hedge funds ... how the 'rich' get richer
... by best guesses, these virtually unregulated and unmonitored hedge funds control something like 1.5 trillion dollars worth of 'hot money'. Whit that sort of money at their disposal, they can make or break not only a company but a country, if they so choose !
Note that if you want to play as an investor in this league, the minimum buy-in is $1 million dollars.
Re: hedge funds ... how the 'rich' get richer
and here's a fresh tidbit illustrating how these hedge funds play the game ...
"Fairfax sues hedge funds, alleges manipulation
Insurer seeks up to $5B in damages from SAC, Copper River, Lone Pine, others
By Alistair Barr, MarketWatch
Last Update: 7:40 PM ET Jul 26, 2006
SAN FRANCISCO (MarketWatch) - Fairfax Financial Holdings said late Wednesday that it sued a group of hedge fund firms, including SAC Capital, Lone Pine, Copper River and Third Point, alleging they were involved in a scheme to manipulate the insurer's shares.
The complaint, filed on Wednesday in Superior Court in Morris County, N.J., seeks damages of up to $5 billion and alleges violations of various state laws, including the New Jersey Racketeer Influenced and Corrupt Organizations Act (RICO), Fairfax said in a statement.
Representatives at Copper River and Third Point didn't immediately return calls seeking comment on Wednesday afternoon. Representatives at SAC and Lone Pine weren't immediately available to comment.
Fairfax becomes the latest company to sue hedge funds that make some or all of their money betting against companies using short selling. The strategy involves selling borrowed shares and then -- if all goes according to plan -- buying them back at a lower price and returning them to the lender. What's left over is profit. "
keep in mind that the hedge funds in question probably earned $50 billion in profits on their alleged naked shorting activities, such that if this lawsuit actually is successful a $5 billion dollar fine will be just one more cost of doing business !
Re: hedge funds ... how the 'rich' get richer
interesting article.
FYI Melonie, the hedge fund world has changed. A few years back, you needed either $100,000 or $250,000 to invest in a hedge fund - that being the amount you invested.
Then there came an explosion in the number of funds and that has all changed. I have a couple of firms that call me every few months hoping that I'll put clients their way. These guys are looking for $10,000 as a minimum investment. It's my opinion that these particular funds are crooked and I wouldn't suggest them to anyone, but it is easy enough to get into the hedge fund game now for c. US$20,000 or less.
That opens them up to a whole new range of investors who are largely unable to understand what they are buying and the scale of potential risks involved.
Re: hedge funds ... how the 'rich' get richer
Melonie, woman, you have ESP. I was talking to someone about this subject and I was going to ask you your take on the situation (I forgot until I saw the thread name). Thanks for the link!!
Re: hedge funds ... how the 'rich' get richer
Quote:
That opens them up to a whole new range of investors who are largely unable to understand what they are buying and the scale of potential risks involved.
While the fact that investors may not understand what they are buying and what they are risking, the USA does have a very inconvenient extra wrinkle. There is such a thing in the USA as 'qualified investor' status being necessary in order to enter into certain types of investments i.e. reputable well established hedge funds. Here is PacStar's criteria, which is significantly above the million dollar mark ...
The 'qualified investor' law does not state that the minimum buy-in must be any particular amount ... only that the potential buyer have sufficient financial resources to be 'qualified' to buy into this type of investment in the first place.