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Reply #12: Hedge Funds Post Biggest Monthly Losses Since Lehman Crisis [View All]

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ozymandius Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jun-02-10 06:23 AM
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12. Hedge Funds Post Biggest Monthly Losses Since Lehman Crisis
John Paulson, Louis Bacon and Andreas Halvorsen navigated the global market turmoil of 2008 with little or no damage. They werent as successful last month as the Dow Jones Industrial average had its worst May since 1940.

Hedge funds lost an average of 2.7 percent through May 27, according to the HFRX Global Hedge Fund Index, as the sovereign debt crisis in Europe triggered declines in stocks, the euro and commodities, and the gap in yields between U.S. short-term and long-term debt narrowed. It was the biggest decline since November 2008, when hedge funds lost 3 percent in the wake of Lehman Brothers Holdings Inc.s bankruptcy two months earlier.

Almost every strategy lost money in May, according to Hedge Fund Research Inc. in Chicago, as the Dow index of 30 big stocks sank 7.6 percent including dividends amid speculation that Greeces debt problems would spread to nations such as Spain and Portugal. Some of the best-known funds saw their gains for this year erased.

Paulsons Advantage fund dropped 6.9 percent through May 21, dragging it to a year-to-date loss of 3.3 percent, according to investors with knowledge of the results, who asked not to be named because the information is private. Halvorsens Viking Global fund fell 3.4 percent in the same span and 2.9 percent for the year. Bacons Moore Global declined 7.7 percent as of May 20 and 4.8 percent in 2010, investors said.

Their bets on falling stocks didnt make enough money to counter losses in shares the managers expected to climb. Commodities retreated 8.2 percent in May, as measured by the UBS Bloomberg CMCI Index. Traders who positioned themselves for the U.S. yield curve to steepen, a sign of expected economic growth, suffered losses when the difference between payouts on two-year and 10-year Treasury notes narrowed instead.

http://preview.bloomberg.com/news/2010-05-31/paulson-dr...
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