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Man Down As Hedge Fund Redemptions Arrive: 25% Of Hedge Funds Industry To Follow Into That Good Night
It was just yesterday that we, as it happens prophetically, said that "we fear the hedge fund space, which at last check was approaching $2 trillion in AUM, will collapse by 25% after the new year when the full carnage of the redemption requests is made public...we certainly had no idea just how pervasive the decimation within the hedge funds ranks was until we saw the mid-September results. We really, really hope the collusive short squeeze-cum-month end rally works out for the hedge fund community, because it really will be "or else." Well, as of today it is nearing "or else" for the world's largest hedge fund Man Group, which is down, yup, 25% today on, you guessed it, redemptions. There is, however, good news for all hedge fund managers reading us today: you will know whether or not you are in business next year, by this friday. As Dow Jones reports, "Friday marks a deadline for investors in many hedge funds with monthly and quarterly liquidity to say they want their capital back." In other words the pain is over, as 25% of hedge fund managers will hear their death sentence in 48 hours and the painful expectation of the inevitable ends.
Man Down:
More from Dow Jones:
The hedge fund industry is braced for a new round of redemptions after two months of poor performance and growing investor desire to move money into cash. The world's largest listed hedge-fund manager, Man Group PLC (EMG.LN), stoked fears of another industry meltdown Wednesday when it reported a net $2.6 billion was pulled from its funds between June 30 and Sept. 26 . It lost a further $1.5 billion from fund losses and $1.9 billion from the effect of a stronger U.S. dollar when accounting for euro- and Australian dollar-denominated funds. Its GLG unit, acquired last year, posted particularly large outflows. Man Group shares fell as much as 25% in London.
Aberdeen Asset Management PLC (ADN.LN), a U.K. fund manager with about GBP26.2 billion of its GBP176.9 billion in alternative investment strategies, Monday said those funds lost about GBP2.2 billion between June and August from redemptions and performance losses. Despite volatile markets this year, redemptions have been relatively subdued for most hedge funds, but high-profile losses over the summer and the deepening euro-zone debt crisis and economic gloom could send investors toward the exits. Most large managers of long-only equity and bond funds posted outflows last week, data provider EPFR Global said Monday, highlighting how investors are taking risk off the table
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I RECOMMEND YOU PANIC!
Hugh Hendry did say that this would happen. Slowly, that dude is looking smarter everyday. Now if he would only bring Soros down...
25% losses, in the aggregate + apply 'traditional' amount of leverage = SHTF
-An interview on CNBSc or Bloomturd, sometime in the near future-
Not to mention GS Global Alpha fund which blew up. Soon the bodies will wash ashore.
you have a lot of free time.
The Hindu cow fund holders have 48 hours before being shipped off to the slaughterhouse? Well may as well chew some more green cud then, plenty of time before butchering time.
Ever since I shorted just about everything in 2007, I definitely do have a lot more free time [true story]. But who could've seen that coming (?).
Glad to see the rich big client guys are losing too, and not just me on my crappy Schwab IRA.
http://www.singledudetravel.com/2011/09/charlies-first-ira/
Deadpool = 4 week member troll bot sent over from BAC on a mission to keep BAC from = $0
At least Soros has demonstrated long-term competence. He's no longer really in the game anyway without private investors.
TruthInSunshine you forgot Roubini :)
Nouriel Roubini: "Don't say I didn't tell you!", "But you didn't, you just keep summarizing everything.", "Well, look harder, it was in there somewhere!"
To be fair, when he isn't massaging the egos of his unfortunately corrupt academic circle (*looks at* Larry Summers), the guy does have a brain and seems to struggle between saying his most extreme thoughts and not risking his reputation ...
So 25% of Hedgies pack-up and what? Where are these dice rolling gambling artists employable?? My greatest economic concern is not the zero loss to the economy but what it'll do to Porsche Cayanne sales in New York... they've seen a 30% YoY rise in the deepest darkest Index collapse between the twin peaks of Hedgies mountanous delusions in 2008 and 2011.
And with 25% of Hedgies gone there's a fat chance the Indexes can do anything but tank ...er, isn't there?
Unless Benny goes completely LaLa and prints $Trillions of counterfeit wealth pumping them into the last remaining vestiges of high finance (gambling joints). That'll be Goldman Sucks and JP Morgueticians then neither of whom according to sharp cookies like Reggie Middleton can make money trading, only stiffing clients and rigging markets.
So nothing productive then about hi-finance! Just destroying (consuming) others wealth with hi-fi con-tricks. Funny that's exactly what most critiques of Sucks and Morgue claim they are (ie. criminals)
Now it all adds up. It's why despite Bennys previous printing of $Trillions in counterfeit wealth to 'stimulate the economy' back to life he's not got a fuking Cent back in productive output from the economy from giving it to the wealth destroying US Govt and WS Gangsterland thugs. Benny is a relentless fuk-up in ever decreasing circles, and now we know why, all of his partners are fuking worthless
When I wrote 25% "losses" above, I had meant to write "redemptions," which, for all practical terms today, and given what's happening to hedge fund performance, probably correlates pretty well to losses.
Zero Govt - We've read about all the 20 to 30 year veterans of hedge funds and other asset management shops, many of whom were actually some of the most credible managers, packing it in and returning all capital to partners/investors over the last couple of years (and especially the last year). They knew what was coming.
"So 25% of Hedgies pack-up and what?"
Answer: Enter the unemployment line.
They call it funemployment these days.
To me the question is about the mechanics of this thing. Suppose the hedge funds get that surge of redeptions on Friday, I assume they have to liquidate assets to get the cash, how much will that be and how long does it take. This may represent a substantial amount of stock and commodities hitting an already unsteady market all at once. If it comes as a rush on Monday it may be that last straw (or bale of straw) landing on the camels back. Bottom line is does anyone have a good feel for how much downward pressure this will put on the market?
I think we are looking at multiple weighting inputs. One is that the marco picture in China and Europe is making even those who believe that Ben Light Year will move to full on QE in short order and that TARP II is in the works, will still want to move to cash and so whether it is with hedge funds or just selling throught their own trading accounts, the impact of redemptions will be multiplied.
I'm just having a gut level feeling, all analysis aside, that we are about to enter a major liquidation phase across all asset classes and that the macro picture, the fear factor and the x factor are all going to act as a multiplying factor on the redemption problem and in short order. When the S&P crosses 1000 Ben will have the necessary political cover to make big pronouncements and maybe Germany will get their people to help create a new constitution so that Germany can bail out the rest of Europe.
I don't know. It looks really frightening to me. I expect the US exchange stabilization fund to be on over drive the next few weeks but given who the derivatives operatives are who place the buy orders and what their limitations are, I don't know how effective they will be given the very very stark global macro situation.
Thoughts?
Duffminster
I think we are looking at multiple weighting inputs. One is that the marco picture in China and Europe is making even those who believe that Ben Light Year will move to full on QE in short order and that TARP II is in the works, will still want to move to cash and so whether it is with hedge funds or just selling throught their own trading accounts, the impact of redemptions will be multiplied.
I'm just having a gut level feeling, all analysis aside, that we are about to enter a major liquidation phase across all asset classes and that the macro picture, the fear factor and the x factor are all going to act as a multiplying factor on the redemption problem and in short order. When the S&P crosses 1000 Ben will have the necessary political cover to make big pronouncements and maybe Germany will get their people to help create a new constitution so that Germany can bail out the rest of Europe.
I don't know. It looks really frightening to me. I expect the US exchange stabilization fund to be on over drive the next few weeks but given who the derivatives operatives are who place the buy orders and what their limitations are, I don't know how effective they will be given the very very stark global macro situation.
Thoughts?
Duffminster
Haha!
Can't stop what's coming. Pound sand indefinitly. Fucked.
The Barton B.I.G.G.S. quote made my night. Why is anyone still asking for his opnion on the market? The guy seems more confused about the what the market is doing than your average man on the street. Old people with a confused/terrified look constantly on their face give me the jeebies
Hugh Hendry is all about total armageddon. He looked liked a fool though the 10 years before 2007. Once in a while everyone gets something right.
Just don't sell amzn at 104 P/E, that would be a tragic mistake.
Bezos, like solar power, is always two years away from great profits;)
They are two months from buying Netflix
But...but...but...my Hitchhikers Guide To the Galaxy says DON'T PANIC in large, friendly letters on it's cover!
http://www.youtube.com/watch?v=WB8XDk3sQBc
The Infinite Improbability Drive is your friend....
I manage my PANIC attacks with a dose of BTFD.
Ditto!
Fuck em!
Let The Bodies Hit The Floor
www.youtube.com/watch?v=sO_QntXc-c4
From Money.CNN:
Several traders and industry watchers say gold's sharp correction was largely due to hedge fund and other money managers amping up their cash holdings in anticipation that investors may start asking for cash back, raising the threat of a flood of redemption requests.
"Whenever you have a market correct as quickly as gold just did, you can assume people are getting margin calls," said Wayne Atwell, managing director at Rodman & Renshaw, who covers the precious metals market.
It didn't help that COMEX and Shanghai hit the silver market with joint margin calls. Silver is a powerful lever on gold prices. Of course COMEX hit the market with a really big margin hike on gold.
I'm a bit suprised that in an envirionment like this one, Ben Light Year isn't buying gold to halt the perception of deflation which is about to crash ashore in the new few weeks.
QE to Infinity and Beyond!
Can you say "liquidation sale"? Get ready for cascading, multiple day breaker tripping followed by "bank holidays".
That or we'll just print anther trillion or two, give it away free to the hedge funds and continue to melt up every day on the rumor that Greece has been saved again, for the 50th time this month.
That or we'll just print anther trillion or two, give it away free to the hedge funds...
That.
Dont' be a cheapskate, let's do both.
Very true. They are the true weapons of mass distruction.
Hedge Funds distort price. Massively. Of course, it's just a matter of order. It's all coming down soon enough.
ORI
Pertinent thoughts
behaviour economics show investors sell their winners first. gold is about to tank.
don't confuse COMEX paper (subject to mutiple margin hikes +55%) to physical holders. Holders don't sell EVER.
Except at Cash for Gold.
the gold bubble will be like the real estate bubble. you can hold the asset, but you'll be underwater for a while, if you got in late.
Yes...my gold AR loan is about to reset. What should I do?!?
/sarc
Don't know why everybody junks this assertion. Metal spot will definitely go down in a crash, look at 2008. This is good news for us physical collectors, and a grat buying opportunity.
PM's are "cheap" and getting cheaper by the day.
Seems that might just be the case with all asset classes since the worldwide printing presses started and the hangover was rolled over for another day.
I am a physical holder, and I do, and I did. Now that I am mostly in cash I will be buying back when I judge the time is right.
"growing investor desire to move money into cash"
This is a Liquidity crisis. For the moment, crap though it is, cash is King.
Why pay the premiums on the round trip? You're not really a 'holder'.
holding cash, especially the US dollar, isn't an investment.
"dormRoom" is the perfect name for you, it really it. sums it all up nicely.
(Better, even, that a "mommy's basement" reference).
Some of us are a still too young and unworldly to get the scale of the situation. My grandparents never could impart the reality of their formative years and it only just dawned on me properly yesterday. Dorm Room stop speculating and accumulate.
oh boy.. they better hurry and open those fed swap lines to the hedgies.. god forbid they start selling some of those mall properties.
Many hedge fund managers need to be thrown in the wood chipper with Robert Rubin, The Ben Bernank and The Goldman Sack.
Where can we donate for this "chipper"????
You must mean the Gold Mansack
effect on PM's?
They'll go down but not as far or for as long as stocks. And if a "singularity" occurs PMs will be your only ticket to the other side.
me thinks Paulson sold GLD to meet redemptions. Front page of WSJ says funds picking over paulson holding to front run any selling he has to do (down 30%...) and GLD is "money" they say. good for patient hands to pick up his chum.
I also know there was a big 3q push into The Permanant Portfolio by the likes of Richard Russell (which is big on Swiss Franc, gold and silver = 50%) so that new money ain't happy and probably bought high and sold low.
If it wasn't long dated US Treasuries (therefore wasn't anybody) no bonus for you.
I heard that 40% of Paulson's investors, when they redeem, they have chosen to redeem in gold.
I dont know if this means give them shares of GLD or if he will have to go to the GLD Trust to redeem for physical, to then give to investors.
Anyone know?
I think it means he has to go down to the coin ship with one of those draggable luggage bags. Or maybe he has an intern buy scrap dental fillings off of ebay.
Yikes !
Well at least we now know who coughed up the golden hairball on Friday.
LOL, good one.
Good Riddance!
Ditto.
Round and round liquidity crunch,
The dollar chased the euro.
That's the way the fiat goes,
Pop goes a weasel.
Looks like the batwing formation is back.. after the early morning rampage in the futures..
http://www.hedgeaccording.ly/2011/09/another-bat-in-s-has-been-captured....
Then why is the market up? Plunge Protection Team at work?
Russell is down 1.24%, the majors have a window dressing free fall net underneath them
quarter ends Friday. bonus must be earned.
If the market tanks on Monday, you will offically be my new hero.
A cockroach can survive for like a week after having it's head cut off.
pods
Comparing the market to cockroaches isn't fair..... To the cockroaches
Not possible to make money in manipulated and fraudelent US market. Put money in dollar, you will get killed, in treasuries, you will get killed, only real money is Gold and Silver and the Courrpt Banking Cartel will do all they can to keep it down and fuck you out of that too.
Leverage was what Archimedes invented, thus making the world dream of finding a fulcrum to levitate the world by the mere touch of his finger. We saw in awe the HFs do the same for ten years with financial leverage, like sons of Whiz kid Eureka.
Now like for Archimedes the Romans are at the gates and redemption comes knocking at the door of Syracuse. Deleverage is the cry as the financial catapults get dismantled.
3 things never to buy:
1. a hedge fund share;
2. a house; and,
3. an old smelly shoe.
4. A used mattress.
pods
6. A rumor, scuttlebutt, murmur, buzz, gossip, hearsay, whispering,
I heard this from a friend who heard it from a guy he knows down at the track that takes care of horses owned by a hedge fund guy.
5. A used condom
#) Anything that emanates from Jim Cramer's miserable piehole...
It's called the 3F rule.
If it floats, flies or fucks - RENT IT!
Do Hedge Fund Managers have Hedge Shrubs planted in lue of Head Stones marking their graves?
how would you like to be long IOC in your fund the last 2 days......pass the lube please...pain....
Talk about an Epic Collapse......
Poor General Jim just got 50% of his net worth wiped out in 4 trading days.
Looks like TRX is getting "Bre-X'd"....
LOL......
Was wondering what was up with that, bizzare move, absolutely massive drop.
Cant seem to find any news related to it, something smells.
You claiming TRX is a scam like Bre-X? Better becareful there. You might just get your ass sued for making unsubstantiated claims.
And, even if true, you think that is funny. Sick mind Robot. 0
"Dead men walking", move aside, move aside please.
You think the miners are lower because gold is going back to 800, earnings will be poor, the price of oil "up to 80" and management has a good handle on expenses, yup, those are the reasons they are lower. Has nothing to do with Tyler's post above.
HA!
Once the hedgies are out of the stock market, who's left? Only the HFT bots, a few daytraders and the guy who sweeps up at the NYSE. In other words, only people with a very short attention span and a very low risk tolerance. The culling of the investor class over the past 3 years has been astonishing.
You are excluding the long-only funds from your analysis. They are not "out of the stock market". It is mutual fund redemptions that will deal the knock-out blow. Wasn't that what Cdad said in his horserace skit?
if no one else is aorund I'm gonna have my way with one of them there robots.
Now, that's GOOD
Paulson is next. GLD about to get real cheap for those interested.
one more reason to buy GLD puts -- thanks for that
"GOLD about to be real cheap for those interested"
there, fixed it for you.
"Stocks up on better than expected durable goods report" LOLOL!!!!!
Wait till Monday!!!
Wait until the GDP tomorrow...probably sobering...
old market adage: (it's old so must be true). Buy on Rosh Hashana; sell on Yom Kippur. If my datebook is correct that would be buy today thru next Friday.
You got it backwards. Troll school is getting lax now-a-days.
My question is, what are the people doing with the money once it is pulled from the hedgefund? Does anybody have and data or thoughts on that? Buying PM's, hoarding it, buying treasuries, etc. ??
Paper jackets? Paper hats (lined with tinfoil of course)?
just look at fund flows or price increases in the quarter...was Swiss Franc, gold and Treasuries. end of quarter had selling in Swissie and gold but bonds up. that's your answer.
They should buy food and guns with their money while its till worth something.
Reality always catches up with those doped by the Hopium Dealers, and then murders them, leaving their corpse in a bloody heap in some alley behind a 401(k)/ERISA/Pension Plan/Day Trader's Dive Bar.
HE'S BACK!!
Gold, silver, miners must be lower. Yup, that's it.
Don't suppose the market triggers were reduced in anticipation of this, anyone, anyone, Shaprio....anyone.
Another article on ZH, today, stated "the market is 12-18 months behind". Yep, I pulled out in June 2010. Now, 15 months later, Mr. market has figured out what we all saw coming.
The markets didnt just get left behind a grade for being a bit slow, they got transfered 3 years ago to the 'Full Retard Special Ed' wing of the campus!
Rumors are the washout in TRX is due to a concentrated Hedge Fund liquidation- probably margin called... This is why these bankster takedown are so dangerous and criminal. They ruin investors.
Well at least we know a lot of the big boys are feeling a lot of big pain. They were all only too happy to get bailed out on the backs of taxpayers, so now whatever happens to them I dont feel the least bit sorry for them.
How you going to feel if they get bailed out again?
Dodd Frank regulations are to blame. They have to register with the sec and show their holdings. (show their work)..ouch!
Most fail anyway like Insana Capital.(LOL) few are capable of achieving results like Hugh Henry or Soros.
"Under the deal, which runs through September of 2015, most of the workers won't get annual pay raises. But they'll get $5,000 signing bonuses, profit-sharing checks and other payments that total at least $11,500 during the next four years. GM also promised to add at least 5,100 jobs and reopen an assembly plant in Spring Hill, Tenn."
It's BOOOYAAAH! at GM.
http://finance.yahoo.com/news/General-Motors-workers-ratify-apf-34753287...
When it comes to Friday, this is what the majority of people are thinking:
http://www.youtube.com/watch?v=kfVsfOSbJY0
There was a hedge-fund called Man Group
Whose investors got coverered in poop,
Performance so poor
They rushed out the door,
Now - fuggedabout steak - they eat soup!
Interesting to see Man Group having such a poor run. They were one of the first to use the leveraged, technically driven computer trading model. I am sure they must have been HFT`ing as well - or did the JPM, GS cartel lock them out and make them locate their servers a bit further from the exchanges than ideal? Perhaps their models just got outdated in the pico second world that is now `the market`. Most of the brains that spun Man Group out of ED&F Man are long gone, either to their graves or to retirement at their country estates. It`ll be interesting to see if they can bounce back - I am doubting they will.
Now it would be good if 25% or more of the TBTF banks were closing shop as well.
Where will the money go? 2 options....when a fund closes another one opens up OR their capital is consolidated by group think into the largest players. TBTF hedge funds coming to a bailout near you. Not that this is anything new(see LTCM, Amaranth). The money will go somewhere, eventually.
Before 2008 , it made sense to go long the dollar (and short stocks) when you were bearish. Now a single QE is all it takes to obliterate you.
Shit'll buff out.....
Does this mean buy and hold is dead? ;-)
rage, rage against the dying keynesian light...
Fasten seat belts. Prepare for impact.
Shouldn't the headline have been "Man overboard"?
Losing other people's money and still earning fees and commissions: WINNING!
1-800-RUN
Just a Gigolo, everywhere I go, and I ay yei yei aint Got No Money,
No nobody,
babadabedababoboi Solyndra Crook....
Aieeey aint got no body....
While all asset classes will be hit hard, real money, gold in silver, in the long run will be the only survivers in my opinion. Yes, they'll be taken down too in the short run but due to their function as the only alternative non-debt encumbered currency in the world, they will ultimately become much stronger as the prospect for a US default on sovereign debt or infinite and infinitely increasing QE becomes a reality (which only happens if Congress nationalizes, and the President approves of that nationalization) the Federal Reserve. None of that takes place quickly, where as the redemptions take place at high frequency.
Nobody mentioned that MAN's largest fund, the AHL, is actually performing well. It was UP in both August and so far in September.
People are running like crazy to get their money out of these funds (that aren't protected really). Because they know that something big is on it's way and it will rattle the market for weeks if not months.