Hedge Funds

[FaninAma]

Does anybody know what type of hedge fund T. Boone operates? I do know that if it has very much exposure to the real estate mortgage market the ags better plan on holding a few garage sales to complete the funding of their new sports complex.

There is speculation than no less than a dozen hedge funds will declare bankruptcy next week. I fully expect the Federal Reserve to have an emergency session and announce a 25 to 50 basis point reduction inthe prime interest rate. The problem with that is that that move will pull any support out from underneath the USD price which will not be good for the US bond market in the intermediate term.

I do suggest if you have any money in corporate bond funds, especially if they have exposure to the mortgage bond market, you consider alternate sources of investment.

[royalfan5]

As far as I know, Boone sticks to what he knows in the energy complex.

[FaninAma]

As far as I know, Boone sticks to what he knows in the energy complex.

Then the ags may end up with more money than Harvard....if T. Boone lets them have it.

[Petro-Sooner]

In laymans terms what is a hedge fund?

[SOONERKAT]

Oil and Gas, with soon-to-be interest in water plants and wind energy. I doubt many of the recent credit based concerns and sub-prime bailout issues will impact his portfolio too much.

[Hamhock]

In laymans terms what is a hedge fund?


layman terms and hedge fund are not to be found in the same paragraph.

i believe they are only open to accredited investors.

[SOONERKAT]

layman terms and hedge fund are not to be found in the same paragraph.

i believe they are only open to accredited investors.


Yep. Hedge funds = unregulated funds set up for the affluent. Basically, they invest in things that most people have never heard of and charge fees to their investors, which are typically institutional investors (pension plans, 401k's, etc...)

For most of these products, you have to have a net worth of around $5mil and be able to make an initial investment of $1mil.

That's about as layman as I can get on this one. :O

[soonerscuba]

In laymans terms what is a hedge fund?

Essentially a bunch of really rich people give money to smart people, these are accredited, serious investors who are not held in the same regards by the SEC, thus they work in something of an "inside market", then take a fee off the top.

In short, to do it, you better be a financial badass or the lawsuits are going to be swift and severe from your benefactors.

[Chuck Bao]

As I understand them, hedge funds were originally meant as funds designed to take advantage of short term arbitrage opportunities whereever and in whatever market. They could take advantage of market inefficiencies and make numerous trades and lock in small profits and achieve above market returns (if they were smart).

The problem is that hedge funds don't have to comply with the restrictions of most investment funds in terms of exposure and risk and types of investments.

Hedge funds have grown expotentially during the bull market over the last 10-15 years, partly because they had produced well above average rates of return and their lack of tough investment guidelines gave them great leeway. This includes attacking the baht that sparked the Asian economic crisis in 1997.

Personally, I think they are evil and deserve to be let die when the market goes against their high-priced betting. No public funds should ever be allowed to bail them out and their rich and foolish shareholders.

But that's just my opinion.

[XingTheRubicon]

The difference between hedge funds and say mutual funds are exemptions from certain regs, mainly selling short, leverage, program trading, swaps, arbitrage, and derivatives.

Hedge funds are usually set up like a limited liability partnership. A managing general partner (who has his personal jack in the hedge fund)...< very important and limited partners <W voice> cronies <W voice> that aid buying power and they sign off on the risk.

[SOONERKAT]

[/QUOTE]

Personally, I think they are evil and deserve to be let die when the market goes against their high-priced betting. No public funds should ever be allowed to bail them out and their rich and foolish shareholders.

But that's just my opinion.[/QUOTE]


Here, here. And my firm manages a few themselves. What is scary is the new drive to develop and offer "fund of hedge fund" investment for "less" accredtied investors. This is sort of like getting the young mis-guided teenager to "take a hit" before offering to sell 'em the bag.

[FaninAma]

I could still see where T. Boone could get himself(& osu) into trouble if he is playing the leverage game with corporate bonds and using derivatives to multiply gains. I can't see any hedge fund being able to operate without some exposure to other investment firms like Bear Sterns and Goldman-Sachs.