets, still manages seven funds with about $2.2 billion in assets. The global fund, the firm’s oldest, was betting the Swiss franc would decline, said the person, who asked not to be named because the information is private.
Everest grew to $2.7 billion by the start of 1998 after navigating crises in Mexico and Southeast Asia. Russia’s default and currency devaluation proved trickier and assets fell by half amid losses. He revived the firm and a decade later Everest managed $3 billion. Then the global financial crisis hit, and assets shrunk by $1 billion.
Last year, the main fund rose 14.1 percent, driven by Chinese equities and bets against currencies, including a wager that the Swiss franc would fall after citizens rejected a referendum that would require the central bank to hold at least 20 percent of its assets in gold, the investor report said.
In other words, Dimitrijevic survived the vagaries of extremely volatile markets for over 15 years, and even flourished, yet all it took to destroy him was one decision by a conference room full of central-planners who were confident they knew better than the market for the second time in 3.5 years. Ironic.
One thing is certain: it is not just the former Yugoslav who feels as if he has fallen off the top of Everest this weekend, many other funds are too. Here is who else has been named so far according to the WSJ:
Other hedge funds that have suffered amid the Swiss turmoil, according to people familiar with the situation, are Discovery Capital Management LLC, a South Norwalk, Conn. firm that manages $14.7 billion, and Comac Capital LLP, which oversees $1.2 billion in London.
Expect to learn of more casualties from the historic move in the coming days, and certainly once other banks follow in the footsteps of the Swiss central bank, and like the Pied Piper, lead all those "sophisticated investors" who were merely frontrunning and trading alongside central banks on massive leverage pretending they were generating alpha, right off the edge of the cliff.
»
- 32408 reads
- Printer-friendly version
- Send to friend
- advertisements -
We free marketed some folks.
Always remember this is a zero sum game. Those losses became someone else's profits ......
Yes it is, so where are the winners? Usually after a big move, there are a few fools strutting around like they just won the super bowl.
It's way too quiet out there. This is friggin spooky.
It's a weekend. Let us see what shakes out next week. If nothing, then, yeah, spooky.
There may be enough of a domino effect among FX firms,
that they are having trouble paying the winners.
The Swiss people are the winners here, you won't be hearing from them that is for sure.
Disagree about the winners when all the players are leveraged 10X. Everyone will lose in the end with rolling defaults.
That could be true but the taxpayers bailed out AIG and made Goldman Ballsacks good.
"Dimitri could not be reached for comment."
We know one party who certainly knew (SNB), and a whole bunch of the usual suspects who apparently didn't know (e.g. IMF, GS, ShittiBank). Seems to me the Swiss FI's have been paying more than their "fair share" to Uncle Sam's extortion racket... while US domiciled FI's have gotten a free pass from the human lawn jockey/Attorney General...
(but that would be very un-Swiss)
"Place your bets Gentlemen!"
"Yup, think I'll let mine ride on Red 17 again."
Losses are always someone else's error.
Winners: Cross border workers. Italian, German, and French citizens who cross daily into Switzerland for large salaries that were articifically low for 3 years.
Winners: Swiss citizens with savings
Winners: Those who got fucked when the SNB put the floor in place. This applies to the above, but also those who were holding CHF as a defensive play. The CHF was having a great year when the SNB put the floor in place... Vaporized.
The above winners don't have PR depts.
Is it bad that Im more excited for Monday Markets than I am or ever will be for nfl games tomorrow?
I had a dream once about a poker game. The game was being played by who appeared to be very important people. There were 8 or 10 people max. But the number of folks playing wasnt the focal point, that was the silver tray being held by the dealers bank. You see, on this tray each player could take a "chip" from this tiny black dot in the center of the tray. At first everyone went hog wild taking from the silver platter, filling thier coffers and increasing their bets. Eventually I noticed that the black dot on the silver tray was increasing in size.
Eventually it came to be a giant void of 3 dimensional debt. However it came to be that no one who was playing poker could help themselves from it, everyone needed more, always. The void of solid abscence gave endlessly to the greedy, self absorbed gamblers, entirely oblivious to oblivion.
I had the same dream. Came after reading the minutes of a meeting of the federal reserve under the Bernank.
Right with you on Monday/Tuesday. I dont have any more info than anyone else, less in fact as I get some of it from the knowledgeable folks on this site, but I have this really bad vibe about what will come out over next couple days. The guy who said "spooky" about this calm from Swiss stuff is interesting.
Cha Ching.
Wild guess-the winners are UBS and Credit Suisse.
Not with leverage, large losses destroy credit... which today is money.
It isn't a zerosum game. It costs serious money to run all those trading desks. There is also the cost in terms of economic contraction, loss of confidence and the costs of bankruptcies, failed counterparty obligations and human destruction (how many suicides, marriage failures and abortions will result from this).
especially abortions...
The following email was sent by Everest Capital to one of my clients on Friday:
Subject: Update to Our Investors Following yesterday’s unprecedented movement in the Swiss Franc, in particular against the Euro, the Everest Capital Global Fund experienced very significant losses such that there may be little or no recovery for the Fund’s investors. We are currently evaluating the ramifications to this specific Fund and are working on resolving the Fund’s liabilities. The Everest Capital Emerging Markets, Global Emerging Equity, Emerging Equity Focus, Frontier Markets, Frontier Markets Equity and Asia funds had little or no exposure to the investment in question and through yesterday are in line or ahead of global equity markets for the month. Please feel free to contact us if you have any questions. This communication and any attachments hereto is confidential and is intended solely for the addressee. If you are not the intended recipient, any disclosure, copying, distribution or any action taken or omitted to be taken in reliance on it, is prohibited and may be unlawful. Electronic communication cannot be guaranteed to be secure or error-free as information could be intercepted, corrupted, lost or destroyed. Everest Capital does not accept liability for any errors or omission in the contents of this message. This communication shall not constitute an offer of interests in any fund, which may only be made pursuant to the confidential offering memorandum, related subscription agreement and applicable laws and regulations.Sorry for the lack of spacing. I just pasted it directly from Outlook.
(Duplicate)
"$830 Million on double sixes at 30 to 1 odds please Croupier."
DOH! Thank you SNB!!!
No doubt many of these fine people were advised of the developments while on posh ski vacatons. Hilarious. Well, at least the lawyers will make out pretty good.
the world doesn't end when you lose all your money.
But it does end when you hit the ground after jumping out of a window because you lost all your money.
In the spirit of Fight Club:
What one needs for fighting is skills. Lose the fight, you still have your skills.
Money is what you need for trading. No money, no trading.
Bankers have a somewhat different view of "the world" than you and I.
True, but it's no great honor, either.
It ends when you lose your food and water.
Or that stuff pumping through your veins.
You mean, your world doesn't end when you lose all your clients' money.
Obviously performance don't mean shit on a hedge fund managers resume.
:"the world doesn't end when you lose all your money."
It does end when you piss off a nuclear armed country like Russia and you back them in the corner.
Like the US is doing.
"No dollar Monday" coming up.
Come 9:30 AM Tuesday "all will be well again."
Miami might have a few problems..."they handle that upstairs. Room 243, floor 97 I believe."
Well that'll teach em' won't it?!!
oops, did I say that?
My old man told me years ago, "When your number is up...it's up."
They were evidently... levverred up... to the yingyang....
Ying yang , that a new currency pair ?
Absolutely , and where'd they get the money, from
the banks so they lose....too bad, maybe gov will
make them whole
so who was long? Made a fortune!
I made $13 on a $5 bet against Yen. #StillCountin
What effect will this Swiss Miss have on the hot chocolate industry!!??
I see June and July shawclate' futures really melting up : /
Good! Serves them right.
It's what happens when you lever-up and become a pig.
Pigs get slaughted.
I completely agree.
Swiss National Bank has about 500 billion Euros and the Euro at one time dropped 39%. So that was a loss of nearly 200 billion Euros or a loss of $230 billion in a few hours. Luckily the decline now is only 16% or 80 billion Euros or about $100 billion. And the Swiss stock market has also declined about 14%. With the Swiss stock market worth about a trillion, Switzerland has lost $140 billion in stock market wealth. So about $240 billion in wealth just evaporated in two days. That would be like the US losing over $5 trillion in wealth in just 2 days.
Is the Swiss National Bank bankrupt due to its losses of about $100 billion? Or it just conjures up more Swiss francs?
LOL, the Swiss elite got those Euro for free. Or rather, they stole the purchase power/net worth of the Swiss people and got for themselves those Euros by printing the Swiss currency.
There is no loss for the elite. The Swiss people got screwed in both directions.
The people are rising up and are going to hang the elites.
Yeah, but the SNB's Greek bond holdings are paying 10% :) Surely they will offset the currency losses with the guaranteed coupon payment...
This is supposed to be a HEDGE FUND which mean its protfolio should be HEDGED so it loose a bit when things go wrong not blow up!!!! i can't beleive it that people still trust crooks that don't know what they r doing in with their money!!!
I better dig out my book "The Death of Money".
I am sure one of his predictions for the end of days was chronic instability/volatility.
Crude, Venezuela, Russia, Ruble, the Middle East, China teetering, Japan desperate, the Euro shambles, US stock market at 1929 highs .....
Even the boring Swiss have become unstable.
The end is nigh.
Buy gold, though what use that will be in the radio-active wasteland left after the US/Russia war over the Ukraine, I don't know.
What does it taste like?
In this scenario the fiat stuff wins.
At least you can burn it to keep warm.
Gold is probably more useless than paper.
People perceive it has value and so it does.
Millions of blocks of it stored in vaults around the world never doing anything useful at all.
Mined from one hole in the ground, refined, melted into blocks and put back in under ground vaults (other holes in the ground).
Yup, gold is slavery. The Zeitgeist is salvation.
"People perceive it has value and so it does."
Wow, did you go to school to get that smart?
So what is the chance of this turning into an LTCM type moment? LTCM lost $4.6 billion and so far we've seen $840 million from Everest, $350 million from FXCM, $150 million from Citibank, etc. Not all in one place like LTCM, but????
0
A lot of people are still lying. Remember Jamie Dimon and his tempest in a teapot whale trade? Ever time a new story came out, losses were 3x bigger than the last time. These fkrs do nothing but lie. It is worse that we know. It always is. The Fed is probably bailing out these asshats nonstop.
Yep- a good rule of thumb with these guys is to triple whatever they initially report- no way that Citi lost "only" $150M, they're one of the two major conduits- more disclosures to come in the next few weeks......
Nothing quite like the look of blood spatter on all those white golf shoes.
Bailouts in three two one.Omnibus bill? Taxpayer on the hook for wrong way bets on derivatives?
Well, for those who know how to count :
Swiss banks+ Deutsch+ Citi+ 4 retail traders + Ruski HF = 2 billion and still counting.
This is now in the class of JPM and the London Whale. And its only just beginning.
The FX bamboozle will outscam the Derivative interest rate and rehypoth shenanigans around dicy derivatives.
Interest rate, CDS/CDO sandwiches, FX, RE, Commodities like Copper/Iron/Gold...and now Oil; even ISIS oil...
All coming to the boil.
Who says ECB QE will be less than 1 t ? More likely more than 1 t maybe 2 t !
In for a penny in for a pound.
What gets me is the title of the post : the SNB "blew up"...
How can you "blow up" a HF who is part of the bubble economy.
Its job is to blow bubbles and SKIM off the top.
This time its got skimmed. Fortunes of War.
"Well, for those who know how to count : "
... + 30 bn in pension assets :
http://www.ipe.com/countries/switzerland/snbs-snap-currency-decision-wip...
Why did they close the fund? Didn't they see Gramma Yellen waving a check covering their losses in full. Oh wait a minute... that's for SQUIDS only and you're not a squid so get the fuck outta here!
Don't fight the fed, don't fight the fed. These guys didn't fight the central planners and they got destroyed. Could this happen to the faithful BTFD'ers or BTFATH'ers in equities? This is the problem with central planning markets. I see said the blind man to his def daughter.
The crash is acontecento the end-of-week and no one is assisstindo because the bank compensasão operations are automatic.
Wait a Monday very interesting.
The beatings from the east where the sun rises first.
Computers from there change the day automatically.
hehe.
Why do I have to think in terms of business model of "picking up change in front of the steamroller" again?
This is BULLSHIT:
In other words, Dimitrijevic survived the vagaries of extremely volatile markets for over 15 years, and even flourished, yet all it took to destroy him was one decision by a conference room full of central-planners who were confident they knew better than the market for the second time in 3.5 years. Ironic...
Dimitrijevic was absolutely gambling ON THE CENTRAL BANKERS CONTINUING TO FIGHT THE MARKET.
What I find hysterical is the doom and gloom that was preached from a church pulpit should the Swiss gold referendum pass.
That a bunch of FX traders got creamed is great.
Wait till the Greek election and all those CDS's blow up.
I don't get it.... what kind of a moron would short the Swissie against the Euro? It has been well known for years that the SNB has had to buy an uncomfortably large number of Euros to hold the 1.20 peg. So what upside could there possibly be in a short?? It's not like the SNB is going to move the peg even higher.... the only possible direction was down.
Apparently this never occurred to the smartest guys in the room. Funny.
Anticipation of QE by ECB.
And there are still a lot of US banks lying about their mega billions in losses on this CHF move. The fallout is not over. Between oil and currencies, these dumfuks are re-learning why banks with customer deposits should not be allowed to speculate.
You think that was bad? Wait until China stops propping up the USD. No one is going to want to hold that crap.
Have been giving that one some thought too Quin. That unpegging will murder the USD, in much the same way the SNB are nailing the coffin lid down on Euros. Confidence is going to rapidly diminish in the Euro now I expect (though God only knows why anyone who is paying attention would have any confidence). Well, they wanted a weaker Euro - be careful what you wish for....
They are pegged to the dollar, dollar going higher, ergo selling dollars and buying yuan to keep up. When they quit, they will sell Yuan and buy dollars.
Where am I wrong?
Fooked me royally. I got stopped out of DRR a while back. Poop.
Lemme guess...Rickards going to represent them?
Taking money out of the pocket of a Jew is like putting a stake thru the heart of a vampire. Hopeully, lots of the Satanic Tribe took a hit!
Yeah, it's all the Jews' fault that you turned out to be loser. It couldn't possibly be due to you being lazy, stupid, and unattractive.
Another member of the anti-Tribe Diatribe Tribe complains that he has been tricked out of his birthright by people smarter than himself.
Jews are smarter than other groups? Seriously???
So original that. Yawn.
Easy come easy go. Bitcoin is $199 if you'd like to get yourself some of that.
Litening to BBC I constantly hear explanations how bad it is for the Swiss that they removed the peg, which makes me conclude that it in reality it's very good for the Swiss and bad for the rest of the EU.
Somebody big wanted some smaller entities dead. Again, consolidation continues. Rabid dog eat dog world. Time for circus break...go Seahawks!