Trimtabs - Death March Begins: 43 Billion of Redemptions; Just the Start

Discussion in 'Wall St. News' started by ByLoSellHi, Oct 17, 2008.

  1. TrimTabs: Hedge Fund Redemption Cycle Just Beginning

    by: Matt Stichnoth October 17, 2008

    Investors pulled $43 billion out of hedge funds in September, in what could be the start of a “death march,” the FT reports:

    The data from TrimTabs Investment Research - which was to be sent to clients late yesterday - come as hedge funds are working to prevent far bigger redemptions by the end of the year, when many funds give investors a chance to take out money.

    Withdrawals can lead to a vicious circle in the markets, as funds sell holdings to return money to clients, depressing prices and prompting further redemptions.

    A fundraiser for a major hedge fund said the period "between now and December 1 is a sort of death march" for the industry. . .

    Conrad Gunn, chief operating officer of TrimTabs, said the $43bn in September withdrawals would mark "the beginning of what we expect to be a series of outflows for the remainder of the year. We expect October outflows to be larger". [Emph. added]

    Bonus confidence-booster!: The FT also notes an estimate by J.P. Morgan that, because of hedge funds’ leverage, every $150 in redemptions translates into $400 worth of portfolio liquidation. December 1 can’t come fast enough.
  2. i think people are realizing they were misled. hedge fund used to mean that funds were hedged against large market moves. boy was that wrong.