Don’t Doubt the Hedgies, Long-term
October 16th, 2008 by Buck Woodford
Many top managers are having a rough go of it. Most of the pain came in September. After many solid years managing Tontine Partners, Jeffrey Gendell lost a bundle this year - nearly 2/3 of the fund’s value. In the same article, it mentions that David Einhorn’s Greenlight fund lost 17% in September alone — and this is the guy who presciently predicted Lehman Brothers’ bankruptcy 6 months in advance! A heavier hitter than either, Ken Griffin’s Citadel group, has steered their primary fund to a nasty 30% loss on the year.
But don’t think that the entire industry is in danger. The concept of performance-based pay will always attract the best and brightest.
Near the end of this Financial Times article, the CEO of a large Swiss bank — which admittedly advises clients to allocate heavily to absolute return investments — makes an outstanding point:
“The hedge fund industry is the most talented people who have come
together to manage money. When they don’t achieve they disappear. There is a Darwinian process that we don’t really see in the long-only world.”
Teewinot fully intends - and remains well on track - to survive this negative environment and absolutely thrive as the world eventually emerges from it. There is no hurry, no panic, no “hail mary” environment for us. We’re simply preserving our clients’ capital in down periods, seeking opportunities for profit, and taking calculated/limited risks.
Please check out Teewinot’s 2008 3rd Quarter Client Letter for more information.
