http://www.cnbc.com/id/26515055 Could this be why the 200point + gain went poof... Maybe they had to liquidate all their assets today? It really did seem something was odd for the indexs to fall so sharply today! I'm betting this is the reason!
What's happening with hedge funds now reminds me of daytraders going back to corporate jobs in 2000. Anderson was a LT commodities professional though, rather than some twat who worked on an IB desk and thought he could really trade. Expect to see hordes of the latter having the towel thrown in for them. Its hard out there without an institutionalised edge or a bubble.
edit "The losses were primarily caused by a substantial sell-off in a number of our energy, mining and resource equity holdings" Ospraie typically had exposure to commodities as much through a lot of holdings in listed commodities producers as it did in derivatives - as do many commodity funds, especially those of a certain size and pension fund friendly risk profile.
"We estimate that it could take as long as three years to dispose of certain portions of the remaining portfolio" Wonder what kind of assets they have on the books that would take so long to liq.? Real estate perhaps?
"The balance of the Fundâs assets, which should consist mostly of illiquid investments," Investments in unlisted miners or "mark to make believe" assets used I suspect by many funds to boost returns and provide the nice smooth monthly returns that attract pension money? I think the hedge fund universe will get as ugly as a collapsing Ponzi scheme if too many investors try to get the money they think they have in a fund out, and for the same reaon, it may not really be there. Bernenke will have to find another route (other than the Term auction facility for primary delaer who just happen to have Prime Brokerage operations) for a backdoor bailout if it gets too big.
From an older bloomberg article: "...Anderson and the 39 analysts and traders who work for him normally invest over a two-year period. They spend as much as half of their time traveling to farms, mines and refineries researching investment ideas. The founder, who, like his mentor Robertson, is his own chief portfolio manager, journeyed to at least 15 countries in the first six months of 2007. He surveyed palm oil plantations in Malaysia, metal producers in France and oil service companies in Texas. Other destinations included Australia, China, Peru, Qatar, Saudi Arabia and South Korea..." Can you imagine having those kinds of resources at your fingertips (including flying to whereever you want when you want) and still blowing up? :eek:
Reminds me a bit of the story of LTCM. One of the interesting things I recall from reading lowenstein's narrative, was that at a moment of desperate weakness (they were down something like 50%), LTCM turned to GS for help, and part of the provisions was revealing a large amount of their holdings. As it was told, one of GS' major traders quickly downloaded tons of LTCM's positions onto his laptop. Shortly thereafter, a substantial amount of LTCM's overly leveraged positions "somehow" seemed to correlate in lockstep against them practically simultaneously (mathematical odds being infinitesimally small). Always wondered what would have happened had they not resorted to opening the books out of desperation. But it also tells you a little bit about how wall street operates and the ephemeral nature of success in the markets.
^^^^^^^ what in the hell does does flying around have anything to do with a macro economic adjustment thus a fund going under as a result ? Get a clue!