Monday, December 17, 2018

Major Hedge Funds are Scrambling to Prevent Financial Wipeout

Here's another major warning sign that things are not looking good at all.

John Aidan Byrne at The New York Post reports:
The stars of the biggest hedge funds are losing their shirts as analysts fear a major financial wipeout is imminent.

From Ken Griffin’s Citadel, to Israel Englander’s MIllennium Management, one big name after another is racking up negative returns lately, amid bad bets in a saturated market.

Over 11,000 hedge funds manage in excess of $3 trillion in assets. And hundreds of funds could be gone by next year, say insiders...

Analysts are forecasting a surge in redemptions, especially toward year end, as more clients pull money out of losing funds.

The news is hardly good for a parade of managers at some of the biggest hedge funds.

According to industry reports, November was a bone-crushing month for David Einhorn’s Greenlight Capital, which saw a 3.6 percent loss; Steve Cohen’s Point72 Asset Management, which took a 5 percent hit; Ken Griffin’s Citadel, which absorbed a 3 percent loss; Israel Englander’s Millenium Management, which ran into the red by 2. 8 percent; and Dmitry Balyasny’s Atlantic Global Fund’, with a decline of 3.9 percent and firm-wide job cuts of 125 jobs after losses and withdrawals eliminated $4 billion in assets.

And each day brings more depressing news. Most recently, hedge fund closures included Brenham Capital, Brenner West Capital Partners, Tourbillon Capital Partners LP, Highfields Capital Management and Criterion Capital Management.

All of the hedge funds in this story had no comment.
Whenever the stock market falls the way it has started a lot of pain develops in Wall Street. As far as I can judge at this point, we are only at the beginning.



  1. Even the connected people are confused. In a fairly recent interview available on the nets, Druckenmiller confessed he's been confused since 2009, in the wake of the explosion of central bank balance sheets. According to Stan, markets used to have a predictable rhythm, but this rhythm has lost its predictability with ZIRP/NIRP and QE money-printing. Now I read today Stan is calling for a halt to interest rate "normalization". (Who can say what "normal" is in the absence of a truly free market that sets a price for the money commodity, but of course I quibble).

    State intervention always creates distortions and mayhem, and non-Austrian economic "models" are unable to give comfort to the confused. Years ago, Lew Rockwell told the economists connected to the Mises Institute that when the system eventually crashes "the clarity of Austrianism will have been born for this moment".

    1. Its been crazy for so long people forget that any of it is at all crazy!