August 01, 2007

FLASH: And then the hedge funds kept imploding. And imploding. And imploding. Bear Stearns nukes the market (again)

Come on now, you can't be serious! Bear Stearns is the gift that keeps on giving, but the thing is, they're just the tip of the iceberg. Thousands of hedge funds, pension funds and foreign countries will now implode as the CDO-uber-leveraged US housing market melts down.

Just turn in the keys and walk away Jim Cramer says. And that's exactly what folks are doing.

Tilt. Head for the hills. This sucker is gonna blow. Err, make that "blowing", active tense.

Bear Stearns Halts Redemptions on Third Hedge Fund

July 31 (Bloomberg) -- Bear Stearns Cos., manager of two hedge funds that collapsed last month, halted redemptions from a third fund after a slump in credit markets prompted investors to demand their money back.

The Bear Stearns Asset-Backed Securities Fund had about $900 million invested in asset-backed securities, including mortgage bonds, spokesman Russell Sherman said today in a telephone interview. The fund was overwhelmed by redemption requests, Sherman said.

The fund's stumble is a setback for New York-based Bear Stearns and illustrates how the crisis in the subprime mortgage market has spread. The fund had less than 0.5 percent of its assets in securities linked to loans to subprime borrowers, Sherman said. The two funds that collapsed invested almost fully in subprime bonds. Losses have spread to banks, insurers and hedge funds in France and Australia, including one run by Macquarie Bank Ltd.

``This shows you don't necessarily have to be a subprime fund now to be having problems,'' said Bryan Whalen, a portfolio manager in Los Angeles at Metropolitan West Asset Management, which oversees more than $21 billion in fixed-income assets.

23 comments:

JWM in SD said...

God I love the smell of contraction in the morning...smells like...Victory

Eat It PermaBulls..what have you got to say now morons?????

UnitedStatesOfPonzi said...

Ok so im not too sharp. Is this what happened?

2002- SOX gets passed so corrupt wall street follows accounting rules in response to stock market crash/corruption in markets

2003-Hedge funds/private equity start five year boom of unprecedented growth that is unregulated an there are basially NO MORE IPO's

2007-Hedgies collapse collapse collapse due to corruption/no regulation

2008-More regulation? what happens now? depression! Can you sue an unregulated Hedge? i mean what do they 'owe' to the investors of a ponzi scheme when it collapses? Wil l the govt bail out failed ponzi schemes?

tim73 said...

Shit has hit the jet engine. Bulls will be assaulted with compressed, fast-moving, steady stream of really hot shit. Full throttle ahead.

Anonymous said...

Full Stop - ALL HANDS ON DECK!

Code red.....Battle stations...
Code red.....Battle stations...
Code red.....Battle stations!

Oh the Humanity!

philo101 said...

redrum!redrum!redrum!

philo101 said...

This is like watching hurricane Katrina, only there is no media coverage and the agony isn't a cry but whisper...just unreal.

philo101 said...

In the b'ham news sunday, there were 5 pages of homes for sale, not ads, but 4 pt. type listings,6 columns per page on 12 by 14 pages...roughly 3000-4000 homess? Also 'Greystone' where the million dollar mcmansions were built is tombstone now, column after column of homes for sale.
Can't anybody come up with a plan?

borkafatty said...

Its all in the charts..we fu@ked

http://www.recharts.com/reports/CSHB031207/CSHB031207.html?ref=patrick.net

Anonymous said...

"halted redemptions"

Uh. who says the rich don't have problems. Could you imagine having a chunk in one of these funds, you hear all of the negative news, and go and try to get some of your money out and they say no?!? And then you read a press release the fund has taken 25-50% losses?!?

Cancel the trip! F the lease on a luxury car! Cut the shopping!

Anonymous said...

If that's a Bear Staerns Santa, he's got a sack full of munitions for everyone's portfolio. Run-n-hide!!!!!!!!!!!!!!

area 51 said...

Where are all the experts who said subprime was contained?????

idiottroll said...

I saw a stock go up once.

Bears: OWNED!!!!

Ben Dover said...

The fund was overwhelmed by redemption requests

Is that similar to a "run"?

Anonymous said...

"The fund had less than 0.5 percent of its assets in securities linked to loans to subprime borrowers, Sherman said."

How much you want to bet that they have MORE than .5 percent of its assets in subslime garbage????

snicker....

Anonymous said...

Actually, doesn't suprise me at all.

Ben Dover said...

The Santa picture makes me wonder how the Christmas season will unfold this year. A huge bubble of ARM resets, the HELOC ATM now closed, inflation, and maxed out credit cards should make for an interesting season.

Anonymous said...

Most hedge funds use a lot of leverage to increase their return on investment. If the value of the investment drops then the leverage tends to magnify that loss. A one percent drop in the value of an investment can cause a ten percent loss for the fund. This usually kicks off a margin call by the bank that lent you the money. You have to sell some assets, usually at a loss, to pay the bank, this causes more losses and more margin calls. Then the investors want their money back and the whole thing falls apart. It doesn't take much to send a highly leveraged hedge fund into a death spiral. I read a prediction today, by somebody with a very good track record, that fifty percent of all hedge funds will lose all their investors money.

mook said...

Anyone who gambles in a hedge fund deserves to lose it all. They are structured to take huge risks with other people's money. Here's how it goes

1. HF take a 2% management fee no matter what happens

2. HF get a 20% performance fee if they hit a certain % gain for the year. If they miss by even .0001% then they get nothing except the 2% fee.

This encourages massive gambling. If you are required to hit 30% and you get 29%, you get paid almost nothing. If you get 50%, then you get 20% of that 50% gain plus 2%. It's all or nothing with other people's money.

Anonymous said...

Everybody duck and cover! It's a full on HOUSINGPANIC, run, run!

Greed is Good said...

I shorted everything and the kitchen sink last week.

My portfolio is rocking. I made more in a week, than the last three months with mostly long positions.

Anonymous said...

Santy

k.w. - Southern Ca. said...

"Greed is Good" ?

Bullox ... never ... in the long run, many people loose out.

You are wittness to that fact now.

As friends from Europe have told me, the mindset here is one of self-interest - which is toxic to the population over the long-term.

~~~

Greed is Good said...
I shorted everything and the kitchen sink last week.

My portfolio is rocking. I made more in a week, than the last three months with mostly long positions.

hedge fund news said...

Hope we can do something to regulate it.