Remarkable

The pigmen levitate the market magically. My brokerage account balance has gone to shit. Never underestimate the skill of the market manipulators. How many people have their money stuck in hedge fund cockroach motels, unable to withdraw while they game the market with these pump rallies, helping out their buddies and fleecing Joe 6 pack? It is sad.

Bear Stearns Fund Failure Redux??????

Bear Stearns Halts Redemptions on Third Hedge Fund After Losses
By Yalman Onaran
July 31 (Bloomberg) -- Bear Stearns Cos., manager of two hedge funds that collapsed last month, halted redemptions from a third fund after investors demanded their money back.
The fund had about $900 million invested in asset-backed securities, including mortgage bonds, spokesman Russell Sherman said in a telephone interview. The fund probably had losses in July and was overwhelmed by redemption requests, Sherman said.
Bear Stearns has no plans to close the fund, which has $50 million in cash and gets about $13 million in principal and interest monthly, Sherman said. The fund can wait until the slump in the mortgage market is over, he said. Less than 0.5 percent of the portfolio is in subprime securities, he said.
``We don't believe it's prudent or in the interests of our investors to sell assets in this current environment,'' Sherman said. ``The fund portfolio is well positioned to wait out the market uncertainty.''
The Wall Street Journal earlier reported that the fund was up 5 percent this year through June, before its performance plummeted in July.
``This shows you don't necessarily have to be a subprime fund now to be having problems,'' said Bryan Whalen, a portfolio manager in Los Angeles at Metropolitan West Asset Management, which oversees more than $21 billion in fixed-income assets.

My favorite part: "we believe by suspending redemptions, we can ensure the best long term results for our investors."

BWAHAHAHAHA. Let me translate:

"we believe by suspending redepemtions, we can ensure that our rich ass fund manager can collect fees for another few months. Also, we can ensure that our other portfolios of horrible quality mortgage paper and derivatives is not immediately marked to market so we can pull the wool over everyone's eye's and sell just a few more pieces of this toilet paper to dumb ass fund managers. Also, we can allow enough time to take on sufficient swap hedges on the junk as we desperately try to make up for some of the lost revenue.

Frogs Caught in Pot of Boiling Water

Sweet, now we can add another domino with the French flag on it. From Bloomberg:



Oddo to Shut Three Funds `Caught Out' by Credit Rout (Update1)
By Neil Unmack and Jacqueline Simmons
July 31 (Bloomberg) -- Oddo & Cie, a French stockbroker and money manager, plans to close three funds totaling 1 billion euros ($1.37 billion), citing the ``unprecedented'' crisis in the U.S. asset-backed securities market.
Oddo said it will wind down the funds within the ``shortest possible time frame'' because of a plunge in prices for collateralized debt obligations, notes backed by other bonds, loans and their derivatives......
.......``Like many actors, we have tried to revitalize the performance of our funds by investing in CDOs,'' Arnaud Ploix, a spokesman for Paris-based Oddo, said in an interview today. ``Like others, we noticed recent problems with short-term liquidity and were caught out by the subprime dilemma.''



Ahhhhhh, those dour Frenchmen, who woulda thunk they were out there chasing yield like all the rest?



Not that I have anything against the French, I think France is great. Once I had to go to Paris for work. A dude I was working with befriended me and even though I was only there for a two day fire drill still took me out to dinner with his wife even though we'd been working until 2 Am the night before and were absolutely cooked and showed me a bit of the historic part of town and shit they even paid for my (damn expensive) dinner. Pretty fugging cool.

Sowood Capital investors take a Capital Haircut

http://tinyurl.com/yttkh6

More on this as the details trickle through.....

Another fund goes under Down Under

The Absolute Capital Yield Strategies Fund in Sydney apparently "suspended" itself today, which as we all know is just another way of saying "we are thrashing about in the final throes of and agonizing death. we were harpooned on on July 17 when the Bear Stearns funds (finally) imploded for good and we realized our capital had been wiped out. since then any efforts to stanch the hemorrhaging of blood have failed. we are now on life support, dead in all but the purest physiological sense."

Or maybe it's more like "we are stopping you from taking out your money because we can. we will collect our 2% fees for as long as we can avoid the mark to market of our worthless structured finance products because we can. we will get richer because we can. then when we are finally forced to close up shop we'll go on vacation to Fiji. fuck you all."

BREAKIN OUT THE LUBE

Right about now....some hedge fund manager is getting ready to get pounded in the ass. The funny thing is, the downgrades were small. The forced selling of 1-2% of 2006 subprime securities won't do much in and of itself. The hammer to fall first will be disbursements. See, contrary to what some of you may think, there are many investors in hedge funds that are intelligent, financially savvy, news-cognizant people. These people are looking at the last holdings report from their hedge fund manager and thinking "oh shit, he's about to get pounded in the ass, I better get my money out now". So before we see the massive downgrades that we know must come, we'll see more "hedge fund halts disbursements" headlines. Because when you're leveraged 30:1, and someone asks for their money, and you suddenly realize you cannot liquidate all these arcane structured finance products quickly, you'll do what they all do: stop paying.

DOWNGRADES

So more belated downgrades come on a slew of late vintage subprime fortified paper. I'm sure the hedge funds who got headily drunk collecting those juicy returns at 30x leverage won't really care too much if they implode, they still get to run away from their 20% over the last two years. And a bunch of pension funds will be holding the bag on the rest of the junk. Sigh.