Endeavour loses 27% value on leveraged Japanese bond trading bets

Discussion in 'Wall St. News' started by ASusilovic, Mar 20, 2008.

  1. 20 Mar 2008

    Endeavour Capital, a $3bn (€1.9bn) London hedge fund, on Monday lost more than a quarter of its value as it became the biggest victim of the unwinding of a popular Japanese government bond trade that hit many rivals this week.

    Endeavour, run by former Salomon Smith Barney fixed income traders, told investors it fell 27% as a highly leveraged bet on the spread between short- and long-dated JGBs was hit by contagion from the US financial crisis and domestic worries. The loss triggered conditions in bank borrowing agreements, forcing Endeavour to close other trades in an effort to reduce its leverage from 18 times to almost nothing.

    Hedge funds scrambled to unwind the so-called “box trade” - betting that 20-year bond and swap spreads would widen as seven-year spreads narrowed - early on Monday when the market moved sharply against them. Hedge fund investors said other well-known funds lost 5% and 20%, although Endeavour was believed to be the biggest loser.

    In a separate move, it has emerged that a fixed income hedge fund run by JWM Partners - the investment firm headed by John Meriwether, the founder of Long Term Capital Management - lost 24% of its value between January 1 and March 14.

    The fund suffered as increasing margin calls by nervous creditors forced hedge funds such as Peloton to unload assets. JWM opened a year after Russia’s 1998 default resulted in almost $4bn of losses for LTCM, Meriwether’s previous hedge fund.


    Little bit deleveraging going on...
  2. In Europe, I believe they call it "de-gearing".:D
  3. Makes you wonder who was on the other side of those trades? Japanese housewifes?
  4. Mrs. WATANABE !!! Ha, ha, ha....:D :D :D

    Dollar Sales by Tokyo Individual Investors Reach a Record High


    I think, I should buy some USD now...supporting Helicopter BEN and US economy...anyway my next trip is already planned to NYC...shopping...:D :) :p :cool: