Tuesday, March 8, 2011

Ichan Ditiching Outside Investors

Hedge fund operator Carl Ichan is sick of hand holding investors through tough times and fears that more tough times may be ahead. That's the only conclusion you can reach from Ichan's decision to return the money of outside investors in his fund. NYT reports:
Carl C. Icahn is returning all outside money in his hedge fund, citing his reluctance to be responsible to investors through another possible crisis.

“While we are not forecasting renewed market dislocation, this possibility cannot be dismissed,” wrote Mr. Icahn in a letter to investors that was obtained by DealBook. “Given the rapid market run-up over the past two years and our ongoing concerns about economic outlook, and recent political tensions in the Middle East, I do not wish to be responsible to limited partners through another possible market crisis.”
Often, the best way to make money is to take positions opposite those of the general public and just hang on through short-term losses. If you are running a fund with contrary positions, you spend a lot of time hand-holding your investors who don't see the potential in your long-term contrary position. And, if things get rough again in the stock market, there is going to be a lot of hand-holding that will need to be done.

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