What a difference a day makes. When you come off the biggest three-day market rally since March 2009, and day four is the Bloomberg Hedge Funds Summit, it’s a ride you don’t want to end — especially when your guests include market masters like: Glen Dubin (Highbridge), Bruce Richards (Marathon), Tom Hill (Blackstone) and Boaz Weinstein (Saba).
We spent the early part of last week watching the market whipsaw with many traders short or underweighted. Then the rally started, sparking a short- covering scramble with traders chasing the market. Even those skeptical of the European rescue story didn’t want to miss out and risk ending the month, or year, underperforming their benchmarks.
However, there was little discussion about covering, shorting or chasing anything at the New World Stages in New York last Thursday. Our guests opted to talk long-term investments, distressed opportunities in the markets, and risk management amidst all the volatility. While speakers differed on the timing of recovery – Davide Serra of Algebris believes European rescue is imminent while Bruce Richards at Marathon sees a long road ahead – no one spoke of massive hedge fund redemptions or headlines ruining their year. Why? Because these are the big boys – managers who have proven to the market and investors they know what they are doing. Many commented that the hedge funds with daily PNL restraints will suffer most in this market.
While the volatility will continue to make it tough for smaller and emerging managers, this was no surprise to Bruce Richards (Marathon Asset Mgmt). He looks at smaller funds like any business venture and suspects the roughly 7,000 funds will dwindle down to just 5,000 in 2013.
And, for those who do make it over the next few years, Governor Malloy (D-CT) welcomes you, and your money, to cross the border. He makes the case that Wall Street would do well following in the path of SAC, Tudor and Silverpoint, all of whom set up shop in Stamford. And if you do move, make sure to buy a lottery ticket.
Stephanie Ruhle is a correspondent for Bloomberg Television and emcee of the event