00:00Bloomberg's Hema Parmar covers hedge funds for us and was behind this story.
00:03Hema, I mean, this is probably not great news, right?
00:06Because isn't this the whole point of a hedge fund, that when markets are freaking out,
00:09you return something that's uncorrelated?
00:11Yes.
00:12You're seeing some numbers that are down 4% for the month, down 8% for the month.
00:16Some funds are about flat, which is a good year, a good month,
00:19and given the kind of environment we've seen,
00:21hedge funds should protect in a down month and in a down year.
00:25I would think they would argue that given how stocks and bonds and other,
00:30wherever your money might be elsewhere, compared to that, they have lost less.
00:35But again, it's manager selection, right?
00:37So when it comes to specific firms, how are they doing?
00:40And when we look at, let's take, for example, Exodus Point, down 4.5% for the month,
00:46down 2% for the year, Baliasne down 4% for the month.
00:49These are pretty sizable losses for multi-strategy funds.
00:53They typically, we expect them to be up at least a percent a year.
00:58A percent a month, excuse me.
00:59And they want to be not just uncorrelated with the broader market,
01:03but with each other as well.
01:04Are they all in the same trades?
01:06It depends on the strategy.
01:08You see sometimes some billionaires have voiced concerns
01:11over all being in the same stocks on the equity side
01:14and that potentially causing a spiral and a deleveraging event.
01:17Yeah, because if they do poorly, they get cut, right?
01:20So the ones who are doing well, everybody probably looks at that strategy
01:24and says, I don't want to get cut.
01:26Oh, like in the pod shop kind of thing.
01:27All the money gets funneled to the winners.
01:29Are they all pod shops?
01:30Well, the multi-stracts are typically the pod shop names.
01:33And you have multiple teams of traders who are given money
01:36and they can invest in silos separate from each other.
01:40They're supposed to make the firm less correlated
01:42because everyone's doing their own thing without influencing from one another.
01:45But we are seeing some dispersion within the pod shops, right?
01:49Millennium down just 1% for the month.
01:52Bali down 4% for the month.
01:55Walleye down about 1.3%.
01:57So you are seeing even within this group of multi-strategy funds,
02:00not everyone's the same.
02:02And also I should note, like Exodus Point is a lot more fixed income
02:05than the other guys.
02:06So you are seeing even within this group of multi-strategy funds.
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