Hedge Funds’ Great Big Mulligan Ideas
Long Term Capital’s Meriwether, Sowood’s Larson Raising Capital in ‘Round Three’
May 12, 2008
The harder the hedge fund managers’ fall - the more money they lose, the bigger the fat cats - the easier it is for them to raise additional seed capital for another hedge fund idea. So reports The Wall Street Journal this morning in “Rebounds by Hedge-Fund Stars Prove ‘It’s a Mulligan Industry.’”
The logic seems to be, those who fell hard obviously are big guns, hedge fund portfolio managers who rank and whose ideas are aplenty. Some are also arguing that their highly leveraged bets on subprime mortgages, sometimes nine times capital in hand, were actually smart calls but that the banks pulled out on them too early.
Some, like Jeffrey Larson of Sowood Capital Management, infamous John Meriwether of Long Term Capital Management, Daniel Zwirn of D.B. Zwirn & Co., and Brian Hunter of Amaranth Advisors, are now returning to the markets with new investing ideas, and having no problem raising additional capital.
“It’s crazy, but the guy who’s down substantially often will have a lot more options versus someone who hasn’t lost much money,” Neal Berger, head of Eagle’s View Asset Management, told The Journal.
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.
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