Friday, December 30, 2005
What I learnt about Hedge Funds
Chicago Tribune (25 Dec 05) reported that hedge funds once kept a low profile and were known mostly for short-selling and other strategies devised to make money whether stock, bond, commodity, currency or other markets rose or fell. Increasingly, hedge funds are becoming activists at companies they regard as undervalued, pushing for asset sales, management purges and stock buybacks. And the weight they throw around corporate America is only going to get heavier in the years to come.
Hedge Fund Research Inc. in Chicago said that in 1990, there were 610 hedge funds worldwide with assets totaling $39 billion. Earlier this year, assets in the 8,532 hedge funds in existence exceeded the $1 trillion mark for the first time.
Apparently hedge fund manager Edward Lampert, who engineered the merger of Sears, Roebuck and Co. and Kmart Holding Corp., made USD 1 billion last year in his day job. Lampert's success at his ESL Investments is expected to inspire other money managers to start their own hedge funds.
Hedge funds were once known mostly as investment vehicles for wealthy individuals, but an increasing number of public and private pension funds and endowments are sinking money into them. Because of that, corporate activism by hedge funds is expected to increase significantly in 2006. Their asset growth is expected to double by 2009 and sextuple, to $6 trillion, by 2015, according to Van Hedge Fund Advisors International.
Opinions differ on whether hedge funds' rising influence is good for the affected businesses in particular and the economy in general.
Hedge Fund Research Inc. in Chicago said that in 1990, there were 610 hedge funds worldwide with assets totaling $39 billion. Earlier this year, assets in the 8,532 hedge funds in existence exceeded the $1 trillion mark for the first time.
Apparently hedge fund manager Edward Lampert, who engineered the merger of Sears, Roebuck and Co. and Kmart Holding Corp., made USD 1 billion last year in his day job. Lampert's success at his ESL Investments is expected to inspire other money managers to start their own hedge funds.
Hedge funds were once known mostly as investment vehicles for wealthy individuals, but an increasing number of public and private pension funds and endowments are sinking money into them. Because of that, corporate activism by hedge funds is expected to increase significantly in 2006. Their asset growth is expected to double by 2009 and sextuple, to $6 trillion, by 2015, according to Van Hedge Fund Advisors International.
Opinions differ on whether hedge funds' rising influence is good for the affected businesses in particular and the economy in general.
