July 2, 2010 – Hedge Funds Are Getting Trimmed

Featured Trades: S&P 500 SPDR's ETF

2) Hedge Funds Are Getting Trimmed. Given the piss poor performance of hedge funds this year, you really have to ask yourself why you subscribed to a letter entitled The Diary of a Mad Hedge Fund Trader. Many funds have 'derisked', are nursing wounds on the sidelines, and only have paltry 1% returns to show for the year (click here for more depth). Legendary hedge fund trader, Louis Bacon, who runs Moore Capital Management, and certainly knows which end of a stock to hold up, got clocked for 9% in May. Is this really worth the 2%/20% these guys demand in fees? It seems that many funds were on the wrong side of everything this year. Short positions in Treasury bonds turned out to be a grim reaper. Natural gas shorts took quite a few to the cleaners (click here for 'Natural Gas Indigestion' ). What is especially disappointing is that so many short funds are down on the year, despite an S&P 500 that is off 10%. This is most likely because the market took off like a bat out of hell for the first four months of the year, forcing many to cover shorts, and then fell off a cliff. For a lot of funds, their only saving grace was hefty long positions in gold. Watch out, because the $2.8 trillion the hedge funds now control is in a very bad mood. Maybe you should have subscribed to The Diary of a Mad Bond Fund Trader instead.



Hedge Funds Are Getting Trimmed