Each business day HedgeCo.Net keeps you informed with the top hedge fund industry news, opinion and insight from around the globe. From the latest hedge fund launches, to the impact of regulation, competition, and investor activism - we track the topics and people that make a difference to you.
Reuters UK – Hedge funds are going to have to dance to their investors’ tune once more as lucrative profits fall and a new breed of clients begins flexing its muscles, demanding more results from managers.
Institutional clients, a growing part of the hedge fund investor base, are questioning high fee levels and say they want to see what managers are really doing with their money — an understandable worry since the Madoff fraud.
They also want to know how hedge funds manage risk in choppy markets after record performance losses last year, and are balking at funds that are restricting investors from accessing their money by using so-called gates.
Detroit Free Press – In our view, incessant selling is coming from the liquidation of hedge funds, and it is the new element in the securities markets that no one has experienced before.
This new source of selling has added to the normal amount of selling pressure generated by pessimistic investors, and in a confusing way. Hard information is tough to come by, but a better understanding can be achieved by arranging what we know.
In round numbers, the hedge fund industry peaked at some $1.6 trillion in assets. By the nature of the beast, that asset base is composed of trading strategies using stocks, bonds, options, futures, credit default swaps, you name it.
The funds are also leveraged 1.4 times as an industry average. So, $1.6 trillion becomes $2.25 trillion on a working basis. It is also to be noted that for every position in a trade, someone is on the other side of it. By definition, then, one part of the trade is right, and the other is wrong.
Reuters – General Motors Corp (GM.N) and Ford Motor Co (F.N) posted more than $27 billion of net losses in the first half of 2008 — and that was before a deepening economic slowdown pushed industry sales beyond 15-year lows.
What either automaker will report for an encore in the third quarter could be overwhelmed by the potential merger of Chrysler LLC into GM or various other scenarios of some or all of the Auburn Hills, Michigan automaker being sold.
Both are expected to post dismal third-quarter results on Friday, capping off a disastrous week that started with reports that U.S. auto sales plunged to the lowest annualized rate in a quarter century in the first month of the fourth quarter.
Analysts on average expect GM and Ford to post losses of roughly $2 billion each for the third quarter excluding one time items, according to Reuters Estimates.
