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Hedge Funds Make Wrong Way Bets For a Fourth Week: Commodities
For those investors that might be wanting to open or increase their possition in commodity funds ... You might find the below article of great interest.
Hedge funds had a bad year last year, as well. I own a couple of public feeder funds - the one I've been pleased with is Brevan Howard Macro.
The article is definitely an interesting take not only on fund bets, but last week's events, as well. I'm not changing anything in terms of commodities/commodity-related bets.
Another possibly dangerous aspect of the hedge fund side and private equity; is that many more pension funds (especially public sector) continue to move assets into these two areas. Many pension funds remain underfunded, plus had a possible whack (especially if some assets were sold at the wrong time during the market melt period) and continue to establish the old base goals of 8%/year returns. Some larger cities in MI now find that with the decrease in revenues, higher (inflation related) day to day operating expenses; that a full 40% of the budget now goes to retiree pension/health care plans. Yikes................ Regards, Catch
Reply to @catch22: Take a look at the issue with the Illinois Teacher's Pension Fund, which was invested (and probably still is) in a huge number of exotic derivatives products.
"Dale Rosenthal, a former strategist for Long Term Capital Management, the hedge fund known for its epic collapse in 1998, and a proprietary trader for Morgan Stanley, has seen his share of financial complexities. But when shown a seven-page list of derivatives positions held by the Illinois Teachers Retirement System as of March 31, obtained by Medill News Service through a Freedom of Information Act request, the University of Illinois-Chicago assistant professor of finance expressed disbelief. “If you were to have faxed me this balance sheet and asked me to guess who it belonged to, I would have guessed, Citadel, Magnetar or even a proprietary trading desk at a bank,” Rosenthal said. How bad is it? After losing $4.4 billion on investments in fiscal year 2009, and 5 percent on investments in fiscal 2008, the teachers’ pension is now underfunded by $44.5 billion, or 60.9 percent, according to the Commission on Government Forecasting and Accountability’s March 2010 report. By comparison, only 20.3 percent of the Chicago Teachers’ Pension Fund is unfunded."
There are pensions borrowing from themselves, as well.
Hmmm....the NY state stuff; recalled seeing a blip about this, but not aware of the fun game they are playing. Kinda reminds me of being at the beach and one attempts to dig a perfect hole into the wet sand only to discover that the sand won't stay in place properly and the hole starts to fill with water, too. Keep on a digg'in, they are.
Comments
The article is definitely an interesting take not only on fund bets, but last week's events, as well. I'm not changing anything in terms of commodities/commodity-related bets.
Regards,
Catch
http://news.medill.northwestern.edu/chicago/news.aspx?id=166746
"Dale Rosenthal, a former strategist for Long Term Capital Management, the hedge fund known for its epic collapse in 1998, and a proprietary trader for Morgan Stanley, has seen his share of financial complexities.
But when shown a seven-page list of derivatives positions held by the Illinois Teachers Retirement System as of March 31, obtained by Medill News Service through a Freedom of Information Act request, the University of Illinois-Chicago assistant professor of finance expressed disbelief.
“If you were to have faxed me this balance sheet and asked me to guess who it belonged to, I would have guessed, Citadel, Magnetar or even a proprietary trading desk at a bank,” Rosenthal said. How bad is it? After losing $4.4 billion on investments in fiscal year 2009, and 5 percent on investments in fiscal 2008, the teachers’ pension is now underfunded by $44.5 billion, or 60.9 percent, according to the Commission on Government Forecasting and Accountability’s March 2010 report. By comparison, only 20.3 percent of the Chicago Teachers’ Pension Fund is unfunded."
There are pensions borrowing from themselves, as well.
http://articles.businessinsider.com/2012-03-14/politics/31162913_1_pension-costs-pension-system-pension-fund
Hmmm....the NY state stuff; recalled seeing a blip about this, but not aware of the fun game they are playing. Kinda reminds me of being at the beach and one attempts to dig a perfect hole into the wet sand only to discover that the sand won't stay in place properly and the hole starts to fill with water, too.
Keep on a digg'in, they are.