Clarium Down 6.1% In March - Just Another Example Of Massively 330% Leveraged Hedge Funds?

You've heard of 130/30. How about 278/56? That's the most recent net exposure of Clarium. That Peter Thiel's fund is not doing that hot with that kind of leverage is not big news. What however is, is the fact that his hedge fund was 3.7x levered as recently as last week, and currently has 3.3x exposure as % of NAV. And just in case you were wondering how much risk is attributable to a long debt position that is nearly 3x your NAV, Clarium assigns a cumulative 6.4% 3-Sigma risk as a % of NAV. So what if the fund was 10x leveraged? Would that mean a linear expansion and just under 20% in risk? How about 100x leverage? 1000x? How many other hedge funds currently have well over 3x leverage and think their risk of NAV loss is negligible? Clarium has one thing going for it: its L/S equity ratio is 3:52. Too bad now even Bill Gross is saying to sell bonds and go all in into stocks. At least we know who will be covering shorts. And one wonders: just how many other hedge funds have asked their prime brokers to give them 4x leverage? Sure, 4x, 5x even 10x, leverage happens every day, but primarily for market neutral funds. When this shifts to LS, it is a recipe for disaster. In the end this will all explode so spectacularly, just like in those long forgotten days of 2008...