Yikes, worse than previously thought. Goldman's Global Alpha Falls 26% in 2007, People Say (Update2) By Katherine Burton and Jenny Strasburg Aug. 10 (Bloomberg) -- Goldman Sachs Group Inc.'s $8 billion Global Alpha hedge fund has fallen 26 percent so far this year, which may prompt additional investors to withdraw their money, according to people familiar with the fund. The decline in Goldman's largest hedge fund, managed by Mark Carhart and Raymond Iwanowski, follows a drop of about 9 percent in 2006, said the people, who declined to be named because the fund is private. The Standard & Poor's 500 Index of the biggest U.S. stocks has returned 3.6 percent this year. ``It's hard to imagine how investors can maintain confidence, because their losses have been taking place over a long period of time, starting last year,'' said Virginia Parker, who helps oversee about $1.8 billion at Parker Global Strategies LLC in Stamford, Connecticut. ``There has been a broad range of market climates, and the fund has not demonstrated the ability to excel in any of them.'' Quantitative, or ``quant,'' hedge funds in the U.S., including those run by Goldman, Highbridge Capital Management LLC and Tykhe Capital LLC, have lost money in August as credit spreads have widened and the stock-price volatility has jumped, jarring the computer models the managers use to make their bets. -snip- Full article here: http://www.bloomberg.com/apps/news?pid=20601087&sid=aOux0yUHL3xw&refer=home
From the same article: Simons' Decline James Simons' $29 billion Renaissance Institutional Equities Fund has fallen 8.7 percent this month, hurt by swings in securities prices, the 69-year-old said yesterday in a letter to investors. The two-year-old fund now has fallen 7.4 percent since the beginning of January.
RenTech is big news...we all know Goldman isn't the best already. Volatility doesn't hangout up here if there aren't some major players hanging on by their short hairs. Citadel plods along though.
Link includes communication(s) from Jim Simons/Rentec: http://www.dealbreaker.com/2007/08/how_credit_market_turmoil_rock.php
Will be interesting to watch if these seemingly random plus and minus 15% swings in many mid/small caps will continue when redemptions hit. August 15 was the date the Journal was looking at. This last week was nuts, looked like massive forced liquidations of quant long/short positions.
whats interesting is that once the markets stabilize and forced liquidations stop, will many of these funds reload the liquidated positions? If this is a technical event not driven by traditional valuation fundamantals, doesn't it place a mean reversion to a high probability? (just as simons says in his own letter)
i agree entirely. not basing it on any rumors/leaks, but just on the action of the stocks. stocks across many sectors had tremendous bounces off lows and the common thread was short interest. sure looked like someone had to sell off their winners (in this case, being short) as well as losers to cover redemptions.