Hedge Funds Take Huge Loss as Mood Swings

Many alternative asset managers, who brag about their ability to make money regardless of market conditions, posted their worst figures in years last month after worldwide sentiment suddenly changed on energy prices, financial stock and the U.S. dollar.

The hedge fund with the biggest loss is SRM, the Monaco-based group that took a huge gamble on Northern Rock last year. When Northern Rock was nationalized, the group lost approximately 85% of its investors’ money, according to The Wall Street Journal.

Many hedge funds were placing huge bets that energy prices and mining stocks would continue to soar and financials would continue to fall, but when that trend reversed last month, they took a major beating.

“There was a tendency for funds that did well in June to do badly in July,” Christopher Fawcett, head of Fauchier Partners, told The Times.

Other funds affected are the U.S.-based Pequot Global Fund, thought to be down double-digits; Ospraie Management, down 20%; and U.K.-based Paragon Global Opportunities Fund, down 12.41%.

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.