Friday, October 17, 2008

Barakett brothers blow up

Atticus Capital, the hedge fund run by Tim Barakett is down around 40%, and now his brother's Bret fund, Tremblant Capital, was down 27.9% at the end of September, and Tremblat Concentrated was down 40.1%. Assets with him are down to $2.1 billion from $4.5 billion.

Here's the link to the story in today's NY Post.

In today's WSJ, we read that "Some hedge-fund managers are coming under increased pressure to liquidate their positions as banks ask for more collateral to back funds' borrowing..."

On Wednesday's meltdown, there were rumours that Citadel Investments, was liquidating positions, and a blogger that posted an estimated return for Citadel was forced to retract the story. Here's that story:

If you're going to shame a "website" for putting up what was in fact a rumor, don't send David Faber out on the air an hour later to muse that "Citadel has been down around 26 percent- or so they say" and then "from what I'm hearing, there are a lot of questions about forced selling out there."

It looks, however that the blogger was right. From the WSJ:

Much as investors fretted about investment banks that relied on heavy leverage to boost returns, the focus now is on hedge funds that are perceived as big borrowers. Ken Griffin's Citadel Investment Group has racked up annual returns of as much as 30% for its largest hedge funds in recent years, but last year, it held about $7 of investments for each $1 it held. That figure has come down to about $4 this year. The firm holds about one-third of its asset of cash and has expressed confidence that it is well hedged. Still, Citadel's largest fund is down about 32% through Oct. 10.

If you manage $30 billion, and you are leveraged 4 to 1, and you are down 32%, I guess you can get a little testy when someone talks about your performance!


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