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Hedge Funds Hit In 'monstrous' May - Wrong Footed By World Markets

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http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7812107/Hedge-funds-hit-in-monstrous-May.html

Global hedge funds in May suffered the heaviest losses for 18 months after some of biggest and most successful managers were wrong-footed by world markets.

Powerful groups including Moore Capital, Odey Asset Management, Lansdowne Partners, CQS and Bluecrest posted trading losses of as much as 10pc, leaving most of the year's gains wiped out in a month being dubbed "monstrous May."

The Hennessee Hedge fund index said the average fund was down 2.99pc last month, the worst drop since October 2008 when the collapse of the global banking system caused a rout across markets. Another index from Hedge Fund Research (HFR) said the average was down 2.26pc, the worst collective performance since November 2008.

Experts said hedge fund managers started May with large "long" positions reflecting their view that markets would go up. However, as the debt crisis across Europe sparked fears of another banking crisis, investors to pulled money from the markets far faster than anyone expected. The FTSE100 fell 6.6pc in May, the worst performance in over a year.

David Stewart, chief executive of Odey Asset Management told The Daily Telegraph: "As our clients were aware, we were long equities. It's been painful and we're not happy but in the short term we were wrong."

Odey's $1.76bn European fund lost 10.96pc during May. Crispin Odey became one of the best known hedge funds in the world after correctly predicting the banking crisis. Last year his fund returned 35pc.

Lansdowne Partners, a group that also foresaw the financial crisis, posted losses of 5.58pc in its global financial fund and of 3.98pc in its $6.9bn UK equity fund. The group confirmed it had "given back performance from earlier in the year" due to the "awful market conditions" but that the losses were "well within" the risk tolerance of funds that have returned over 20pc for nine years.

Other London's stars that suffered rare slip-ups included Michael Hintze of CQS, who posted losses of 6.7pc in his $1.62bn convertible fund; Hugh Sloane's SL Global fund which plunged 11.1pc and Michael Platt's $6.9bn Bluetrend fund which fell 8.3pc in May, having been nearly 10pc up on the year, according to figures collected by HSBC.

Leading American financiers also struggled. Louis Bacon's $7.6bn Moore Global fund fell 9.15pc in May while Dan Loeb's $1.6bn Third Point Offshore fund was down 5.6pc, though it's still up 12pc for the year.

The poor performance even among the star players has compounded investor fears over the high-rolling sector. Data from HFR published yesterday found that 240 hedge funds were liquidated in the first quarter of 2010 - a number that risen for the first time in over a year.

Still they get paid no matter what the performance so who cares. Your money is being looked after by the best of the best.

At least they aren't idiots buying into all this VI ramping that the recovery is here...

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Guest DissipatedYouthIsValuable

Investors lose, middlemen keep the vig.

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http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7812107/Hedge-funds-hit-in-monstrous-May.html

Still they get paid no matter what the performance so who cares. Your money is being looked after by the best of the best.

At least they aren't idiots buying into all this VI ramping that the recovery is here...

maybe they are just sh!t or need a decent analyst

Edited by Tamara De Lempicka

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thought the poitn of hedge funds was that they made moeny whichever way the market went.s you so rightly point out,the evidence would lead you to beleive thasts obvously not the case

Indeed, hedging their bets!

As a boy (around grand national time) I had the genius idea of putting 50p on every horse, since I reckoned quite correctly that one of them would have to come in first. Sadly, the reality of the odds put that cunning plan to rest. Plus I didn't have £25 in stake money to start with.

My grown-up plan of buying all 14,000,000 possible combinations of National Lottery tickets fell short for similar reasons! ;)

Don't hedge funds make money by being contrarian?

QB

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My grown-up plan of buying all 14,000,000 possible combinations of National Lottery tickets fell short for similar reasons! ;)

Actually you can win that way... You just need a big enough Jackpot (actually from my A-Level dissitation I recall that at £12m jackpot the total prize fund is >£14m and therefore you make some profit... unless you have to split the jackpot).

There was a case in Oz I recall where the jackpot was so big organised 'crime' bought every number and made a profit.

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As a boy (around grand national time) I had the genius idea of putting 50p on every horse, since I reckoned quite correctly that one of them would have to come in first. Sadly, the reality of the odds put that cunning plan to rest. Plus I didn't have £25 in stake money to start with.

My grown-up plan of buying all 14,000,000 possible combinations of National Lottery tickets fell short for similar reasons! ;)

QB

But the lottery jackpot may exceed 14 million on occasion, even if that's not so you also have all the lesser wins. You can probably work out what jackpot (unshared) is required to break even, but life is too short as far as I'm concerned. I doubt the operator would sell a block ticket, so I think you'd also have to get several thousand people to buy blocks of tickets. I'm sure they would not do it from the goodness of their heart and then there is then the question of "wastage" and ownership of the winning tickets.

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Actually you can win that way... You just need a big enough Jackpot (actually from my A-Level dissitation I recall that at £12m jackpot the total prize fund is >£14m and therefore you make some profit... unless you have to split the jackpot).

There was a case in Oz I recall where the jackpot was so big organised 'crime' bought every number and made a profit.

I'm supprised no-one has done it here... we've had big jackpots well over £30m IIRC.

If you buy all the tickets as well as getting your share of the jackpot you'd also get a share of all the other number combinations for the lesser prizes. Even if the jackpot was split 3 ways you'de win enough from the other shares of the prize fund to cover your setup costs.

In fact I suspect with a computer calculated spread you could probably make a profit only buy half the possible combinations.

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  • 259 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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