Failed Hedge Funds Stories

A

alain

After I have read about what happened to Mr. Van Tharp with the hedge fund he invested in I would like to take this a little further. And this information could be helpful for traders trading hedge fund money.

I'm curious to read more about hedge funds from the past 50 years that failed. The reasons why they failed and how this could have been avoided.

Maybe someone on ET has an internet source for such info or some articles to post.

thanx, alain
 
i am not sure if one can call this a "failed" hedge fund rather than out right fraud. this dude misappropriated most of his investors money to finance a nice lifestyle and a cigar bar in FLA. (heaven). do an internet search on the names. its interesting reading !

surf:)
 
Aside from the really public "death spirals" such as LTCM, Mobley, Slatkin, etc, etc...I do remember a few "sound bites" about some of the more concentrated tech funds that attracted ALOT of investor money between the 4Q 1998 and 2Q 2000...One of these funds had several hundred million concentrated in less than half dozen of the high fliers...I remember a Barrons list of the hedge funds and their returns(published some time around April, 2000)...There were numerous hedge funds up 300-500% at that time...This one fund I believe was over 700% for the previous year and basically swung so far to the downside in April, 2000, that it was closed...The manager had an investment of several hundred million in approximately 2-3 tech stocks at that time...Not too "hedged" obviously...

But check out a Barrons list from 2000 and then see how many of these same funds are reporting now...We all know that many mutual funds die a silent death, but these hedge funds go under just as frequently...Obviously the whole "hedge" in hedge funds is a misnomer in many cases...
 
most hedge funds have to meet a profit watermark to get paid.if they have a bad year it makes it hard to catch back up to that watermark. so they just close the fund and start a new one with a fresh watermark.
pretty smart isnt it.heads you lose tails i win.
 
it's called survivorship bias, i think, the ones who went bye-bye are no longer in the rankings, and according to the research i've read it's a very high % attrition rate.
 
This was in Richard Russell's remarks from his Sept 13th newsletter.


Since March 2000, 566 mutual funds have merged and 414 have disappeared. This means that 980 funds have disappeared.
Robert
 
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