Its about some shark-like attacks on quant funds by other funds. Here is an excerpt :
Among other major New York-based managers, the $29 billion multi-strategy shop D.E. Shaw & Co. is down as much as 20% in certain portfolios while Tykhe Capital LLC, founded by former D.E. Shaw employees, may have lost 27% year-to-date.
The losses have been exacerbated by investor redemptions that forced fire sales of fund holdings in panic-stricken, frozen markets. According to Merrill Lynch economist Richard Bernstein, "Some equity hedge funds and quantitative long/short equity funds are now liquidating positions at decidedly unfavorable terms."
In a research note explaining the losses, Mr. Bernstein suggested that this year was the most difficult period in the past 18 years for long/short equity managers to out-perform the market and that therefore they were tracking the market and levering to enhance returns. Others have also pointed out that there was a high and rising correlation between hedge funds gains and the equity market. Many hedge funds followed stock prices up and, more recently, down Previous HedgeWorld Story.
One manager who might profit from the situation is Steve Cohen of SAC Capital. His team is said to have taken the unusual step of running algorithms in reverse in order to profit from the confusion. Mr. Cohen and other SAC executives own a large chunk of the capital they trade, while their outside investors have agreed to long lock-ups. Hence SAC is less threatened by redemption demands and forced sales than many funds.
