Hedge Funds Not Knowing What to Do with Money?

May and June have been brutal for money managers. The volatility and conflicting economic signals made it very hard to stay the course or change the course. On hindsight, it would have been great to be 100% in cash since early May when S&P was at 1200. It's probably not a very good idea to raise cash after the 10% correction. But that appears to be what some of the big hedge funds have done, which has probably contributed to the market volatility and deepened the correction.

Barton Biggs, whose purchase of stocks in March 2009 gave Traxis Partners LLC a 38 percent gain last year (so?), said last week he sold about half his stock investments because of concern governments around the world are curtailing stimulus measures too soon.


“I’m not wildly bearish, but I don’t want to have a lot of risk at this point,” Biggs, who manages $1.4 billion, said in a telephone interview. “I’m not putting my money into anything. I’m raising cash.”


At the end of May, this same Big manager was voicing his opinion that the stock market was set to "pop" in days (yes, in no uncertain terms, "in a couple of days."). Apparently, he has been frustrated by June's continuing declines. But his earlier bullish call was a frustrating call at best. Did he actually know something or was he just wishing for something?

For more comments, see this Bloomberg article.