Some Hedge Funds Doing Great—Just Don't Tell Anyone

Even though a number of high-profile hedge funds—like Citadel, Perry Capital, and David Einhorn’s Greenlight Capital—have gotten clobbered by the financial meltdown, a few adept firms, like those run by John Paulson and commodities star Paul Touradji and the hilariously named Tulip Trend Fund, have managed to deftly avoid the downturn and posted positive returns for October. They’re just not allowed to tell anyone, they say in an article in the New York Times. (Sort of defeats the whole secrecy objective.)

NY Times: Despite Wall Street’s reputation as a place of big money and bigger egos, many of the winners are reluctant to boast, particularly given the gaping losses threatening some rivals.

Indeed, gloomy talk of an industry shakeout is getting louder as returns at most funds sink lower. Over the last few months, some funds have been forced to dump stocks and bonds because their investors want their money back. Wall Street traders worry that another big wave of withdrawals in mid-November could further unsettle the markets…

Several managers who are doing well did not want to brag at a time when so many of their industry colleagues were struggling.

“You don’t do victory laps,” said Adam Stern, a partner at AM Investment Partners, whose volatility fund is up 6.75 per cent this year. “It’s a very sad time for a lot of people. People worked very hard, and they’re losing a lot of money and net worth.”…

Roy Niederhoffer, founder of R. G. Niederhoffer Capital Management, whose more famous brother, Victor, made and then lost a fortune trading, is up more than 50 per cent…

Mr. Niederhoffer is not planning any celebrations.

“The greatest danger at a time like this is hubris,” he said. He has banned fist-pumping victory poses on his trading floor.

New York magazine’s Daily Intel blog notes a few more ways hedge funders have been privately celebrating (all made up, we think).

Daily Intel: Niederhoffer, for instance, has distributed iPods that play an endless loop of “Let’s Get It Started” and “We Will Rock You” to his employees, and Drury Capital holds two-minute “naked victory dances” in the executive bathroom between 4:00 and 4:02 p.m. Meanwhile, John Paulson, whose Paulson and Company is up 30 per cent, has long maintained a stoic public face, although he reportedly has a secret tunnel under his desk into which he shouts “YA BURNT,” every day at precisely 5 p.m.; the sound has been specially calibrated to travel across the Atlantic Ocean to England, where it reverberates under the City of London and is directed in particular into the offices all of the British banks he’s been shorting.


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