Hedge fund leverage
Investors Intelligence: When the Chickens Come Home to Roost
The average hedge fund uses leverage, to the tune of about 1.4 times (see chart 6). This is down significantly from a year ago, but it still means that hedge funds need to liquidate investments of at least $500-550 billion in order to meet current redemption requests. And the real number is probably higher because some of the worst performing strategies this year are the ones using the most leverage. The real number is therefore more likely $600-800 billion.
Huge downward pressure for some time to come.
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