Before he was a managing director at the D. E. Shaw Group, and before he was president of Harvard University, Lawrence Summers was Secretary of the Treasury when Long Term Capital Management collapsed.
In mid-September, he spoke at the Global Alpha Forum in Greenwich, CT, firmly stating that, at that time, there was no consideration whatsoever of providing a government bailout to LCTM. He says, “We did have a sense that there was a tremendous coordination problem, and if everyone found a way to stand down and not rip all the assets out of LTCM, more or less everybody would be better off.”
Regarding the current crisis, Summers urges “humility” and notes: “Until March 2008, there had been no contingency plan for the unwinding of a major broker-dealer.”
Amid ongoing liquidations in the face of poor performance and difficult fund-raising, there has been quite a lot of hedge fund launch activity in the past few weeks.
Astra Investimentos (Sao Paulo, Brazil) has launched the Astra Credit Fund.
The Vallea Fund is a joint venture of Laven Partners (UK) and Vallea Capital.
The Venus Index Plus Fund is from Venus Capital Management. FrontPoint Partners will soon launch a new tech fund. Rosemount Capital Management (Dublin, Ireland) has launched a new fund. [more…]
Deal Journal reports a few sobering industry statistics generated by Eurekahedge. 15% more funds have closed during the first half of this year, than during the same time in 2007, and launches have slowed as well. Industry growth, in terms of number of funds, is nearly flat.
More seriously, data that is already almost two months old also shows severly inadequate performance, and things haven’t gotten easier since then. Funds are not meeting their high water marks, the valuation threshold that allows a fund to collect the performance fees (20% of gains or thereabouts) that constitute its profit. Only one in ten hedge funds is now earning performance fees. One fund executive doubts that some funds — assuming they survive so long — will begin again to earn them before 2010.
Though investors have been pulling money from hedge funds for many months, funds that retain credibility with investors may ride it through. But since bonuses are often determined from performance fee earnings, hedge fund compensation is looking to be very tight this year, in any case.
To read the article from Deal Journal, click here. For more on high water marks, read this lucid post.
Here’s a job for a software / network / systems professional who may not have any financial experience, from a fund that is growing its tech team.
A prop trading firm in Chicago is looking for a Quality Assurance Engineer to join their team. Requirements:
4+ years QA experience: system, integration, functional, and regression testing of complex [...]
Highlights from today’s Reuters article colorfully titled, “Lehman, Merrill to pound already bloody job market“:
The total let go from Merrill Lynch may be around 24,000
“The resume flow will start on Monday like there’s no tomorrow,” according to one recruiter cited
It’s looking like 2008 job cuts in the financial sector may surpass the 2007 total
“‘Hedge funds, [...]
Hedge fund solutions consulting group is looking for a top-notch Excel VBA / SQL Server developer / architect with hedge fund operations experience to help design, develop, enhance and support critical financial applications for its clients. Candidate would work directly with hedge fund staff to help automate fund operations, trading and research. Big pluses are: [...]
A few recent clippings from the press. And this article is worth a quick gander for some timely tips on career management.
UBS restructuring compensation. A “phantom equity” scheme would reward employees according to the performance of their unit within the firm. And the firm’s budget for employee compensation will shrink by one-third this [...]
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