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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.


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Thu, 06/14/2012 - 12:23 | 2526025 Colombian Gringo
Colombian Gringo's picture

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

Thu, 06/14/2012 - 12:24 | 2526049 Unprepared
Unprepared's picture

But can a beta male still get some love?

Thu, 06/14/2012 - 12:29 | 2526066 sunaJ
sunaJ's picture

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


Thu, 06/14/2012 - 12:40 | 2526107 CommunityStandard
CommunityStandard's picture

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

Thu, 06/14/2012 - 12:46 | 2526137 Colombian Gringo
Colombian Gringo's picture

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

Thu, 06/14/2012 - 13:01 | 2526203 CommunityStandard
CommunityStandard's picture

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

Thu, 06/14/2012 - 13:12 | 2526246 YuropeanImbecille
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!

Thu, 06/14/2012 - 13:45 | 2526351 bobnoxy
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?


Thu, 06/14/2012 - 14:19 | 2526491 Colombian Gringo
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.

Thu, 06/14/2012 - 14:25 | 2526523 bobnoxy
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?

Thu, 06/14/2012 - 14:30 | 2526558 Colombian Gringo
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.

Thu, 06/14/2012 - 14:34 | 2526576 bobnoxy
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?

Thu, 06/14/2012 - 14:39 | 2526603 Colombian Gringo
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.

Thu, 06/14/2012 - 14:44 | 2526632 bobnoxy
bobnoxy's picture

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

Thu, 06/14/2012 - 15:35 | 2526901 Bicycle Repairman
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.

Thu, 06/14/2012 - 16:56 | 2527210 bobnoxy
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.

Thu, 06/14/2012 - 22:59 | 2528143 Bicycle Repairman
Bicycle Repairman's picture

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

Thu, 06/14/2012 - 12:31 | 2526053 hedgeless_horseman
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.

Thu, 06/14/2012 - 13:01 | 2526198 knukles
knukles's picture


Said decisions cratered a.....

Health Care Fund

My ass


What horseshit

Thu, 06/14/2012 - 12:20 | 2526027 Todd Horlbeck
Todd Horlbeck's picture

Wow, nice commets

Thu, 06/14/2012 - 12:40 | 2526100 AlaricBalth
AlaricBalth's picture

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

Classic Bill Murray-SNL

Thu, 06/14/2012 - 12:23 | 2526041 williambanzai7
williambanzai7's picture

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

Thu, 06/14/2012 - 12:24 | 2526046 SemperFord
SemperFord's picture

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

Thu, 06/14/2012 - 12:30 | 2526074 junkyardjack
junkyardjack's picture

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

Thu, 06/14/2012 - 12:31 | 2526075 zilverreiger
zilverreiger's picture

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

Thu, 06/14/2012 - 13:04 | 2526208 knukles
knukles's picture

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

And I don't mean Eastman Dillon.

Thu, 06/14/2012 - 12:27 | 2526060 Zola
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.

Thu, 06/14/2012 - 12:36 | 2526088 junkyardjack
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

Thu, 06/14/2012 - 12:50 | 2526155 CommunityStandard
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.

Thu, 06/14/2012 - 12:59 | 2526194 CvlDobd
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.

Thu, 06/14/2012 - 13:08 | 2526216 gjp
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.

Thu, 06/14/2012 - 13:06 | 2526219 CommunityStandard
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.

Fri, 06/15/2012 - 06:23 | 2528606 Ghordius
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.

Thu, 06/14/2012 - 13:39 | 2526333 I am a Man I am...
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.

Thu, 06/14/2012 - 12:30 | 2526069 tocointhephrase
tocointhephrase's picture

The heart bleeds, Tyler!

Thu, 06/14/2012 - 12:30 | 2526072 Skateboarder
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...

Thu, 06/14/2012 - 12:38 | 2526098 Unprepared
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.

Thu, 06/14/2012 - 12:39 | 2526105 Apply Force
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...

Thu, 06/14/2012 - 12:37 | 2526073 pashley1411
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.

Thu, 06/14/2012 - 12:37 | 2526095 GeneMarchbanks
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.

Thu, 06/14/2012 - 14:31 | 2526565 Spitzer
Spitzer's picture

Ummm, wrong.

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

Thu, 06/14/2012 - 16:01 | 2527042 GMadScientist
GMadScientist's picture

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


Thu, 06/14/2012 - 12:33 | 2526080 junkyardjack
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

Thu, 06/14/2012 - 12:33 | 2526082 Big Corked Boots
Big Corked Boots's picture

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

Thu, 06/14/2012 - 12:36 | 2526087 KarlGDenninger
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!

Thu, 06/14/2012 - 12:36 | 2526089 KarlGDenninger
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!

Thu, 06/14/2012 - 12:44 | 2526123 Bam_Man
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.

Thu, 06/14/2012 - 12:46 | 2526136 KarlGDenninger
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.

Thu, 06/14/2012 - 13:31 | 2526313 epwpixieq-1
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 ...

Thu, 06/14/2012 - 12:45 | 2526134 walküre
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'

Thu, 06/14/2012 - 12:48 | 2526143 the 300000000th...
the 300000000th percent's picture

no free lunches bitchez!

Thu, 06/14/2012 - 12:59 | 2526193 El Viejo
El Viejo's picture

"- that everyone's a hero in a central-bank-liquidity-driven rally"

So why do the sheeple bad mouth Bernanke???


Thu, 06/14/2012 - 13:25 | 2526288 I am a Man I am...
I am a Man I am Forty's picture

those high water marks are a bitch, aren't they?  better off to just shut the fund down and start from scratch, better chance in getting that 20 and not just the 2.

Thu, 06/14/2012 - 13:28 | 2526304 mendigo
mendigo's picture

"super-cautious investors" - more like the few left with means and have not swallowed the date-rape pill.

Thu, 06/14/2012 - 13:30 | 2526310 slewie the pi-rat
slewie the pi-rat's picture

you had me at zoe and sinclair

that fungicide is gonna run in the beta breakers again this quarter

screwed down tight is the forecast

the alpha pig-men are gonna love peanut butter and baked potatoes and hard-boiled eggs with sun tea, too;  they will be in solidarity with slewie

the only oscillators left for the flagellators are over-risk0n  and over-risk0ff and they are painted for the moronic, too

and the builld-up of cesium in the food chain, of course...  the ecosytems i visit on a daily basis seem to be loving the bequerels;  so far, so good;  the half-life of cesium137 is 30 years and fuk_u is about 15 months old

i don't believe they have yet figured out how to safely dispose of the first thimble-full of toxic nukuler waste ever produced, have they?  but we can be assured that best minds in "science" are working on the problem and sparing no expense which can be socialized while they are fuking at it, too

Thu, 06/14/2012 - 15:59 | 2527028 GMadScientist
GMadScientist's picture

The best minds in science would tell you that nukes are an expensive jobs program with sideline benefits to the healthcare industry.

Of course, they'd also tell you that conservation+renewables would allow us to tell the ME to summarily fuck itself and save hundreds o'billions per year on dropping Johnny where he's not wanted.

"Starving hysterical", as the fat gay poet said.

Thu, 06/14/2012 - 13:35 | 2526320 c-rev with a twist
c-rev with a twist's picture

This is because these are not hedge fund managers.  These are mutual fund managers masquerading as hedge fund managers.  Were they actual hedge traders, they would be hedging one market against the other, or volatility against another equity index.  All of these lemmings deserve to go under.

Thu, 06/14/2012 - 13:36 | 2526323 W10321303
W10321303's picture


The newly leaked document is one of the most controversial of the Trans-Pacific Partnership trade pact. It addresses a broad sweep of regulations governing international investment and reveals the Obama administration's advocacy for policies that environmental activists, financial reform advocates and labor unions have long rejected for eroding key protections currently in domestic laws.

Under the agreement currently being advocated by the Obama administration, American corporations would continue to be subject to domestic laws and regulations on the environment, banking and other issues. But foreign corporations operating within the U.S. would be permitted to appeal key American legal or regulatory rulings to an international tribunal. That international tribunal would be granted the power to overrule American law and impose trade sanctions on the United States for failing to abide by its rulings.


Thu, 06/14/2012 - 16:57 | 2526411 falak pema
falak pema's picture


...US 'Get-Rich-Quick' Hedge Fund Dreams...

Ah, I thought these guys were the salt of the earth, the beacons of new capitalism, the guys who drew their guns faster than their shadows and hit bulls-eye every time, alighting the torch of triumphant capitalism. Even they have fears of biting the dust, their quest ephemeral self interest, not to save home of the brave and land of the free. What a let down, and...they do have tickets on the Titanic! 



Thu, 06/14/2012 - 14:08 | 2526442 W10321303
W10321303's picture


ore than $4 trillion in near zero-interest Federal Reserve loans and other financial assistance went to the banks and businesses of at least 18 current and former Federal Reserve regional bank directors in the aftermath of the 2008 financial collapse, according to Government Accountability Office records made public for the first time today by Sen. Bernie Sanders.

On the eve of Senate testimony by JPMorgan Chase CEO Jamie Dimon, Sanders (I-Vt.) released the detailed findings on Dimon and other Fed board members whose banks and businesses benefited from Fed actions.

A Sanders provision in the Dodd-Frank Wall Street Reform Act required the Government Accountability Office to investigate potential conflicts of interest. The Oct. 19, 2011 report by the non-partisan investigative arm of Congress laid out the findings, but did not name names. Sanders today released the names

“This report reveals the inherent conflicts of interest that exist at the Federal Reserve.  At a time when small businesses could not get affordable loans to create jobs, the Fed was providing trillions in secret loans to some of the largest banks and corporations in America that were well represented on the boards of the Federal Reserve Banks.  These conflicts must end,” Sanders said.

The GAO study found that allowing members of the banking industry to both elect and serve on the Federal Reserve’s board of directors creates “an appearance of a conflict of interest” and poses “reputational risks” to the Federal Reserve System.

In Dimon’s case, JPMorgan received some $391 billion of the $4 trillion in emergency Fed funds at the same time his bank was used by the Fed as a clearinghouse for emergency lending programs. In March of 2008, the Fed provided JPMorgan with $29 billion in financing to acquire Bear Stearns. Dimon also got the Fed to provide JPMorgan Chase with an 18-month exemption from risk-based leverage and capital requirements. And he convinced the Fed to take risky mortgage-related assets off of Bear Stearns balance sheet before JP Morgan Chase acquired the troubled investment bank.

Another high-profile conflict involved Stephen Friedman, the former chairman of the New York Fed’s board of directors. Late in 2008, the New York Fed approved an application from Goldman Sachs to become a bank holding company giving it access to cheap loans from the Federal Reserve. During that period, Friedman sat on the Goldman Sachs board.  He also owned Goldman stock, something that was prohibited by Federal Reserve conflict of interest regulations. Although it was not publicly disclosed at the time, Friedman received a waiver from the Fed’s conflict of interest rules in late 2008. Unbeknownst to the Fed, Friedman continued to purchase shares in Goldman from November 2008 through January of 2009, according to the GAO.

In another case, General Electric CEO Jeffrey Immelt was a New York Fed board member at the same time GE helped create a Commercial Paper Funding Facility during the financial crisis. The Fed later provided $16 billion in financing to GE under this emergency lending program.

Thu, 06/14/2012 - 14:10 | 2526453 Grand Supercycle
Grand Supercycle's picture

Rally warning continues...

Despite stockbears with their pre-election jitters, SPX choppy bullish daily & USDX bearish daily charts strengthen.

Significant equity / EURUSD upside & USDX retracement ahead.

Thu, 06/14/2012 - 14:17 | 2526487 W10321303
W10321303's picture



                                           Sanford Weill, the former CEO of Citigroup, served on the Fed’s Board of Directors in New York in 2006. During the financial crisis, Citigroup received over $2.5 trillion in total financial assistance from the Fed.

Richard Fuld, Jr, the former CEO of Lehman Brothers, served on the Fed’s Board of Directors in New York from 2006 to 2008. During the financial crisis, the Fed provided $183 billion in total financial assistance to Lehman before it collapsed.

  1. James M. Wells, the Chairman and CEO of SunTrust Banks, has served on the Board of Directors at the Federal Reserve Bank in Atlanta since 2008. During the financial crisis, SunTrust received $7.5 billion in total financial assistance from the Fed.
  2. Richard Carrion, the head of Popular Inc. in Puerto Rico, has served on the Board of Directors of the Federal Reserve Bank of New York since 2008. Popular received $1.2 billion in total financing from the Fed’s Term Auction Facility during the financial crisis.
  3. James Smith, the Chairman and CEO of Webster Bank, served on the Federal Reserve’s Board of Directors in Boston from 2008-2010. Webster Bank received $550 million in total financing from the Federal Reserve’s Term Auction Facility during the financial crisis.
  4. Ted Cecala, the former Chairman and CEO of Wilmington Trust, served on the Fed’s Board of Directors in Philadelphia from 2008-2010. Wilmington Trust received $3.2 billion in total financial assistance from the Federal Reserve during the financial crisis.
  5. Robert Jones, the President and CEO of Old National Bancorp, has served on the Fed’s Board of Directors in St. Louis since 2008. Old National Bancorp received a total of $550 million in low-interest loans from the Federal Reserve’s Term Auction Facility during the financial crisis.
  6. James Rohr, the Chairman and CEO of PNC Financial Services Group, served on the Fed’s Board of Directors in Cleveland from 2008-2010. PNC received $6.5 billion in low-interest loans from the Federal Reserve during the financial crisis.
Thu, 06/14/2012 - 14:32 | 2526571 Jack Sheet
Jack Sheet's picture

doesn't sound like a hedge fund to me - just a mutual fund investing in pharmaceutical companies

Thu, 06/14/2012 - 15:38 | 2526917 exiledbear
exiledbear's picture

It sounds like someone needs a hug. Maybe they can pay a hooker to hug them?

Thu, 06/14/2012 - 15:53 | 2526989 GMadScientist
GMadScientist's picture

With all due respect, this less about what they "will do", than what they can do.

Do NOT follow this link or you will be banned from the site!