Goldman Ousts Bridgewater as Largest Hedge Manager

the data gets even more impressive when you add the leverage (up to 12 times in the case of citadel!) / das ganze wird umso beeindruckender wenn man den hebel (von bis zu 12 bei citadel) berücksichtigt. http://immobilienblasen.blogspot.com/2006/12/read-this-twice-hedge-funds.html



in the case of goldman it is even without their official hedgefundsunit already a "hedge funds" that makes the majority from their tradingdesks......./ guckt euch mal abseits des offiziellen ablegers bei goldman an wie die ansonsten ihr geld verdienen.......

http://immobilienblasen.blogspot.com/2006/09/goldman-sachs-bank-oder-hedgefonds.html

Total Investment Banking 1,288
Total Trading and Principal Investments 4,720 (over 60%!)
Total Asset Management and Securities Services 1,455
Total net revenues $ 7,463



http://tinyurl.com/yh7xla Dec. 1 (Bloomberg) -- Hedge fund managers can make you rich quicker than just about anyone. Sometimes, they can make you poor even faster.

Just look at Amaranth Advisors LLC, the Greenwich, Connecticut-based hedge fund manager that stumbled over wrong-way bets on natural gas. Going into September, Amaranth was up 26 percent in 2006. By October, it had lost $6.6 billion.
http://immobilienblasen.blogspot.com/search?q=freunden

The next Amaranth is out there somewhere. ......

Since 2000, the secretive world of hedge funds has more than doubled in size. There are now more than 9,000 of these funds with combined assets of $1.34 trillion. .....

Investors poured a record $110.7 billion into these vehicles during the first nine months of 2006 -- more than twice what they did in all of 2005. Since September, Morgan Stanley has bought stakes in two hedge-fund firms and purchased a third outright. And since late 2005, Goldman Sachs Group Inc. has become the largest manager of hedge fund money, with $29.5 billion in assets, according to HFR and Bloomberg.


Goldman passed Westport, Connecticut-based Bridgewater Associates Inc., which has $28 billion in assets, and New York- based D.E. Shaw & Co., which has $23.2 billion.

Returns Sag
So many hedge funds have crowded into the markets that the industry is struggling to generate standout profits. As of Sept. 30, the average hedge fund was up 7.1 percent in 2006. .....

As money pours in and returns sag, Theodore Aronson, ...., sees potential danger ahead. ``You don't have to go back to the tulip bulb mania to see how things could turn out,'' he says. ``It could be ugly.'' .....

Troubled Industries
Hedge funds that trade distressed assets, typically junk bonds and corporate loans, posted an average annualized return of 14.6 percent during the three years ended on Sept. 30, according to HFR. During the first nine months of 2006, these funds returned 9.8 percent. So many hedge funds are chasing distressed investments that returns have withered from 18.9 percent in 2004. ...(explains the record low spreads./erklärt die rekorverdächtig niedrigen spreads)

Fallen Angels
More companies are likely to run into trouble soon, according to S&P. As of early October, 38 companies around the world had lost their investment-grade credit rating in 2006. Forty-one more, with a combined $77.6 billion of debt, were at risk of landing on the junk-bond heap..... (with more companies than ever with junk ratings there is plenty to choose from.....http://immobilienblasen.blogspot.com/search?q=US+credit+quality+in+25-year+retreat+toward+junk-S%26P+ )

Industry Giants
Investors poured more than $30 billion into long/short funds during the first nine months of 2006. These funds now sit atop a combined $379.3 billion in assets, more than a quarter of the industry total.


``We'll buy something that has a 40 trailing P/E, but if we look at where we see it going, it'll have a forward P/E of 10,'' Mashaal says. .....(seems to be the mentality of almost everybody... not only hedge funds.../scheint mir die menatlität von fast allen zu sein ... nicht nur bei hf)

Fed Headache
As the funds rate has climbed, so have U.S. Treasury yields. Two-year Treasury yields reached 4.75 percent on Nov. 8, up from 3.07 percent in late 2004. Ten-year yields have climbed less, to 4.64 percent from 4.22 percent. As a result, investors who borrow at short-term rates to buy bonds make less money on their investments. (hey the can use the carrytrade..../nehmt doch den carrytrade...)http://immobilienblasen.blogspot.com/2006/11/boj-chief-has-yen-carry-concern-mother.html#links

Housing Market
Mortgage bonds are getting riskier now that U.S. home prices have begun to decline. Banks fashion these securities out of mortgages and home equity loans. If enough people default on the loans, the securities' credit ratings could suffer.... (already happening at a record pace..../ ist gerade in der mache....http://immobilienblasen.blogspot.com/2006/12/mortgage-bonds-hurt-by-delinquencies.html)

No Limit Specified........

Lets hope they still can find enough buyers of their treasuries ( see Who Will Be Left To Buy US Treasuries...... & China Slashes Lending Rate to Support Slowing Economy ) to finance their daily bailout ( see Breakdown of the Bailout Rescue Efforts & Various Fed Lending Facilities ) with a yield close to 3% .... The bigger issue down the road could be that the "investors" are demanding bonds that are not $ denominated......Got Gold.....?

Bleibt zu hoffen das die USA es weiterhin schaffen genügend "smarte" Investoren finden ( siehe auch Who Will Be Left To Buy US Treasuries...... & China Slashes Lending Rate to Support Slowing Economy ) die bereit sind dies täglichen Bailouts ( siehe Breakdown of the Bailout Rescue Efforts & Various Fed Lending Facilities ) für 3% in US Währung zu finanzieren..... Die US sollten sich schon einmal entfernt darauf gefasst machen das es in naher Zukunft bald Investoren gibt die keine US Anleihen auf $ Basis mehr abnehmen wollen.......Got Gold...? UPDATE: Netter Bericht der FTD 700 Milliarden? Ha! Es sind 8500 Milliarden

WSJ

An even better graph is coming from the NYT

Eine noch besser Übersicht liefert die NYT

bigger / größer

Barry Ritholtz has much more and slightly different data ( but what are a few trillions here and there these days ) and the quote of the day......

Barry Ritholtz hat noch mehr und leicht abweicdhende Daten ( aber was sind heutztage einige Billionen unter Freunden ) zu diesem Thema und ein Zitat das wohl mehr als alles andere die Ausmaße der aktuellen Bailouts beschreibt......

The only single American event in history that even comes close to matching the cost of the credit crisis is World War II: Original Cost: $288 billion, Inflation Adjusted Cost: $3.6 trillion

The $4.6165 trillion dollars committed so far is about a trillion dollars ($979 billion dollars) greater than the entire cost of World War II borne by the United States: $3.6 trillion, adjusted for inflation (original cost was $288 billion).

Go figure: WWII was a relative bargain.

No wonder the CDS on US Debt are "moving"........ Via FT Alphaville

Kein Wunder das die Absicherung gegen einen möglichen US Bakrott langsam in "Bewegung" kommen..... Dank an FT Alphaville

was sind schon 5billionen $ verlust unter freunden / hedge funds blow up

“AMARANTH ADVISORS, the $9.5 billion (£5.06 billion) hedge fund manager, has told investors including clients of Morgan Stanley and Credit Suisse that it may have lost billions of dollars after it was wrong-footed by a drop in American natural gas prices….

Rivals expressed concern last night that the natural gas markets could be affected if Amaranth has difficulty liquidating its trades. Its problems could be exacerbated if investors demand their money immediately.

In an attempt to raise cash to meet margin calls and investor demands for their money, Amaranth is selling most of its ¤ debt, traders said.

Amaranth may not find it easy to exit its positions quickly because the natural gas futures market is highly volatile and dominated by a handful of large players, including Morgan Stanley, Touradji Capital and Goldman Sachs. Amaranth has said that it has met all its margin calls.

Prime brokers, the investment banks that lend hedge funds money to trade, have tended to demand that their clients increase collateral on their trades when they fall into financial difficulties. ”

auch dazu

Wall Street assesses hedge fund exposure
Goldman, Morgan Stanley will post losses; greater risk seen

Investors were assessing Wall Street banks' exposure to the high flying hedge fund industry Tuesday, a day after a Connecticut-based hedge fund said it lost billions of dollars.

Amaranth Advisors on Monday said it suffered huge losses of more than $5 billion, or more than half of the fund's $9.25 billion in assets. Though fallout from Amaranth did not appear to be causing panic in other markets, reports from institutional investors of direct losses from Amaranth began trickling in Monday.

Goldman Sachs Group Inc. said one of its funds, Goldman Sachs Dynamic Opportunities Ltd. , a hedge fund vehicle listed on the London Stock Exchange in July, may post a 2.5% to 3% loss in September because of its holding in Amaranth, depending on the performance of its other holdings http://immobilienblasen.blogspot.com/2006/09/goldman-sachs-bank-oder-hedgefonds.html

(klar das die aktie von gs nicht auf diese tolle news reagiert.....)

Brad Hintz, an analyst with Sanford C. Bernstein & Co., said disclosure of the Amaranth losses has served two purposes. First, bank credit departments are likely reviewing exposure to hedge funds. Secondly, the sudden move of natural gas prices doesn't seem to have had a big impact on the proprietary trading made by big banks over the last few months as some had feared

Amaranth's losses were limited to the investors in that fund. The fund said it has been able to meet all of its margin calls. Margin is a loan extended to an investor usually by a trading firm.

"We're not talking about a collapse here," Hintz said. "We're talking about pulling out of a given business."

But Hintz, former corporate treasurer at Lehman Bros. , also believes credit departments at big firms today are reassessing the so-called counterparty risk, or leverage, that comes with extending margin credit to hedge funds. The collapse of Long-Term Capital Management in 1998 required a $3.6 billion bailout by banks organized by the Federal Reserve Bank of New York.

plus von bloomberg

Amaranth, Eight Years After LTCM, Shows Lapse in Risk Control

Sept. 19 (Bloomberg) -- Eight years after the collapse of Long-Term Capital Management LP, the hedge fund industry is still struggling to manage trading risks.

Amaranth Advisors LLC of Greenwich, Connecticut, yesterday told investors it lost about $4.6 billion following wrong-way bets on natural gas prices. MotherRock LP, a $400 million fund, collapsed because of energy trades. Ospraie Management LLC started liquidating a $250 million fund in June after losses in the commodities markets.

As more than $20 billion poured into funds that invest in energy and commodities this year, commodities prices fell. The Reuters-Jefferies CRB Price Index, a market benchmark for everything from oil and natural gas to copper and sugar, dropped 16 percent from its May record, the biggest decline in at least two decades.

``I expect to see more losses, but probably not at the same magnitude as Amaranth,'' said Peter Fusaro, co-founder of New York-based Energy Hedge Fund Center, which advises companies on energy trading strategies. ``There are too many managers out there getting too much money because of the recent interest in commodities, and their risk-control systems aren't adequate enough to cope with the inflows.''

Amaranth's trading losses are among the biggest since 1998, when Greenwich-based Long-Term Capital lost $4 billion investing in government bonds. Long-Term Capital, founded by former Salomon Brothers Inc. Vice Chairman John Meriwether, received $3.5 billion from lenders after the Federal Reserve organized a bailout. (natürlich fed to the rescue...)

Hunter's Bets

The trader responsible for Amaranth's natural-gas bets is Brian Hunter, co-head of the firm's global energy and commodities unit. As of June 30, energy trades accounted for about half the capital of the Amaranth funds.

Hunter, 32, who works in Calgary, about 2,500 miles from Amaranth's headquarters in Greenwich, couldn't be reached yesterday after Amaranth founder Nick Maounis sent a letter to investors notifying them of the losses.

Amaranth is ``working to protect our investors while meeting the obligations of our creditors,'' Maounis, 43, said in the letter. The firm's two main funds, which had gained 26 percent through August, were down at least 35 percent this year as of yesterday. (das nenne ich mal ne performance!)

Amaranth's losses piled up as gas prices dropped 12 percent last week after the U.S. Energy Department reported stockpiles climbed above last year's levels.

`Directional Traders'

Natural gas futures are the worst-performing commodity this year, slumping 51 percent. Soybean meal futures in Chicago have fallen 16 percent and cocoa prices in London are down 15 percent.

``The problem is everyone was bullish, so directional traders lost money,'' said Marcel Melis, founder of Energy Capital Management BV, an Amsterdam-based hedge fund that plans to start trading Oct. 1.

The average hedge fund gained 9.2 percent last year after fees, slightly ahead of 2004's 9 percent and well below the average annual return of 16 percent compiled during the 1990s, Hedge Fund Research Inc. reported. The average fund was up 5.8 percent this year as of July 31.

Fund Closings

More than 500 hedge funds shut in the past two years, mainly because of bad investment performance, according to data compiled by Chicago-based Hedge Fund Research. The funds are private pools of capital that allow managers to participate substantially in the gains on investments made on behalf of clients.

A U.S. Securities and Exchange Commission rule that tightened oversight of the $1.2 trillion industry was struck down by a federal appeals court in June, leaving the agency without the power to conduct random inspections of many funds.

Hedge fund managers at Aeneas Capital Management LP are under investigation by regulators in the U.S. and Malaysia after holdings in Malaysian stocks led to losses of about 60 percent in one of its funds, three people with knowledge of the matter said last week.

hier ne story die genau ins schwarze trifft

http://www.autodogmatic.com/

This is why I find it even more disturbing when I read about the "infrastructure" players of markets further reducing margin requirements. These requirements used to be put in place for fundamental solvency reasons--not because they were dictated by fiat, but because they limit market participants' ability to take on so much leverage they hurt not only themselves but others through default. Examples that worry me greatly are the NYSE paring back specialist reserve requirements by 40%, brokerage banks nearly eliminating margin requirements on the trading they do for hedge funds, Joint-Back Office agreements giving hedge funds access to "house capital" of banks, and the Federal Reserve itself allowing banks to skimp on reserves (severely).

scheint so als wenn endlich die ersten risse in der heilen welt des "leverage" zu sehen sind. bin gespannt ob das auswirkungen hat. wenn nicht wird der nächste knall nur noch größer.

vergleicht man die summen mit dem ltcm debakel wird schnell klar was für ein großes rad inzwischen gedreht wird. denke das der markt nicht zu kontrollieren ist.

regulierungen die bisher imer abgelehnt worden sidn kommen sicher erst wenn alles zu spät ist.

wie üblich......

übrigens auch ein grund warum ich long gold bin

jan-martin