Do Hedge Funds Only Control Small Portion of Market?
It is a common perception that major hedge funds control much if not most of the equity and commodity markets. This is not an unreasonable belief considering hedge funds in the US control over $1 trillion in assets. Citadel Investment Group, one of the US' largest funds, is said to account for almost 3% of US trading volume.
Well, on Tuesday Feb. 23, the U.K. Financial Services Authority found that 50 of the U.K.'s largest hedge funds control less than 1% of the European stock market. The 50 firms in that survey manage about $300 billion USD in assets. They also concluded that no individual hedge fund posed any systemic risk.
According to the WSJ, the study looked at all assets of these funds including their long and short positions as well as derivatives.
There are some flaws with the above conclusions though. Conspicuously absent is a report on hedge funds' total share of market activity as opposed to simply their holdings. It is also unclear from the WSJ article how the derivative values were calculated and whether short positions were netted against long positions or added.
Still it is interesting that based on UK regulators' statements, they see even large hedge funds as posing little risk to the system.
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2.24.2010
Hedge Funds Quit Shortselling As Rule Change Looms
Is Fear of Short-Selling Bans Driving Hedge Funds to Limit Exposures?
Hedge funds have been reigning in their short-selling in anticipation of new rules on short-selling, according to the Wall Street Journal. Today, the SEC voted to restrict short-selling on stocks that have declined by more than 10% in a single day. Insiders also believe their will be a new uptick rule preventing hedge funds and other investors from short-selling stocks that
declined on their last price movement.
According to Bob Sloan, founder of S3 Partners, there is no question that hedge funds have backed of short-selling for fear of regulatory changes.
Since last April when short-selling bans were first seriously discussed, the ration of long positions to short/borrowed positions has increased 30%, according to the WSJ. The article fails to mention whether some of this shift can be attributed to market performance and expectations rather than fear of new short-selling bans.
Hedge funds have been reigning in their short-selling in anticipation of new rules on short-selling, according to the Wall Street Journal. Today, the SEC voted to restrict short-selling on stocks that have declined by more than 10% in a single day. Insiders also believe their will be a new uptick rule preventing hedge funds and other investors from short-selling stocks that
declined on their last price movement.
According to Bob Sloan, founder of S3 Partners, there is no question that hedge funds have backed of short-selling for fear of regulatory changes.
Since last April when short-selling bans were first seriously discussed, the ration of long positions to short/borrowed positions has increased 30%, according to the WSJ. The article fails to mention whether some of this shift can be attributed to market performance and expectations rather than fear of new short-selling bans.
2.09.2010
Hedge Fund D.E. Shaw to buy Distressed Hedge Fund Assets
DE Shaw, one of the largest hedge funds in the world ($28 Billion AUM), announced today that it is setting up a team to examine buy distressed assets from other hedge funds. The fund will be called DE Shaw Portfolio Acquisitions Unit.
D.E. Shaw, The Financial Times said, is particularly interested in snapping up distressed assets that other hedge funds have “side-pocketed,” or split from their healthy assets, in order to keep them from affecting returns.
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Related:
Jobs At DE Shaw
DE Shaw Founder
D.E. Shaw, The Financial Times said, is particularly interested in snapping up distressed assets that other hedge funds have “side-pocketed,” or split from their healthy assets, in order to keep them from affecting returns.
Read More
Related:
Jobs At DE Shaw
DE Shaw Founder
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