greatest hedge fund disaster story?

Closed his fund down and returned the $6 billion in assets back to investors. His unwillingness to jump into momentum-driven Internet stocks and sticking with value names like Federal-Mogul eventually wound-up hurting him as value stocks got liquadated by fund mangers in order to use cash to chase high growth names.

At one point, The Tiger Family of Funds had about $20 billion under management in 1998.
 
Quote from Cutten:

"The Great Silver Bubble" by Stephen Fay has an excellent account of this affair.
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Thanks, sounds intersting, I'll have a look at it at Amazon.

Cheers!
 
Quote from waggie945:

He was NAKED a few thousand S&P futures puts back in the Fall of 1998.

The market was getting hammered due to the Asian Currency Crisis and Niederhoffer refused to buy back the naked put position.

I recall that the WED, THUR, and FRIDAY of that week saw the Dow Jones register triple digit losses, going into the weekend. Yet, he still held his position.

The clearing firm took him out on Tuesday morning.
And of course, that was the low.

A guy on the equity-derivatives desk at Deutsche Bank took the other side of much of Niederhoffer's option position, sold thousands of the puts and made $45 million that week!

True.
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This SnP biz was the second pooching. He had earlier blown up on the Thai Baht.:eek:
 
To ET's

Little known as an aside from the big boys; this joker was a top notch PM in mtg backed securities from Drexal BL.. well the story goes he lost $600 million in one week when the FED raised rates in early 1994..he was wiped out
of all assets within 5 days.

Source: Infectious Greed, Frank Partnoy..a great read BTW.
Best,
david
 
A mortgage trader that had 4 funds with $600 million and was heavily invested in mortgage PO Strips when interest rates rose sharply back in 1994.

When interest rates rise, prepayments slow dramatically and thus the value of a PO Strip falls as well.

Askin was barred by the SEC from the securities industry for two years, and agreed to pay a $50,000 fine without admitting or denying guilt. All that, and he literally stopped the MBS market in its tracks!
 
Quote from TheCaracal:

To ET's

Little known as an aside from the big boys; this joker was a top notch PM in mtg backed securities from Drexal BL.. well the story goes he lost $600 million in one week when the FED raised rates in early 1994..he was wiped out
of all assets within 5 days.

Source: Infectious Greed, Frank Partnoy..a great read BTW.
Best,
david
More...


thanks for the book tip. not heard of that one, will check it out.

surfer dave :)
 
Quote from Trader5287:

"This SnP biz was the second pooching. He had earlier blown up on the Thai Baht."

Very true, very true!

My favorite All-Time "fiasco" would have to be the Hunt Brothers and the Silver Crisis back on the COMEX in March of 1980.

Having actually traded on the COMEX back in 1986, I only heard a few stories here and there during slow trading days or in the cafeteria. In any event, it was such a ridiculous "scene" when the COMEX decided to change the margin rules that there was a 50% one-day price decline on March 27th, 1980 as the price of silver plummeted from $21.62 to $10.80

At $50.00 per penny per contract, you could see that in that one day alone, longs lost roughly $55,000 on one stinking contract!

Things were so messed-up that the Hunt Brothers were not convicted of conspiring to manipulate the market until August of 1988. At this point, the Hunt's had liabilities of nearly $2.5 BILLION against assets of $1.5 Billion.

Of course, the Board of Governors on the COMEX were privy to the changes in the rules. Think anyone in those meetings behind closed doors lost money? Can you say BEAR SPREAD???

:p
 
Beacon Hill Asset Management, lost over $400 million within a short period of time in 2002 in one of their bond funds ...
 
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