Hedge Fund Investors Redeem $40 BILLION In One Month

Will they seek a bailout now too?

Bloomberg: Hedge funds worldwide shrank by 9 per cent to $1.56 trillion last month, the lowest level in two years, after investors withdrew cash and stock markets declined.

Funny, none of this bad news was discussed at the crush-fest Capitol Hill had on the hedge funders last week.

Investors pulled $40 billion from hedge funds in October, according to Chicago-based Hedge Fund Research Inc., while market losses cut industry values by $115 billion. Investors withdrew $22 billion from funds of funds, which pool money to invest in hedge funds.

Hedge funds fell by an average 6 per cent last month, pushing the year-to-date decline through October to 16 per cent, according to the HFRI Fund Weighted Composite Index, which HFRI first published in 1990. In the same periods, the hedge-fund index outperformed the S&P 500 Stock Index, which decreased 17 per cent last month, and 34 per cent this year through October.

Meet some of the biggest losers:

Funds run by Jeffrey Gendell and John Burbank III posted their worst monthly losses in October. Peter Thiel gave back gains made earlier in the year. Nobel-prize winner Myron Scholes froze his biggest fund.

Gendell’s Tontine Capital Partners LP fund, based in Greenwich, Connecticut, plunged 65.7 per cent in October, extending its decline for the year to 76.8 per cent, according to investors. Burbank’s Global Strategy fund fell 38 per cent in the month and 44 per cent year-to-date, according to a letter to clients of his San Francisco-based based Passport Capital Management LLC.


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