Succession Question as Icahn Raises Capital

Chidem Kurdas

One gets the sense that Carl Icahn, aged 76, is not all that interested in retiring to the golf course.

What Corzine Did to MF Global

MF Global was a futures brokerage, not a hedge fund.  Yet it went bankrupt because

MF Global Insight from Previous Bankruptcy

The largest independent commodities brokerage went under. Money was missing. Client accounts were frozen. A bunch of hedge funds were among the unsecured creditors.  It was the fourth largest bankruptcy in US history.  That was six years ago,

Can Political Risk Be Hedged?

Chidem Kurdas

Financial fears dominate the stock market but another kind of danger lurks in news headlines—-like today’s story about an alleged Iranian-directed scheme to assassinate  Saudi Arabia’s ambassador to the US.  As George Tzanetatos sees it, political threats are too important to ignore.

My Kingdom for a Hedge!

Chidem Kurdas

Today people sold stocks and piled into US Treasuries, driving 10-year yields to another low. Everybody is trying to protect themselves.  Funds are hedging their portfolios but to put up defense against a crash is very costly now. There is no good-value, low-risk place to hide. Risky assets, on the other hand, are cheap.

Buying Treasuries looks like the one thing not to do.

Margin Focus in OTC Default Risk

Chidem Kurdas

When Lehman Brothers collapsed in 2008, LCH.Clearnet took over huge derivatives  positions from the bankrupt bank. The clearing house successfully managed this and four other defaults, says Isabella Kurek-Smith, director and head of energy and freight markets at LCH.Clearnet. The experience demonstrated how important it is to require adequate initial margin—though some derivatives traders complain

Fast Moving Risk Appetite Challenges Quants

Chidem Kurdas

As markets take hairpin turns, being prepared for the worst has itself become risky. 

Closed Centaurus Fund’s Upside

In the middle of the financial meltdown in December 2008, Centaurus Alpha Fund went down like so many other funds. Investors rejected the management’s lockup proposal and so the firm decided to close the fund. Selling the assets in the portfolio and returning the money to investors took years. Meanwhile, of course, markets recovered. 

Asia Search Leads to Macquarie

It sounds like US-based hedge fund investors are earning a lot of frequent flying miles with trips to Hong Kong and Singapore in search of promising Asian equity managers. Some of them have ended up with an Australian manager—an arm of investment bank Macquarie Group.

Too-Big-To-Invest Problem

Chidem Kurdas

Back in the day when hedge funds managed more then $2 trillion, nearly half of the capital was channeled via funds of funds.  Current assets are still well below that – even with post-crisis recovery – and funds-of-funds assets are a significantly smaller fraction of the total. There are fewer funds of funds around and a small number of very large ones dominate the market.

 As a result of these developments, hedge funds have fewer investors. And some of those investors find themselves with a problem: they account for too much of the capital of the funds they’re in. Their investment may be no larger than before, but because the pond has shrunk, they’re now relatively big fish.