Wednesday, May 8, 2013

Hedge funds are one trick ponies with suicide vests on

One trick © fintag

News comments:
There is something not quite right at the moment. My long only throw-a-dart equity fund is up double digit percent and yet most hedge funds, trading in unprecedented bull markets, are either down or flat (hfr).

So when we read hedge funds are the new banks, lending to companies the way banks used to (these days they prefer to take free money and pretend to lend it out but never actually do so they can write off their bad debts and pay themselves bonuses for saving their banks and pushing up the stock price for the benefit of even more stock option in the money pay days) with a USD108bn pot (bloomberg) it becomes obvious your average hedge fund is so crap that they are having to buy crap bonds and build up their own sandwiches of subprime debt so they can pass the parcel and sell it to each other for mtm fantasy values.

Yes, subprime is back (reuters) and the crap burger full of horsemeat is the only long on the street.

As those gods of profit start to look like one trick ponies (inside trading anyone? Gold is the new black?), the likes of Paulson and Bill "Thinking Big" Ackman (marketwatch) have truly been shown to have lost their touch. Shame they couldn't get out at the top like Sir Alex Ferguson. Or Bill Gross.

When hedge funds start to panic and buy crap nobody wants ("I am ex goldman and I own the markets"), it starts to feel like LTCM all over. Hedge funds are leveraging off each other (directly and indirectly) and with all these regulation chains being strapped around the big banks, the hedge funds are being given free reign to lend like there is no tomorrow. Once they get into the private equity circle of life, there can only be one outcome. Crash.

In the meantime, enjoy the Bernanke / Draghi / Nippon GinkĊ and tuck into those safe as houses ETFs built on sand and hedge fund hot air.

Today's shorts:
Fcku the paper I want the real stuff (zerohedge)

Today's longs:
Slumming it in London - time to move to Japan (guardian)

Man Utd to be relegated next season.


Anonymous said...

Actually I would not trust my means to a hedge fund, I would prefer the consultancy or service of a professional investment manager with proper contract, unfortunately now I am more concerned about wageday advance. But life is pretty changeable!

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