Hedge Fund Impact

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Interesting. I've been thinking that the backstory to the explosion of subprime lending since 2003 had a lot to do with excessive capital taking higher risks in search of higher returns. The dot com crash in 2000, Enron and similar scandals in 2001-2002 and Sarbanes Oxley reforms in 2002 killed returns in stocks. That capital had to seek returns elsewhere, and this led to the explosion of hedge funds, private equity funds and the like. It's not surprising that a lot of this money found its way into the mortgage market. The implication for mortgages is that once these funds have been burned, they will stay away from the mortgage business just as they have stayed away from public stocks since the dot com crash. In other words, all that capital is gone, and its not coming back to residential mortgages.
 
I agree. I think over the next several qtrs it is going to be interesting to see what funds go ka-put and what ones don't. If I was an investor and my funds where down 30% this yr I would strongly consider moving them out of his control.
 
most hedge funds have lockups. a one yr lockup is pretty standard. in addition, you typically need to give notice in writing 30 or 60 days if you intend to redeem any of your money. so for investors in funds that are in trouble -- ouch!
 
I think in the hedge fund talked about here you could remove your money at the end of in qtr as long as you give a qtrs worth of notice.
 
<em>I think in the hedge fund talked about here you could remove your money at the end of in qtr as long as you give a qtrs worth of notice.


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That's normal standard operating procedure at most hedge funds. Typically it's not a quarterly basis, most only have 2 opening windows a year to withdraw money and NEW money/aka new Investors normally have a lockup period to adhere to, normally 1 yr.<em></em>
 
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