Thursday, August 9, 2007

Big Fund Liquidation Occurring

From CBS.Marketwatch:

Black Mesa Capital, a hedge-fund firm that uses computer models to track down investment ideas, has told investors that at least one very large hedge fund or investment bank is liquidating "massive" trading portfolios, according to a letter the Santa Fe, N.M.-based firm sent to investors Wednesday.

That's causing disruptions and triggering big losses among other so-called market-neutral hedge funds, Black Mesa said in its letter, a copy of which was obtained Thursday by MarketWatch.

"Clearly, something is amiss in the markets that few in our strategy, if anyone, have experienced before," Black Mesa's managers, Dave DeMers and Jonathan Spring, wrote. DeMers declined to comment Thursday.


A hedge fund run by Goldman Sachs called the North American Equity Opportunities fund, has sold some of its positions recently, The Wall Street Journal reported Thursday. Goldman's biggest hedge fund, the Global Alpha fund, has suffered losses recently and may also be selling positions, according to other published reports this week. A Goldman spokesman declined to comment Thursday.

Events like this are why I am still bearish. There are obviously some really big problems in the market right now that will probably continue for the foreseeable future.