Ah Yes, That Quaint Old Man In Omaha
I don't know if the world's third richest man has the time or inclination to feel schadenfreude, but if he does, no doubt Mr. Buffett is enjoying this item in Bloomberg today. (See here to know why.)
"Sept. 13 (Bloomberg) -- Goldman Sachs Group Inc.'s Global Alpha hedge fund fell 22.5 percent in August, its biggest monthly decline, on losses from currency and stock trades, according to an update sent to investors.
The fund, managed by Mark Carhart and Raymond Iwanowski, has dropped by a third in 2007 and 44 percent from its peak in March 2006. Investors notified New York-based Goldman last month that they plan to withdraw $1.6 billion from the fund, or almost a fifth of the assets as of July 31. "
Ouch. Global Alpha is toast. There is no way they will get back over their high water mark, so what is the point of keeping the fund going? Carhart and Iwanowski are toast too. Sadly, those two will walk away very rich men for, in the parlance of Nassim Nicholas Taleb, "spending dollars to make pennies" or "picking up nickels in front of a steamroller." All too often a hot hedge fund manager combines either skill or luck with leverage for a couple of years, to generate big returns and big pay for themsleves. They attract more and more assets and to keep the balls in the air they make increasingly risky trades and use increasing leverage. And when it all blows up in their face and massive amounts of investor capital is destroyed, the managers are slightly disgraced but rich nonetheless, and very likely already thinking about their comeback. Unfortunately in this business, memories are short and fantastic failure is hardly a career destroyer. Carhart, for his part, can always return to academia and live out his days in comfort telling anyone who will listen (and students tend to listen because they've already paid and want a good grade) that there was nothing wrong with his models - that it was the market that was screwed up.
UPDATE: Global Alpha has made the ailing/watch list over at the Hedge Fund Implode-o-meter site.
UPPDATE: Another Buffett centi-millionaire crawls out the woodwork to bestow some major largesse. Just another example of rapacious capitalism propelling society ever downward.
"Sept. 13 (Bloomberg) -- Goldman Sachs Group Inc.'s Global Alpha hedge fund fell 22.5 percent in August, its biggest monthly decline, on losses from currency and stock trades, according to an update sent to investors.
The fund, managed by Mark Carhart and Raymond Iwanowski, has dropped by a third in 2007 and 44 percent from its peak in March 2006. Investors notified New York-based Goldman last month that they plan to withdraw $1.6 billion from the fund, or almost a fifth of the assets as of July 31. "
Ouch. Global Alpha is toast. There is no way they will get back over their high water mark, so what is the point of keeping the fund going? Carhart and Iwanowski are toast too. Sadly, those two will walk away very rich men for, in the parlance of Nassim Nicholas Taleb, "spending dollars to make pennies" or "picking up nickels in front of a steamroller." All too often a hot hedge fund manager combines either skill or luck with leverage for a couple of years, to generate big returns and big pay for themsleves. They attract more and more assets and to keep the balls in the air they make increasingly risky trades and use increasing leverage. And when it all blows up in their face and massive amounts of investor capital is destroyed, the managers are slightly disgraced but rich nonetheless, and very likely already thinking about their comeback. Unfortunately in this business, memories are short and fantastic failure is hardly a career destroyer. Carhart, for his part, can always return to academia and live out his days in comfort telling anyone who will listen (and students tend to listen because they've already paid and want a good grade) that there was nothing wrong with his models - that it was the market that was screwed up.
UPDATE: Global Alpha has made the ailing/watch list over at the Hedge Fund Implode-o-meter site.
UPPDATE: Another Buffett centi-millionaire crawls out the woodwork to bestow some major largesse. Just another example of rapacious capitalism propelling society ever downward.
posted by Donny Baseball at 9:48 AM
1 Comments:
Do you think that for value investing style to work, it is critical that the investor has the ability to assess whether management has the integrity and sound judgment? If so, then is it possible to make the assessment based only on conference calls and SEC filings? Or, is it necessary to get on the board (or at least get to know the management personally) in order to achieve Buffett like return?
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