Third Point Down 3.6% In September: Liquidations To Shift From Gold Back To Stocks Next?

Tyler Durden's picture

One of the sterling performers in the hedge fund arena so far has just gone negative in several of his hedge funds for the year after another painful month. And if one of the best is unch, what can the rest say? Remember when we said 25% of the hedge fund space may be "redeemed"? We were being very optimistic...

Per Third Point, whose latest top holdings can be found here:

Dear Prospect,


Please find the following estimate of the net returns of funds managed by Third Point LLC for the month of September and for the year 2011.


In case we are right, now that gold has seen it dose of liquidations, hedgies will next move to dumping their stock holdings. Which means that as a preemptive attempt to defect first, the stock most held by hedge funds will be the first to go, particularly the winners among them. Conveniently, ss a reminder, here are the 50 most widely held hedge fund names as of June 30, per Goldman Sachs.

Comment viewing options

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

I will get back to stocks when greed is out and logic is in... that's probably never given the number of crooks around.

Pladizow's picture

Birth, Growth, Maturation, Declination and Death - EVERYTHING!

DoChenRollingBearing's picture

ZH-ers fed up with everything that sucks so bad might consider reading my blog.  Send me a mail (tell me who you are and promise to behave, my blog is not Fight Club): ?o?·l????@?u????q?u?llo?u???op for the link.

And you can learn that neat trick too from my reader "Richard" too!  Thanks, Richard!


Well that neat trick did not work (here).  Anyone wanting to read my blog gmail me at my name, and you can read about gold, listen to pretty women singing in Italian and learn Richard's neat trick!

snowball777's picture

UTF codepoints are not a "trick", DCRB.

GetZeeGold's picture


I don't need anyones blog to tell me to buy subsidized gold.

Neither do the Chinese.

Thank you Benji!!! Take X amount of the trillions of QE and drive gold down. My kid sister is smart enough to know what to do with this.

Gold IS Fight's the only thing real.




Howard's picture

Being greedy (looking out for one's self intrest) is logical. I'll stay short stocks until it's money printing time again.

DosZap's picture


Look for QE 3 VERY SOON.

css1971's picture

I think Europe is printing several hundred billion right now. Ink prices just went up.

AldousHuxley's picture

900 for S&P500 seems to be the bernanke put


but bernanke put doesn't help but to persist the stink.


The victims of debt in the next generation aren't going to take it:  "Fuck the Fed" protest in Boston Fed by OccupyBoston


Hephasteus's picture

Get the fuck out of canada you war criminal dick cheney protests in vancouver. I'm currently about .1 percent open right now and I'm fucking seething. I think they opened up the whole can of pissed off at this point in history.

DormRoom's picture

The Feds know any QE will lead to stagflation without fiscal stimulus.  They'll wait until the markets crash, and the Republicans to yield on Obama's plan, to concurrently announce QE3.


The American political system is a mess.  You had Democratics & Republicans playing chicken in Congress.  Now you have the Congress & the Fed playing chicken.


game theory with 3 agents is far more complex, and exist in a higher risk threshold.

Motley Fool's picture

Heh. The apple is about to fall from the tree?

Gravity sucks that way. :P

DoChenRollingBearing's picture

There is a similar saying here in the USA, but it is used in a much more negative way, I'll send it to you MF!

Cursive's picture

No tears for the 2 and 20 crowd.  A pox on all of them, AAPL included.  Try working for a living and making something of value.

GeneMarchbanks's picture

GREEN. Notice Tha JP Morgue is up there, so... there's that to look forward to...

smlbizman's picture

honestly, how fuckin smart do you have to be to combine that list of stocks......and on the other hand, how fuckin stupid do you have to be to pay somebody to apply your money to that list....

Socratic Dog's picture

Yeah.  Someone please tell me what makes a "hedge fund" so different from a boilerplate (low cost) large-cap mutual fund.  Why the hell would you pay someone top dollar for that?  'Cause you're a dumb fuck I guess.

css1971's picture

Because when you are at the top, you only use The Best, and The Best costs money. If it didn't cost money it wouldn't be The Best. Now would it?

snowball777's picture

Soon to be the 0 and -20 crowd. Agreed on the tiny violins.

JSchroe's picture

One of the most brilliant, abstute comments I've ever read. Thank you Cursive.

DormRoom's picture

It's a vicious feedback loop.  stocks & commodities go down, bringing leverage ETFs and hedgefunds down [1].  ETFs & hedgefund deleverage, bringing stocks & commodities down [2].  Go back to [1].


During Q1 the Feds used the shadow banking system (hedgefunds) as a mechanism to produce a wealth effect.  The hedgefunds applied leverage on top of leverage (ETFs), to push equities & commodities higher.  So if the shadow banking system unwinds, we could easily see SPX 666 again, as deleveraging accelerates, USD carry trade unwinds, and hedgefunds implode.


The assymetry of markets (investors sell all @ once, but stagger their buys) implies hedgefunds will all head for the exits at once.  And shows the failure of leverage capitalism.  Or that is to say, leverage was used to distort prices (equities & commodities), underminding the price discovery mechanism, and lead to HUGE misallocation of capital (oil @ 140, lead to huge investments in oil sands projects that have gone bust. ditto for the natural gas industry)


The more regulators allow commodities to be turned into financial assets/vehicles via ETFs, the greater the incentive for big money to distort commodity prices, through grey market warehouses (JPM copper ETF prospectus says 4/5 of copper production is stored in non-bonded warehouses, or stutters them to market (Aluminium) to distort supply metrics).  If we lose the price discovery mechanism, we lose the efficiency of the capitalist system. Instead of an invisible hand lifting us up there is an iron fist at our necks.



FinalCollapse's picture

Just like October 2008 - I predicted the collapse three weeks ahead, by knowing that the Hedge Fund redemption wave is coming. The same shit this year - exact replay. This weekend most of the hedge fund investors are biting their nails and trying to figure out what next. It is easy to predict, that many, if not most of them, will want to pull the money out to safety.

Two years ago, I consulted for the Wealth group in huge American bank. The wealthy ones survived the crash of 2008 remarkably well, because they were diversified, and they quickly pulled their money at risk from the stock market. The people at the lower end of wealth spectrum suffered terrible losses, with many wipe outs. When I charted the wealthiest group, there was almost no impact. 

Same shit in 2011. The huge wave of redemptions is coming. This will force massive liquidations.

Happy trading All!

Mr_Wonderful's picture

Misreading the ongoing dollar rally from cyclical low will continue to be very costly for those long stocks and commodities. Dollar built up tons of energy muddling along that low from May through August. Could already be the mother of all short squeezes.

Mr_Wonderful's picture

SEC Proposes Cut in Threshold for Trading Halts

The U.S. Securities and Exchange Commission began an overhaul of rules adopted a quarter century ago to shut down the stock market and related futures trading during periods of volatility, proposing that curbs be triggered when the Standard & Poor’s 500 Index falls 7 percent.

The changes would switch the index used for circuit breakers to the S&P 500 from the Dow Jones Industrial Average, according to proposals submitted by U.S. equities exchanges and the Financial Industry Regulatory Authority. Index declines that set off halts in stocks, options and futures would be reduced and their duration shortened, according to a summary of the proposals from the SEC......

scatterbrains's picture

I wouldn't be surprised if they engineer 2 consecutive lock limit down moves in order to get everyone begging for more printing. I can envision the 2nd lock limit down to around 950 will be when they announce multi trillion dollar printing and before the unlock we lock up again to the upside and kill off any remaining bears.

Smiddywesson's picture

Index declines that set off halts in stocks, options and futures would be reduced and their duration shortened

Absolutely.  This will be the ultimate example of the little guy holding the bag.  You will see multiple and repeated limit downs with the big algo traders abandoning ship and everybody else who can't trade in microseconds chained to their rowing benches.

cranky-old-geezer's picture



Enjoy your USD safe haven while you can. 

Behind the scenes Bernanke is printing USD like crazy for currency swaps trying to keep Euro-zone banks and the Euro itself afloat, not to mention proxy purchase of US Treasury debt to keep our government going.   It's not QE openly.  It's stealth QE.  Out of public view.

So USD is headed for currency collapse at some point.  Of course nobody knows when.  And that's the point.  There won't be any warning.  

MFL8240's picture

No the mother of all shorts is the long end of the trasury.  The clown show may continue buying but, soon with prices where they are, the Chines will dump their crap.

The Swedish Chef's picture

Time to short AAPL then?


Regards; Shorty

DeadFred's picture

I'm already positioned on two of these stocks but would be interested in any rank speculation on which would be big losers in a liquidation, and particularly if things get 'crashy' who is most vulnerable to big artificial swings. I like throwing out an occasional low cost position aiming for a big drop, they sometimes work and options pricing structure seems poor at reflecting those risks.

Thanks Tyler for this great material. Like a dog with a bone I can gnaw on this table all weekend.

FinalCollapse's picture

AAPL is at huge risk. The ETFs will pull it down, together with the market.

DeadFred's picture

AAPL and EMC are my two along with QQQ. Can a megacap company with $400 shares crash without any company specific news? I can only envision a multiday decline, but what I don't know would fill volumes.

bulldog5's picture

Stampede!!!!! I hope Warren and Kramer get run over by the bac frontrunners


You all are smoking crack investment wise with this little doggie in the manger biting at the world economy's nuts. Read on, and think again about where your bux should be stashed...........................


The Federal Reserve is neither Federal nor a "Reserve". This private bank run by the "Bank of England" has been stripping the US of its assets since the days of Andrew Jackson.  If the $16,000,000,000,000.00 given away secretly, since 2007, to the member banks isn't reason enough to overhaul our entire government financial system then our country is doomed to financial failure. You won't read this in the mainstream media....but it may emerge in the coming elections. Read about this first ever audit of the Fed and understand why we are in such trouble.  Tuesday, September 27, 2011 First Ever GAO Audit Of The Federal Reserve

(You can click on the site and read the report).

The first ever GAO audit of the Federal Reserve was carried out in the past few months due to the Ron Paul, Alan Grayson Amendment to the Dodd-Frank bill, which passed last year. Jim DeMint, a Republican Senator, and Bernie Sanders, an independent Senator, led the charge for a Federal Reserve audit in the Senate, but watered down the original language of the house bill (HR1207), so that a complete audit would not be carried out. Ben Bernanke, Alan Greenspan, and various other bankers vehemently opposed the audit and lied to Congress about the effects an audit would have on markets. Nevertheless, the results of the first audit in the Federal Reserve nearly 100 year history were posted on Senator Sanderâs webpage earlier this morning.   (Summarized below)

What was revealed in the audit was startling:

$16,000,000,000,000.00 (TRILLION) had been secretly given out to US banks and corporations and foreign banks everywhere from France to Scotland. From the period between December 2007 and June 2010, the Federal Reserve had secretly bailed out many of the worldâs banks, corporations, and governments. The Federal Reserve likes to refer to these secret bailouts as an all-inclusive loan program, but virtually none of the money has been returned and it was loaned out at 0% interest.

Why the Federal Reserve had never been public about this or even informed the United States Congress about the $16 trillion dollar bailout is obvious the American public would have been outraged to find out that the Federal Reserve bailed out foreign banks while Americans were struggling to find jobs. To place $16 trillion into perspective, remember that GDP of the United States is only $14.12 trillion. The entire national debt of the United States government spanning its 200+ year history is only $14.5 trillion.

The budget that is being debated so heavily in Congress and the Senate is only $3.5 trillion. Take all of the outrage and debate over the $1.5 trillion deficit into consideration, and swallow this Red pill: There was no debate about whether $16,000,000,000,000 would be given to failing banks and failing corporations around the world. In late 2008, the TARP Bailout bill was passed and loans of $800 billion were given to failing banks and companies. 
That was a blatant lie considering the fact that Goldman Sachs alone received 814 billion dollars. As is turns out, the Federal Reserve donated $2.5 trillion to Citigroup, while Morgan Stanley received $2.04 trillion. The Royal Bank of Scotland and Deutsche Bank, a German bank, split about a trillion and numerous other banks received hefty chunks of the $16 trillion. ****


When you have conservative Republican stalwarts like Jim DeMint(R-SC) and Ron Paul(R-TX) as well as self-identified Democratic socialists like Bernie Sanders all fighting against the Federal Reserve, you know that it is no longer an issue of Right versus Left. When you have every single member of the Republican Party in Congress and progressive Congressmen like Dennis Kucinich sponsoring a bill to audit the Federal Reserve, you realize that the Federal Reserve is an entity onto itself, which has no oversight and no accountability.


Americans should be swelled with anger and outrage at the abysmal state of affairs when an unelected group of bankers can create money out of thin air and give it out to megabanks and super-corporations like Halloween candy.


The list of institutions which received the most money from the Federal Reserve can be found on page 131 of the GAO Audit and are as follows:

Citigroup: $2.5 trillion($2,500,000,000,000)
Morgan Stanley: $2.04 trillion ($2,040,000,000,000)
Merrill Lynch: $1.949 trillion ($1,949,000,000,000)
Bank of America: $1.344 trillion ($1,344,000,000,000)
Barclays PLC (United Kingdom): $868 billion* ($868,000,000,000)
Bear Sterns: $853 billion ($853,000,000,000)
Goldman Sachs: $814 billion ($814,000,000,000)
Royal Bank of Scotland (UK): $541 billion ($541,000,000,000)
JP Morgan Chase: $391 billion ($391,000,000,000)
Deutsche Bank (Germany): $354 billion ($354,000,000,000)
UBS (Switzerland): $287 billion ($287,000,000,000)
Credit Suisse (Switzerland): $262 billion ($262,000,000,000)
Lehman Brothers: $183 billion ($183,000,000,000)
Bank of Scotland (United Kingdom): $181 billion ($181,000,000,000)
BNP Paribas (France): $175 billion ($175,000,000,000)






DosZap's picture


This OLD news, we knew about the 16 T weeks ago.................

Now to WHO it went exactly no, we did not know.

To me,it doesn't matter.(they have gone past the Twilight Zone a long time ago.)

Simply because the Federal Reserve is not Federal,has nothing to do with me,I owe them Zero, and I will not pay them a dime of this insane ponzi they have been running.

And NO American citizen should be on  the hook for one DIME of this.

The Fed's powers should be taken away, and back to Congress where it belongs.

The Treasury should issue ONE note the size of a $1.00 bill, with the entire amount printed on it, that the Fed has spent behind the curtain, and it should read PAID IN FULL.

(like the Zimbabweian notes)

Congress could do this in ONE day,if it sop desired.

They do not have the power, nor the right to have done let them eat it.

Shit sandwiches are bad anytime.

Melin's picture

Congress shirks, Atlas shrugs.

snowball777's picture

They have this technology...on the interwebs...called a 'link'...

You've mastered Ctrl+C and Ctrl+V so you should be able to handle it.

DosZap's picture


Who the F you posting to?.

Quinvarius's picture

The stock market may lose another 15% tops.  We printed too much money.  The EFSF and the IMF about to create another 3 trillion. Fed at 0% and giving out secret loans.  Whatever predicts inflation the best will be the first thing to rise.

Debugas's picture

the problem is all the money printed were given to the wallstreet not the mainstreet so what it means is that the demand for goods is not going to pick up so businesses going to continue to have losses and their stocks go down

searcher68's picture

Interesting how old Bernie, while appearing to be on the correct side of the argument, still refers to the fed as an "agency of the United States government". What a boner.

RSloane's picture

To answer the question in the thread title - yes, stocks are next.

RSloane's picture

Germany just said no to giving any more money to the EU bail-out fund. In the US, the discussion has shifted to when the recession will hit instead of if there is going to be another recession. China's manufacturing output is dragging. Global aggregate demand is sinking. So yah, Monday is thoroughly possible.  

Smiddywesson's picture

That's right Fred.  The markets were forced to channel for a reason, and now that reason is over.  It's time to face the music.

molija6's picture

I question why people think hedge funds would ever be "surprised" by their redemptions. Most have a notice period so it's not like they found out on September 15th that they'd be getting redemptions on September 30th...

Don't doubt that recent sales are being done to fund redemptions though.