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Opalesque Industry Update – Hugh Hendry, the outspoken CIO of London-based hedge fund house Eclectica Asset Management, last week published a letter in Telegraph.co.uk entitled :“We hedge fund managers are on your side” (here), where he explained why the public should not hate hedge funds.
His opening statement summed it all: “You don't know me; we've never met. But I fear you are being encouraged to dislike me. Let me explain: I'm a speculator. I manage a hedge fund. Apparently I profit from your misery. Accordingly, our political leaders are keen to see the back of me.”
He dismissed what he described as the “vastly overstated size and significance of the hedge fund industry,” which controls just 2.5% of the total global financial assets under management. Managers of pension funds, unit trust and banks have the ability to move prices and markets, not hedge funds. But these sectors are “on much better terms with our political masters,” he said.
Hendry, who has 18 years of industry experience and who once managed $1bn in European equity portfolios at Odey Asset Management, added that hedge funds do not have the monopoly on making money. “I am not guaranteed success; far from it,” he said.
He explained that short selling actually helps the public “to discover and identify inadequacies of the poor businesses… During hard times, such businesses typically go bust, allowing us to make an investment profit by betting on that eventuality, and ensuring that successful and prudently managed businesses prosper,” he said.
Hendry’s comments are interesting, said Businessinsider.com, especially since he is known not to care about what people think of him or his business.
Demonization of hedge funds returns
John Carney, in his program “The Call,” aired over CNBC, explained last week why it is ridiculous to demonize hedge funds. Carney said that way back before the Great Collapse on Wall Street, hedge funds were the official demons of finance. The lightly regulated, independent alternative investment managers were said to pose systemic risk because they were operating outside the rules that wrapped more traditional investors and funds.
But the global economic collapse in 2008 and early 2009 saw the most regulated pa...
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