Tim Ghriskey, the CIO of $2 billion Solaris Asset Management, described well what a bunch of hedge fund managers say they’re thinking right now.He told Bloomberg:
“There’s a degree of being frozen in the headlights, of not knowing what sectors to emphasise, of what securities to emphasise.”
Here’s what a handful of others said they’re thinking:
- “I’m not wildly bearish, but I don’t want to have a lot of risk at this point. I’m not putting my money into anything. I’m raising cash.” – Barton Biggs, $1.4 billion Traxis Partners
- There is “a high degree of correlation among stocks, so it’s not the best environment for stock picking, or sector allocation. Investors are not moving money around between sectors, nor are they aggressively moving between fixed income and equities.” – Ghriskey, Solaris
- “There are so many cogs in the wheel. We need more details on the fiscal positions in Europe and then have to wait to see whether the policies will work or not.” – John Trammell, New York-based Cadogan Management
- “It’s all about capital preservation at the moment. The losses of 2008 are still fresh in investor’s memories and so managers should be cautious.” – Amit Shabi, Bernheim Dreyfus & Co (a fund of funds)
But Bank of America’s global co-head of prime brokerage, Sylvan Chackman, said he expects funds to amp up trading this quarter.
“They need to put their capital to work to generate returns,” he told Bloomberg.
So we’ll see. There’s no question most hedge funds are getting clobbered right now. The question of the day: What Will John Paulson Do?