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New York, 9:03 PM
Thu Nov 12
56 posts in the last 24 hours
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09/29/09
Hedge funds are a joke, and their time will come, just like with mutual funds in the 80s and investment banking in the 90s and 2000s. In fact, they've already had their own mini crisis (LTCM). There will be more Amaranths, Madoff Investments and Stanford Financials, rest assured. Normally such collapses would be huge news if not for the huge banks that drew the headlines, like the $700 billion collapse of Lehman Brothers.
As LTCM proved, you cannot make sustained excess returns merely because you have decided you are going to start "hedging" things. You can short, long, straddle, strangle, strip, strap all you want--it will only temporarily mask the simple fact that hedge funds generate higher returns merely through the assumption of greater portfolio risk, which they have not had to disclose, being immune to regulation. As we all know now, undisclosed leverage is never a good thing.
09/29/09
09/29/09
It would help if we could see his positions, wouldn't it? But he said the market's irrational - explaining away poor performance with an argument like that makes you look like you don't know what you're doing. Of course the market's irrational, that's the whole point.
09/29/09
09/29/09
Seeing as he's probably the most well-known former "hedgie" in America (among the general public, at least), calling him the face of hedge funds is not a ridiculous statement.
09/29/09
Maybe from a public perspective - certainly not from the perspective of a market watcher or participant. Cramer made his bones as an entertainer, a circus performer on a circus network. He is neither representative of hedge funds generally nor the face of the industry - the two names I provided are better choices unless the intent was to express an outsider's view. Not the angle I'd take, but I'm willing to accept that I may be too close to the subject to be an effective commentator.
09/29/09
09/29/09
But really, this is the egregious part: no one considers Jim Cramer the face of hedge funds. George Soros is a recognizable-in-pop culture actual hedge fund guy.
Jim Cramer runs an entertaining show about personal investing and hasn't been a fund manager for years.
09/29/09
As we've documented, Thiel's redemptions/outflows have been heavy since the implosion last fall. Yes, some of his investors have probably needed liquidity, and fast. But that's not everyone. Some people clearly weren't in this for the long haul -- some people saw Clarium as a hedge fund, not like long term buy and hold until retirement Berkshire Hathaway shares.
And re Soros as a public name, we'll have to agree to disagree.
09/29/09
Not one sophisticated investor treats Hedges as an asset class, because their opinions are driven by brokers. Even bargain-basement brokers differentiate between a quant and an event-driven fund now. That idea of selling every fund as absolute return was on its way out before Madoff and it's long-gone - hedges have to seem "different" to scared investors. I'd say you should call an AI guy at a brokerage sometime, but you're a Valley blog and I'm kind of confused at your choice of angles here.
RE: Thiel's bleating, his investors don't buy his crap not because it isn't true - I actually agree with him - or because they need liquidity. They don't buy it because every single loser ever justifies their losses with a similar mantra. "The economy just doesn't understand its own flaws! Boo hoo! This is irrational!" Yeah, and you're insolvent, because investors chase performance.
09/29/09
Also, if you're not looking at a fund as an distinct investment strategy--which they always are, or there wouldn't be a hedge fund industry-- you're obviously NOT a sophisticated investor. People who don't bother to do that and just throw money at a fund because it has a brand are the unsophisticated investors--i.e, the poor suckers who gave money to Bernie Madoff.
I think people are abandoning Clarium because they're pessimistic about the portfolio and maybe Theil's competency as a manager, not about hedge funds in general.
09/29/09
09/29/09
The requirement to perform is not unique to hedge funds. People abandon everything from actively managed mutual funds and the abbreviated thing they picked with their 401(k) plan when performance turns. Humans are performance chasers by their nature. The latitude is never there, which just serves to point out how ridiculous/trite Thiel's argument is - the only reason people claim that they invested for the long term is because they lost a lot of money in the short term. If you can't generate alpha, go home, and the first thing a real investor learns is to never let philosophy get in the way of the trade.
09/29/09
2008 sucked. But for the outstanding performance of a few undervalued stocks, we would have been crippled like everyone else. As it was, it was a 20-year low in our performance.
But guess what? No complaints. Few withdrawals, albeit a few more than in prior years. Those who did leave cited "personal liquidity concerns" rather than our portfolio managers' performance.
No matter what Gordon Gekko says, greed is never good, and chasing performance is not investing in the classic sense. Real investors know their portfolio managers, read their confirms and statements, ask questions, and monitor their accounts. Dilletantes write checks and let the mail pile up while sucking down scotch and hoping for the best. (And when that doesn't pan out, they switch to cheaper scotch.)
Not busting your balls here - just disagreeing with your thesis.
09/29/09
09/29/09
Off to GMail I go!
09/29/09
I suppose that the point is that one can't put hedge fund managers and their investors in a convenient basket. Some are greedy, noveaux riche scum, and some are decent people. Some are all about performance, and some tell their advisors that all they care about is 2025.
Thiel may have great investors, but he should make sure that they understand the whole process.
09/23/09
Draw your own conclusions about the outrage.
09/22/09
[www.salon.com]
09/22/09
That being said, I couldn't help noticing the recipients of the big sweepstakes checks, other than the corporations, were of non-Caucasian persuasions. Was this random coincidence? Or did O'Keefe want to target likely Obama supporters, and in his mind that means the "coloreds"?
09/23/09
Go to Moore's site, click on any of his movies, click on the References section and you'll find every factual claim made cited by reputable sources. Every one.
Try the same with any of his film "equivalents". Oh wait, there are none, since the wingnuts can't propagate their message unless their big daddies own a radio or TV network to cram it down the yokel's throat.
Moore's success, on the other hand, is earned one filled seat at a time. True free market in action.
Now, is he bombastic? Yup. Plays a PT Barnum? Yup. Earthy? Uh huh.
But kiddies, Frontline, while awesome for its market, won't fill the matinee seats.
So, put up: go to his site and disprove any of his facts. Or slink home.
Yeesh!
09/22/09
The video was indisputable evidence that ACORN employees/representatives engage in illegal and morally questionable practices. For some reason, though, the lede keeps getting buried.
09/22/09
09/22/09
Don't equivocate or make excuses, it's pathetic and it betrays bias.
09/22/09
[www.nj.com]
09/22/09
09/22/09
09/22/09
09/22/09
09/22/09
I think the issue here is that the mythology of the video is a little off. It's like the difference between a spontaneous protest and an astroturfed rally.
09/22/09
(Granted, claiming the teenage girls as dependents is a bit dishonest. But far from serious - the deduction for a dependent is like $700/year!)
09/22/09
As for the teenage girl bit... it is one thing to have adult prostitutes who at least have a chance of making a "choice" to do this work. If the ACORN employees are giving advice to run an underage prostitution ring, I wonder if they think we are living in Thailand and not the US. The deduction wasn't the serious part, it was the fact that they gave advice on how to bring in young girls from another country (way to help the minorities ACORN!) and put them to work as sex slaves.
09/22/09
I'm not defending the actions of the worker in any way. The video proves that the organization has problems, and that they were showing people how to break the law. But we all "break the law" all the time. I think it's really easy to judge this from our privileged perches. But it's really no different from failing to declare some under-the-table income or stretching the truth about a work-related deduction.
09/22/09
Prostitution is an illegal activity. One of the biggest problems that drug dealers and pimps have is in legitimizing income from their illegal activities. Money laundering and other attempts to "integrate" unlawful income into the fiscal system is one of the most difficult tasks for a drug dealer or brothel owner. Explaining how to to declare income from illegal activities facilitates the crime behind the income.
09/22/09
Anyone focusing their energy and resources on bringing down ACORN is wasting their time. Shutting it down won't have any affect on prostitution. But it's certainly taking attention away from legitimate problems, and if they succeed in ruining ACORN, will eliminate a group that - for the most part - does good work.
And, as many other people pointed out in other comments, this is far from the only organization with corrupt employees that gets money from the government.
09/22/09
09/22/09
09/22/09
09/23/09
So, by definition, they're Satan incarnate.
09/22/09
09/22/09
09/04/09
Listed in the 14F from May 14th, is a $500 MM position in the OIH (an ETF which tracks oil service companies). So if the AUM is $1.5 B, Clarium had 33% of the fund positioned in the OIH, a position that they exited sometime between May 14th and Aug 14th.
The OIH traded from $89 - $114 between the two 14F filings. Since the OIH was on an upward trajectory up until May 14th (The price of the OIH was near it's low around then), it's a good bet that Clarium made money on the OIH position, and that their equity holdings outperformed the S&P over the last period.
How Clarium did in their debt and currency holdings (remember they're a global macro fund) is up for debate. But based on the OIH holding, it's likely they outperformed the S&P.
09/05/09