Hedgies Still Hearing "Redemption Song"


Redemption Calls“, sung to the tune of Bob Marley‘s Redemption Song.

Old clients, yes they call I
ask me for the NAV.
Minutes after I sold stock,
into a bottomless pit.
But my fund was made strong
by the black box it was built on.
We trade in this generation,
leveraged to the gills.
Won’t you help to stem
these liquidations;
They’re all I ever hear.
Redemption Calls
Redemption Calls

Emancipate ourselves from algorithms,
even the Quant’s can wreck our fees.
Take no cash from from the fund-of-funds shop,
’cause when things get tough that capital leaves.
How long shall they call in margin,
while we blow out stocks and debt?
Some say its all just cyclical
but still the calls must be met.

Won’t you help to stem
these liquidations.
They’re all I ever hear
Redemption Calls
Redemption Calls

It’s been reported this week that the hedge fund industry has lost about 20% of its total assets, which are currently estimated at $1.55 trillion.  According to research firm Eurekahedge, about $125 billion of this loss came from redemption.

Based on the bloodbath in some of the more widely held hedge fund-type stocks (fertilizer, metals, oils, china etc.), I would actually speculate that this is a low estimate, and that before we’re out of the first quarter of 2009, there could be much more redemption activity at both established funds and start-ups.  The Madoff scandal certainly didn’t calm the stampede of people who just want out, no matter what.  Now that Cerberus and Citadel are locking down…fugghetaboutit.

Yeah it’s ugly, but at least they have Bob Marley for comfort.

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