Steel Partners Hedge Fund

In addition to the daily news macroeconomic, there is a macro-drama happening in the world of hedge funds, which is strongly influencing the market right now. We have heard many rumors of forced sales by hedge funds in recent months as a partial explanation for the increase of 3-5 times the daily volatility. official announcements of losses and closures of funds begin to appear.

A dramatic example is Tontine Partners, a fund of 10 billion dollars of coverage which opened its doors in 1997. In the past, the activist fund posted returns outstanding, boosting net income by over 100% in 2003 and 2005. How did she do? Like many hedge fund managers focused on macro investment theme, you can buy very large positions in related companies and pressure management to improve shareholder value. Tontine Funds were heavily invested in home builders in 2003 and steel companies in 2005. For a period of time Tontine owned approximately 10% of BZH Beazer and societal pressure to launch a share buyback program to deploy its excess cash.

The funds belonging Beazer and most major manufacturers this summer, with brokerage houses, steel companies and a ton of financial services, including regional banks. U.S. Steel has been its participation in Q2 and upper AKS was No. 5 in terms of its SEC filing 13F. Two of the company's funds have now lost over 2 / 3 of their value and will be closed.
Some of these hedge funds actually give more conference calls and are followed by analysts on Wall Street. 12-year, GLG Partners, a fund of Europe's largest coverage, with 40 sub-funds focused on equities, emerging markets and bonds, only now manages $ 17 billion for wealthy individuals and institutions, after a third-quarter loss of 27% of its capital.

Platinum Grove Asset Management LP, a hedge fund firm co-founded by Nobel laureate Myron Scholes (Scholes options the Black-Scholes formula), has adopted investor withdrawals from its funds after losing more than 29% its assets in the first half of October alone. The plummeting Platinum Grove left with an annual loss of 38% in mid-October.
Many fund managers are to write letters expressing his disappointment, embarrassment and shock to their customers. Overall, however, hedge funds outperform the world index, a decrease of 14-16%, compared with a loss index about twice that much.

Nevertheless, we agree with the manager of Hayman Advisors, who wrote last month, "be careful buying something today. There will be time to buy shares. This time is a few years in the future, when the highlights were separated from the week ... a time when unemployment has reached 10% and U.S. GDP fell by 4-5% (or more). "

As individual investors and traders we really rely on hedge funds to cut a path through the forest investment. It is not too difficult to say when the funds begin to stack in a sector, industry or theme. We can now walk comfortably behind them and enjoy their aggressive strategies of accumulation, capital base, massive and powerful conviction. We expect them to battery back investments in various emerging markets in 2009-2010 as the global recession decreases.

When these people have problems, but they die a horrible death and violence that creates an enormous amount of chaos and confusion in the market. Funds are dying right now. October was a terrible month for them and monthly reporting on performance have been sent to investors.
We expect a negative end of the market for years because of this situation.

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