The Greek Fallout Shatters US 'Get-Rich-Quick' Hedge Fund Dreams

Tyler Durden's picture

It's not all Aston Martins and Brioni suits for hedge fund managers this year. As Bloomberg reports, "It’s a confluence of tricky markets, super-cautious investors and a tough fundraising environment that’s making it a difficult time for hedge-fund managers." The latest addition to the 775 funds that were shuttered last year (the most since 2009) sees California-dreamer Paul Sinclair liquidating his $458mm health-care equity fund as "political decisions made on the other side of the globe have undermined his stock picks and spurred losses for a second year." Physically and mentally exhausted from his travails (planning to spend the summer sleeping and relaxing), Sinclair joins the wannabe likes of Zoe Cruz and three ex-Moore Capital managers, as he honestly notes "I don’t have an edge on Greek elections, the Spanish banking system, what the European Central Bank, the International Monetary Fund, the Chinese government, Angela Merkel, or the U.S. Federal Reserve will do." It seems an increasing number of masters-of-the-universe are awakening to what retail seemed to figure out over the past few years - that everyone's a hero in a central-bank-liquidity-driven rally - and as one other hedge fund manager noted in his investor letter "Markets seem to be driven more by the latest news out of Europe than by a company’s earnings prospects, we have not weathered the ensuing volatility well." Once again correlations are rising - 30-day correlation coefficient between the MSCI World Index and its members is 0.92, compared with the average since 1995 of 0.73 - as all that over-priced alpha is shown up as 'central-bank' beta.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Colombian Gringo's picture

Message to the hedge fund community: No Alpha, no pussy <g>

Unprepared's picture

But can a beta male still get some love?

sunaJ's picture

Maybe in his circles, everyone is concerned about Europe (as they should be), but on Main Street it is DWTS.


CommunityStandard's picture

Climate change is so last decade.  Top trending now is #RihannasBox.  Get with the times.  /sarc

Colombian Gringo's picture

As it should be, since climate change is a fraud but Rihannas box is real.

CommunityStandard's picture

Haha!  Though I might need an Al Gore movie to be fully convinced of its existence.

YuropeanImbecille's picture

I can't believe that people on ZH still believe in the fucking man made climate change scam?


Of course the weather is changing, as it has done for millions of years (and quite dramaticly if I may add). 

Fucking hippies ruining the lives of decent people with their "carbon taxes" and other idiot ideas.

I know I will get 400+ red little arrows, BUT FUCK YOU, YOU TREEHUGGING FUCKING HIPPIES!

bobnoxy's picture

You call yourself an imbecile. I guess you beat the rest of us to it!

I'm no climate scientist, and I'm guessing you aren't either. But when something like 98% of them world wide agree we have a serious problem, that should be good enough for the rest of us. Unless you have something tangible that says no that didn't come from some group or researchers paid by the oil and power companies?


Colombian Gringo's picture

98% of Catholic theologians also agreed on how many angels could dance on the head of a pin. Before Einstein, 99% of physicists agreed. So what?   If you want to pay carbon taxes, go ahead, just leave the rest  of us alone.

bobnoxy's picture

That's it? That's all you got? Pointing out prior ignorance to support your point? Well, I guess if ignorance is all you have, run with it! I'm guessing science has advanced a long way since then, so that's where I tend to agree.

Maybe you also think that those millions of tons of noxious, poisonous crap we've been spewing into the atmosphere these past 100 years just gets waved away by the Pixie Dust Fairies too?

Colombian Gringo's picture

Blah, blah, blah more useless fear mongering... all you want is to make my money your money.  If you cared about the environment instead of a free ride, why don't  you go to Japan and help clean up Fukushima? We will be dead from radiation long before the nasty CO2 gets us.

bobnoxy's picture

You got nothing, just like all the other climate deniers. You point out theologans who knew nothing, and how scientists of the day agreed with them. Why, of course, they did. Disagreeing with those morons got them sent to prison. You can look it up.

And I do care about the environment, which is why I agree with the overwhelming majority of people that know what the fuck they're talking about. Unless your years of climate study says otherwise?

Colombian Gringo's picture

You sound like a reincarnation of the goofmeister.  Climate denier, now thats original. Bet you thought that one up all by yourself. 


It the majority agreed, so what? Science is not a political decision. Climate science is a fraud paid by the banksters to force carbon taxes on the sheeple.


Anyways I got better things to do than argue with a bankster shill.   Next time when I wan to hear from an asshole, I'll fart.

bobnoxy's picture

You are truly an idiot. Go back to getting your information from the t.v. Fox News, I'm guessing?

Bicycle Repairman's picture

Part of my problem with "climate change" is the solution is always more taxes and more control over individuals.  You guys are statists, first and foremost.  There are other solutions.  Propose them or go away.

bobnoxy's picture

No, the solution is energy conservation and renewable energy. I have no idea why this is so hard for you people. I guess for you, there always has to be some grand conspriacy in everything. Sometimes, it's really simple.

But then, if you're gullible to all the ''research'' being put out by the energy companies and other polluters, that's where you end up.

Bicycle Repairman's picture

You aren't listening.  My main problem in two words: carbon taxes.

hedgeless_horseman's picture



"political decisions made on the other side of the globe have undermined his stock picks and spurred losses for a second year."

Message to long-only equity funds from Tim Geithner, "Fuck you, I am a genius!  Just look at my borrowing costs."

America is paying its bills with the tears of Europe.

knukles's picture


Said decisions cratered a.....

Health Care Fund

My ass


What horseshit

AlaricBalth's picture

Todd, Lighten up and go find Lisa.  :-)

Classic Bill Murray-SNL

williambanzai7's picture

Funny, I thought earnings prospects were no longer relevant either because robots don't give a rats ass.

SemperFord's picture

Why don't these Hedge Fund managers get together and buy precious metals???

junkyardjack's picture

Hard to get paid a performance fee on negative returns...

zilverreiger's picture

then the cftc will suddenly complete their investigation, and put limits on positiion size

knukles's picture

Yeah, limit size of longs, unlimited shorts netting to the benefit of Blythe.

And I don't mean Eastman Dillon.

Zola's picture

HFs (non insider trading ones) are the last non crony capitalists in finance. No wonder they suffer when the banks get bailed out constantly and the central banks kill and manipulate the free markets.

junkyardjack's picture

Exactly, I'm not sure why hedge funds are now getting bashed on here.  Its like most of the commenters just don't want to see anyone else be successful.  Hedge Funds aren't getting bailed out, they are placing bets and if they win they make money.  You can tell there area  bunch of poor people in here as they despise anyone that can earn a living

CommunityStandard's picture

Agreed - at least they are allowed to fail.  However, investors serve a purpose in an efficient economy - to invest in businesses and help them grow.  HF don't invest - they place bets.  If all investors took their money exclusively to the casinos every day, we'd certainly be trashing that behavior.

On the other hand, this behavior is a symptom of the central bank inference and poor policies from the government.  Solve this problem, and real investors will return.

CvlDobd's picture

All your investments are bets.

All mom and pop investments in GEVare just bets that it is a good company that will be there for the long haul. Gambling, investing, placing bets, scratching lotto cards, buying powerball tickets are all synonymous.

gjp's picture

It's the leverage and high turnover that make the betting culture a problem (and the fee structure that incentivizes this behavior).  Make a long-term bet on a new factory, software development, etc and manage that to deliver long-term returns, then you have productive capital management.  Taking highly-levered risks on complex (fictitious?) financial products and whipping in and out of them with the whims of the market is quite the opposite.

CommunityStandard's picture

Not true.  If you have an idea, and I give you money to turn it into a business, that is an investment.  Yes, it is also a bet on your success, but you are producing something of value with it, you can employ people, and your idea has the potential of improving society.

If I buy an option on an ETF, I am simply betting on its movement.  The money sits around and produces nothing.  It is a pure bet, and not an investment.

Ghordius's picture

+100% correct.

The correct terms are:


Investment: buying an asset because it will generate a revenue stream

Speculation: buying an asset because it will be more worth in the future


The reason for this popular confusion is the stock market full of "growth" shares that won't pay out dividends.

Further, speculation is often the major cause of bubbles, particularly because you can't judge the performance based on the revenue stream.

I am a Man I am Forty's picture

I think what people are annoyed at is that some of these guys are getting billions and billions of dollars from pension funds because the pension funds are corrupt, making 50M a year, and can't even beat an index.  And the fact that they have somehow convinced anyone that they are worth a 2% fee and 20% of the winnings.  Sure, a few out there are, but 95% are not.  Good luck finding that 5%.  I like Bridgewater, Kyle Bass, and Seth Klarman and that's about it.

tocointhephrase's picture

The heart bleeds, Tyler!

Skateboarder's picture

If your job was to moving around money in ways that made you richer and someone else poorer, and that made you richer than someone moving around something real (say tomatoes... or garbage), then you probably didn't do anything real and therefore didn't earn anything real (nor did you deserve it). Hope all the hedge funds die, and along with them the corrupt markets they hedge on. Fuck people who don't do anything and get rich by being in the right place at the right time, doing wrong things...

Unprepared's picture

There was a time when hedge funds had some real role to play in capital allocation and closure of market gaps, however marginal that role may have been.

Today, the majority are just Dinosaurs before the commets shower.

Apply Force's picture

Agreed & hope Paulie boy is "sleeping and relaxing" in a box under a bridge somewhere this summer.  Would be a great summer should reality re-assert itself & nature revert to the mean...

pashley1411's picture

Just a basic reading of Hayek will tell you that when markets come under the thumbs of the political class, valuations will soon be made on a political basis, not a profit-loss basis.

Hedge funds aren't wrong.  But in an age when the politicals have slipped their leashes, instead of reading Barron's, HF's need to read HuffPo, the Nation, the NYT, and other such effulent, for the latest fad.   Or start showing up at Obama fundraisers.

GeneMarchbanks's picture

eventually valuations are made on a political basis, not a profit-loss basis.

Uhm, hate to burst your bubble but those two are one in the same. The only question being how that political basis operates. Presently, they're not fairing too well anywhere you look.

Spitzer's picture

Ummm, wrong.

Stock prices are not reflecting real value. Mining stocks for example

GMadScientist's picture

How's your "one Zooro to rule them all", Spitz?


junkyardjack's picture

How many hedge funds go out of business on average every year? Aren't there like 8,000 of them? Wouldn't they all have some excuse why they failed

Big Corked Boots's picture

Well, it's all F250's and Carhartt suits for me, bitchez.

KarlGDenninger's picture

not me. Im getting out. Just sold all 80 million shares of bank of america. You know what the boys in the pit below me like to say, prune in june. Buy in july!

KarlGDenninger's picture

not me. Im getting out. Just sold all 80 million shares of bank of america. You know what the boys in the pit below me like to say, prune in june. Buy in july!

Bam_Man's picture

Trying to front-run the front-runners with the inside information is a losing game. Retail had this figured out two+ years ago.

KarlGDenninger's picture

Your right. The boys did 7 million in the pit yesterday. I said if we hit 5 million we would all go out for pizza and beer. The boys were pumpin there fists in the air and hootin and hollering after we hit our goal. Our supercomputer on the 3rd floor accurately forecasted the market perfectly.

epwpixieq-1's picture

and my distributed/super app ( pardon virus ) running on your smart ( pardon dummy ) phone is getting me some fee CPU cycles for my personal super computer forecasting and of course not only that ...

walküre's picture

Paul Sinclair liquidating his $458mm health-care equity fund

How is he liquidating? Who is buying his positions?

The scheisse muffin started when the Fed didn't announce QE3 last year after QE2 expired.

Some are still hoping, praying, salivating over QE3 coming soon.... Keep dreamin'