Hedge Funds Returning Money to Shareholders

[Bullitt]

Hedge fund titan Louis Moore Bacon is shrinking his flagship portfolio by one quarter and will return $2 billion in assets at a time tumultuous global market conditions are making it tougher to trade huge amounts of money... Bacon said markets are "trickier and less liquid."

UPDATE 2-Moore Capital to return $2 billion to investors -letter | Reuters

“The political involvement is so extreme — we have not seen this since the postwar era. What they are doing is trying to thwart natural market outcomes,”

Moore Capital, a Hedge Fund Too Big to Profit, Plans to Get Smaller - NYTimes.com

To me this is kind of like that guy who says, "I could've gone and played [insert sport here] at a higher level but I had a bad knee." Volume has appeared lower in 2012 compared to the past 4 years, but with all the electronic trading and recent retirees trying their hand at the stock trading carnival, I find it hard to believe that liquidity worse today than it was when he was knocking 'em dead in the 90's.

Ahh, I shouldn't be so hard on these guys since in comparison these are the Olympic athletes of investing.

I think there are three takeaways from these articles.

1. Just because headline news dictates certain things should happen doesn't mean they will. Take for example the calls for gold guaranteed go over $2K for the past 3 years and for the US 30 yr yield to rise.
2. If you trade with charts, the news and political events shouldn't matter because charts are a constant. Patterns are patterns and trading systems are trading systems.
3. I don't know about you, but I don't stand a chance against Olympic athletes.

 

[angelouB]

Interesting. Why would they return the funds?

 

[RealMoneyIssues]

Sounds a little like capitulation... a little :embarrest:

 

[Bullitt]

Interesting. Why would they return the funds?

Because he realized that trying the market is a zero sum game even with his war chest and firepower.

As RMIssues said, yeah he capitulated but threw in the excuse that the market is manipulated to make it sound like it's not his fault.

 

[Bullitt]

I'm sure these two failed gamblers will be just fine in the years ahead. They'll just start somewhere else anew.

Michael Platt’s BlueCrest Capital Management pulled back from a complex debt-trading strategy that led to losses and the departures of at least two traders, people familiar with the matter said.

BlueCrest has reduced the size of its so-called relative-value trading book, which seeks to exploit anomalies in related securities, and cut risk across the firm by about $1 billion in recent weeks, one of the people said. Raymond Wang and Romain Denis, traders who focused on such deals, left after their portfolios slumped, the people said.

Returned funds to shareholders in 2015 because of bad bets. Returning funds once again in 2020 for bad bets. It's not what you've done, it's where you're at.

In December 2015, the firm said it would return client money and, since then it has borrowed more money to juice returns. It surged 50% last year and made 25% in 2018. Returns in 2017 stood at 54% and almost 50% the year prior.

https://www.bloomberg.com/news/arti...-from-relative-value-trades-amid-losses-exits