Hedge Fund Collapse

[Fivetears]

13 Hedgefunds have Imploded to date since mid 2007 :worried:

13. Sentinel Mangement Group
12. Sachsen LB: Ormond Quay conduit fund
11. Parvest Dynamic ABS, BNP Paribas ABS Euribor and BNP Paribas ABS Eonia (BNP Paribas)
10. Union Investment Asset Management Holding AG
9. Oddo: Cash Titrisation; Cash Arbitrages; and Court Terme Dynamique
8. Sowood Capital Management
7. Galena Street Fund
6. United Capital Markets Holdings Inc.: Horizon Strategy
5. Caliber Global Investment
4. Lake Shore Asset Management
3. Ritchie Capital Management
2. Bear Stearns: High Grade Structured Credit Strategies Enhanced Leveraged Fund; High Grade Structured Credit Strategies Fund
1. Dillon Reed Capital Management (UBS)

http://hf-implode.com/

[Fivetears]

Australian fund Basis Yield files for bankruptcy
Basis Yield Alpha Fund, a hedge fund specializing in corporate and structured credit, on Wednesday filed for bankruptcy protection in the United States amid mounting losses from U.S. subprime mortgage assets. Basis Yield said it had in June begun to suffer a "significant devaluation" in its asset portfolio, following market volatility related to U.S. subprime lending defaults. It said the devaluation led to margin calls, which it was unable to meet, and the issuance of several default notices by counterparties seeking to close out trades or seize assets.
http://news.yahoo.com/s/nm/20070829/bs_nm/basis_bankruptcy_dc_2;_ylt=AgauyVm4YWfkxS2iQMTANJY E1vAI

[350zCommTech]

Let's print a bunch of many and bail out all the hedge funds...:rolleyes:


Barclays to provide $1.6 bln funding for Cairn

By Simon Kennedy (http://www.marketwatch.com/news/mailto.asp?x=115+107+101+110+110+101+100+121&y=Simon+Kennedy&z=marketwatch.com&guid=%7B071ef216-f763-4b81-822d-0eb5381ca148%7D&siteid=mktw), MarketWatch.com
Last Update: 7:43 AM ET Aug 31, 2007

LONDON (MarketWatch) -- U.K. banking group Barclays on Friday said it will provide emergency financing to bail out a $1.6 billion structured investment vehicle after the collapse of the short-term debt market left the vehicle unable to secure funding elsewhere.


The SIV -- Cairn High Grade Funding -- invests mainly in prime and subprime U.S. residential mortgages and previously raised financing by issuing commercial paper, a type of short-term debt that needs to be replaced every two or three months.
In recent weeks these investment vehicles have struggled to find buyers for commercial paper as the value of their mortgage portfolios has fallen and investors have been much more wary of lending money. Read more on commercial paper troubles. (http://www.marketwatch.com/News/Story/european-banks-battle-short-term-credit/story.aspx?guid=%7B60594916%2D742C%2D4322%2DA5C2%2 D2208390B9336%7D)

The move by Barclays, which helped set up Cairn High Grade early last year, means the SIV will not be forced to sell its mortgage holdings at the current low market prices.
In a joint statement with Cairn Capital, the hedge fund group that manages the SIV, Barclays said it will replace all the outstanding commercial paper with term funding as it matures.
Barclays also noted that it has fully hedged all its credit exposure related to the financing deal.
The announcement came after Barclays on Wednesday borrowed 1.6 billion pounds ($3.2 billion) from the Bank of England's emergency lending facility, but denied it needed to borrow the money because it was having its own liquidity problems.
Investors have been concerned following reports that the group was having trouble borrowing from other banks and faced losses from its exposure to SIVs.

But in a statement late Thursday, Barclays said the loan was necessary because of a technical breakdown in the U.K.'s financial clearing market.
An earlier report in the Wall Street Journal said the settlement house, operated by Euroclear, confirmed it experienced disruptions, but said there had been enough time for banks to make their borrowings and settle their accounts by the end of the day.

Shares in Barclays climbed 1.7% in London after recent weakness has seen them drop around 16% since early August.
Barclays and Cairn said investors in the SIV have backed the new structure and will pay their share of the restructuring costs involved.
Simon Kennedy is the City correspondent for MarketWatch in London.http://www.marketwatch.com/news/story/barclays-provides-16-billion-emergency/story.aspx?guid=%7B071EF216%2DF763%2D4B81%2D822D%2 D0EB5381CA148%7D

[Fivetears]

Oh OH!!

They're "Structured Investment Vehicle's"!!!

Well I guess that's different. :laugh:

[Fivetears]

As 350Z posted on 2008-08-31: Cairn Capital High Grade Funding I
http://www.bloomberg.com/apps/news?pid=20601087&sid=aIHhFSRtYm.0&refer=home

I see another Hedge Fu......... eh... STRUCTRED INVESTMENT VEHICLE has missed our attention:
2007-08-29: Geronimo Multi-Strategy, Sector Opportunity, and Option & Income.
http://www.bizjournals.com/denver/stories/2007/08/27/daily41.html

http://www.kermitage.com/html/characterindex/tms/character/count.jpg
16! 16 SIV Bailouts ah ah ah!

[Bullitt]

Another one bites the dust. Global Advisors LP, which invests in metal, energy and grain is closing 2 hedge funds down after losses in the recent volatility in commodities.

[Birchtree]

I say clean'em all out - they're basically herd followers anyway and cause too many unwanted ripples when they move in tandem. Most of them can't think past two weeks.

[Bullitt]

Live by the gun die by the gun. Article paraphrased from WSJ.

Victor Niederhoffer of Manchester Trading had to shut down his hedge fund 'Matador Fund' after losing 70% last month alone. Apparently he's had returns of 50% or more numerous years, but this market turndown was a crushing blow. Last year he told reporters he was only going to give the hedge fund business one more chance as he couldn't afford any more setbacks.

[Birchtree]

I'm sure the requiem will be somber.

[James48843]

21


http://www.kermitage.com/html/characterindex/tms/character/count.jpg


Twenty-One (21) Hedge Funds have now imploded.

http://hf-implode.com/


(Excuse me please for being a copycat. That was just too much fun NOT to do.)

[Fivetears]

Remember James... they're "Structured Investment Vehicle's." :nuts::D

[kaitlinsnana]

Five tears. Ilike it, sounds like an indian name. I have a very vague idea of what hedge funds are. I know they operate outside the rules - sort of. Are any of them safe. I'm toying with the idea.

Gail

[Fivetears]

A touch of Blackfoot in the family.
IMHO, when you have the capital it takes to become an accredited investor, safety is the least of your concern.

In order to comply with the Investment Company Act of 1940, hedge funds are sold via private placement under the Securities Act of 1933. Thus interests in a hedge fund cannot be offered or advertised to the general public. Although it is possible to have non-accredited investors in a hedge fund, the exemptions under the Investment Company Act effectively require hedge funds to be offered solely to accredited investors. An accredited investor is an individual with a minimum net worth of US $5,000,000 or, alternatively, a minimum income of US$200,000 in each of the last two years and a reasonable expectation of reaching the same income level in the current year.

Hedge fund investors do not receive all of the federal and state law protections that commonly apply to most registered investments. For example, you won't get the same level of disclosures from a hedge fund that you'll get from registered investments. Without the disclosures that the securities laws require for most registered investments, it can be quite difficult to verify representations you may receive from a hedge fund.

[Fivetears]

Treasury officials seek to help battered SIVs
Treasury officials are looking into ways to help investment vehicles called SIVs that have been battered by this summer's credit crisis, sources familiar with the situation said on Friday. Big banks, including Citigroup Inc, are discussing a plan to pool together and financially back as much as $100 billion in these investments, which include mortgage securities. Treasury representatives met about two weeks ago with sponsors of these vehicles, Wall Street banks and investors to discuss "how to alleviate some of the issues in the SIV market," one source informed of the meeting by participants said. SIVs are investment vehicles that raise cash by issuing short-term debt called commercial paper and use the proceeds to buy higher-yielding securities, often tied to U.S. mortgages. The vehicles, often set up by banks, make money by pocketing the difference between their funding costs and investment returns. One plan that was discussed at the meeting involved setting up a "super fund" where "each SIV in the market could pledge up to one-third of its assets and get financing," the source said. A government source also confirmed that there is a Treasury initiative to ease funding costs in the SIV market. U.S. treasury Secretary Henry Paulson is scheduled to speak on Tuesday in Washington on home ownership, mortgage markets, and the U.S. economy. The investment vehicles have been unable to sell new commercial paper for months as investors fearful of contagion from subprime mortgages have shunned most types of asset-backed commercial paper. As a result, many SIVs have run into trouble. Treasury officials also separately met with Wall Street bank treasurers a few days after the SIV meeting to discuss the state of the U.S. asset-backed commercial paper market, the source said.

http://news.yahoo.com/s/nm/20071013/bs_nm/usa_credit_sivs_dc_1;_ylt=AmfGyOlFyVJ0xuQcdfuLHIwE 1vAI

[kaitlinsnana]

Well, certainly a mistake to pitch them to me. I was approached about an offshore hedge fund, but maybe another motive at work.

[Fivetears]

So -- I take it you're in the same Sub-5mil boat as the reset of us TSP investors, Gail. :D
Good luck.
Brian.

[wv-girl]

I would like to hear opinions on the banks coming together to supply liquidity for the sub-prime mess (commercial paper). What should we take from this? Another band-aid on the problem? Or do you think they have a genuine buisness plan that could actually work?

tia
Debbie

[Oldcoin]

I would like to hear opinions on the banks coming together to supply liquidity for the sub-prime mess (commercial paper). What should we take from this? Another band-aid on the problem? Or do you think they have a genuine buisness plan that could actually work?

tia
Debbie

You can bet that there is a profit motive involved in the banks move. No noble motive, they will refi those that can, and foreclose those that can’t. They will make money. The amounts that have been kicked around do not seem sufficient to cover the subprime mess, I don’t think it’s enough to make the problem go away. Band-aid would be a good description, and it's for a major hemorrhage.

[Fivetears]

What amazes me is they (the investors and builders) continue to slap track houses together seemingly everywhere, despite this crisis.

I guess all those folks foreclosed upon are going to need some place to RENT sooner or later.

Damn slum lords. :mad:

[Oldcoin]

http://www.rgemonitor.com/blog/roubini/220816/

Nouriel Roubini's Blog
Super-Conduit or Super-Bailout Shell Game?


Roubini can be.....well a downer, but he does give some insight without the talking head spin we get from many other sources.

[Fivetears]

On the flip-lighter side of that complex article, we're all going to get a great buying opportunity on today's $400K homes in just a couple years; or less.
http://www.rgemonitor.com/blog/roubini/220816/

Nouriel Roubini's Blog
Super-Conduit or Super-Bailout Shell Game?


Roubini can be.....well a downer, but he does give some insight without the talking head spin we get from many other sources.

[Bullitt]

European hedge funds have been forced to introduce emergency measures to protect their businesses from collapsing in the wake of the turmoil in financial markets. Up to 10 European hedge funds have suspended redemptions after investors clamoured for their cash when the managers made severe losses.

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article3256253.ece

[DrFaustus]

European hedge funds have been forced to introduce emergency measures to protect their businesses from collapsing in the wake of the turmoil in financial markets. Up to 10 European hedge funds have suspended redemptions after investors clamoured for their cash when the managers made severe losses.

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article3256253.ece

There was a related story on the subprime mess on "60 Minutes" last night .. they were trying to explain how we got into this mess and what to expect from here. The impression I got was that we haven't seen the end of this yet, expect more pain in the future.

One guy they interviewed said that, and I'm paraphrasing, "Yes, we have the situation contained - it seems be confined solely to Planet Earth."

[Bullitt]

Where it all began on that hot summer day with BSC's announcement that a hedge fund was in distress. I keep hearing that the bottom won't be in until some major players go under. Carlyle group is toast, and BSC might be as well. Love it or hate it, the bailout is necessary for the long run. Let's just hope there aren't any additional collapses on the horizon. I'm worried about Lehman and Merrill, but glad to see GS taking a hit for once.

http://biz.yahoo.com/ap/080314/bear_stearns_q_a.html?.v=1

[Bullitt]

Another crook busted. I hope that when this guy walked to his car after being fired, he fell flat on his face.

Basically, he told his high worth clientel that there were rumors the blackstone deal wouldn't go thru and advised they sell or sell short before he shorted ADS. His clients dumped shares, caused a selling wave, he covered, and at the end of the day the share price bounced back, but he made $$$$.



Berliner, who was shorting the stock to profit from the drop in price, made more than $25,000 before the shares recovered, according to the SEC.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aCNlwKOZWNlk