Yesterday's plunge in stocks (and credit markets) was pinned on several catalysts from Russia to Fed speak, but the 'liquidations' explanation appeared to make most sense and now we have a candidate for the culprit. As The Wall Street Journal reports, [5] $10.6 billion BlueCrest Capital Management LLP, one of Europe's largest hedge-funds (and best known for its credit market expertise), laid off several stock traders in the U.S. Thursday and began liquidating their investments, according to people familiar with the matter, not long after it aggressively expanded into equities.
Here is a snapshot of BlueCrest's most recent exposure and AUM via HSBC:
[6]
Via The Wall Street Journal, [5]
BlueCrest Capital Management LLP, one of Europe's largest hedge-fund firms, laid off several stock traders in the U.S. Thursday and began liquidating their investments, according to people familiar with the matter, not long after it aggressively expanded into equities.
Four of 18 U.S. portfolio managers at BlueCrest's U.S. stock hedge fund were laid off Thursday, along with their analysts, one of the people said. Jonathan Larkin, the firm's head of U.S. equities and a former executive at Millennium Management LLC, resigned, the people said.
The New York traders invested in sectors including health care, telecom, media and technology.
BlueCrest on Friday cited performance issues for the shake-up. "We remain very focused on performance and unfortunately we've had to make some changes in the U.S. team," said BlueCrest Chief Financial Officer Andrew Dodd in a statement. "However, our overall strategy remains very firmly in place and we will continue to grow the team and build the fund."
* * *
When one fund's liquidation of a part of their portfolio can drop the Nasdaq by 2%, it should be clear to everyone (including Janet and here friends at The Eccles Building) that the stock market 'stability' is anything but "contained."
* * *
gpro down early...wonder if the bluecrest theory was right
— Jamie Lissette (@jamielissette) September 26, 2014 [7]
Lots of desk chatter this morning that BlueCrest was short GPRO (and covered), which would explain this...
[8]
