Miami Herald – The deflating commodities bubble is claiming its first casualties as large investment funds absorb staggering losses from bad bets that prices for oil, precious metals and grains would keep going up.

Hedge fund operator Ospraie Management LLC notified investors Tuesday that it’s closing its flagship fund after it suffered losses in August on positions in energy, mining and other natural resource-related stocks that left the fund down nearly 40 percent year-to-date. It’s believed to be the first hedge fund to go bust in this latest commodities boom as prices come crashing down after a historic bull-run earlier this year.

And the bloodletting may have only begun. Wall Street analysts say similar trouble looms for other funds that got caught up in the exuberance of the boom but were too late in getting out.

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Myrtle Beach Online – The deflating commodities bubble is claiming its first casualties as large investment funds absorb staggering losses from bad bets that prices for oil, precious metals and grains would keep going up.

Hedge fund operator Ospraie Management LLC notified investors Tuesday that it’s closing its flagship fund after it suffered losses in August on positions in energy, mining and other natural resource-related stocks that left the fund down nearly 40 percent year-to-date. It’s believed to be the first hedge fund to go bust in this latest commodities boom as prices come crashing down after a historic bull-run earlier this year.

And the bloodletting may have only begun. Wall Street analysts say similar trouble looms for other funds that got caught up in the exuberance of the boom but were too late in getting out.

They say Ospraie’s misfortunes illustrate one of the hard lessons emerging from the commodities bubble: Many money managers have never been through a commodities boom and so were ill-prepared for the hyper-volatility associated with hard assets.

"You’re always going to have victims when a market comes down this fast. People stayed at the party for too long," said Phil Flynn, energy analyst at Alaron Trading Corp. in Chicago.

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BusinessWeek – For managed-care organizations (MCOs), which footed the bill for roughly 34% of U.S. health care spending in 2007, health-care reform presents uncertainty and opportunity. Proposals now being debated in Washington and the different states aren’t affecting near-term business, says Phillip Seligman, a Standard & Poor’s equity analyst who follows MCOs. Nor are MCOs currently incorporating reform proposals into their guidance for 2008 or beyond.

Nevertheless, payers are expecting at least incremental changes to the system, given the level of concerns about spiraling health-care costs and growing lack of access to affordable health insurance. On this, a panel of Wall Street analysts concurred at a recent conference on health-care reform sponsored by the Center for Studying Health System Change (CSHSC).

Because they aren’t sure how reforms will play out, MCOs are hedging their bets by diversifying into new markets and product lines that offer a wide range of coverage and pricing options. Many of these products are designed to appeal to price-sensitive small-group and individual buyers. MCOs traditionally considered these to be modest niche markets at best, but now view them as important for future growth, particularly if reforms initially focus on getting coverage for the uninsured, as is currently expected from the political rhetoric surrounding the issue.

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New York (HedgeCo.Net) – Microsoft CEO Steve Ballmer declared that they are “done” pursuing Yahoo and focused instead on Microsoft’s need to invest in its internet businesses.

However, the past six months of on-again, off-again talks with Yahoo have critics wondering if in fact the door is actually closed on this infamous almost-merger. 

"We had a set of principles, we talked about them, it didn’t work out," he said. "Fine, we’re done. We can move on."

Microsoft Chief Financial Officer Chris Liddell added, "The chances of us buying Yahoo on a full acquisition basis are so small that they are essentially negligible."

Instead, Microsoft announced it had expanded its current deal with the internet social networking site, Facebook.  In addition to displaying ads on Facebook pages, they will also provide web search and search advertising for its 40 million+ U.S. users. 

The rhetoric also focused around the fact that Microsoft’s attempt at an acquisition of Yahoo was mainly to better position themselves to compete against Google.  However, with Microsoft’s new strategies in place, their one-time need for Yahoo will become obsolete. 

"This is a two-horse race,” exclaimed Ballmer.  ”It is about Microsoft and Google."

The backdrop was Microsoft’s annual meeting with Wall Street analysts at its headquarters in Redmond, Washington.   Ballmer discussed the potential of its online services division as well as emphasized how important it is to capitalize on future opportunities.

"There is this huge, huge, huge new opportunity around the Internet and online and we have to embrace that opportunity and invest in that opportunity."

 
Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net

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