Readings: Hedge funds - No way out, Global trading, DLF buyback
- Wall Street Journal: When Hedge Funds Bar the Door
Following bad bets and big losses, A.R. Thane Ritchie has barred investors from leaving his fund, which is currently valued at $2 billion, down from almost $4 billion in 2005.
The tussles illustrate the “roach motel” nature of hedge funds, where once investors get in, they can’t always get out. Amid a continuing credit crunch, a growing number of hedge funds are restricting people from withdrawing their money for a period of time. Funds say they have no choice: To return the money, they’d have to sell off assets, leading to deeper losses for all their investors. But critics say locking down investors’ stakes chiefly benefits fund managers, who get to keep earning hefty management fees.
The proposal allows overseas broker/dealers to solicit business directly from U.S. clients — individuals as well as institutions — with $25 million or more to invest. That’s down from $100 million under the current rule.
Any broker/dealer will be able to join the fray as long as it’s regulated by a securities administrator in its home country. The broker/dealers won’t have to register with the SEC and won’t be regulated, for net capital and other requirements, under American rules. They will be able to pitch any debt, equity and derivative security listed on their home exchanges, even though those securities aren’t registered with the SEC.
Shares of DLF Ltd, India’s largest listed real estate developer, surged more than 15% on Wednesday after the company said it will consider at a board meeting next week a buy-back of its stock, among the worst performers on Indian bourses this year.
The stock closed at Rs 423.95 each, after having dipped to a lifetime low of Rs 350.30 just before the announcement. DLF shares rose as much 19% to Rs 439.90 before falling back. It is still valued at less than one-third of its lifetime high of Rs 1,225 on 15 January, and less than the Rs 525 at which the company priced the shares when it went public last year.
The funny part is that our intraday trading system picked up DLF yesterday, and we rode it 15% to 425. Obviously, we had no idea of the supposed reason driving the stock. Note to self - price reflects all! 
Related Posts:
