Wall Street Wobbles into the Second Quarter of 2008

by StockJockey

Monday, March 31, 2008 - 7:46 pm

With most hedge funds struggling, it should be no surprise Clarium LP is getting the bulk of the inflows. Who else are you going to fund? And while that might be a joke, this is not:

Hedge funds are having their worst start to the year on record after March turned into one of the ugliest months for popular strategies and several funds imploded. Daily data from Chicago-based Hedge Fund Research showed that, with two trading days to go, the average fund tracked by its HFRX index was down 2.4 per cent in March, its worst month since the collapse of Long Term Capital Management in 1998.

“It was a very difficult month to make money for every fixed income strategy,” said one hedge fund investor. “At some stage, something’s gone wrong for almost all trades.....“I’d like to say there was a bright spot but there really wasn’t,” said one prime broker.. FT

My unscientific study of equity strategies in the recently completed quarter came up with +3%, +1 and negative 12%. The other hedgies polled either left their offices early to seek out out a stiff drink or were pretending to be away from their computer.

Of course the long-only community is having a tougher time of it; many domestic small-cap funds are down more than 10% and health care, technology and international funds are faring even worse, and have been reduced to praying for a second half rally. Fixed income hedge funds are generally a debacle and the SellSide is seemingly insolvent.

And to top it off, regulators are poking around, and Main Street is protesting in the lobbies of Wall Street firms.

The only good thing about the first quarter of 2008 is that it is over.

Hedge funds feel the pain
FT
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The content contained represent the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.