wpe50.jpg (1913 bytes)     TigerSoft News Service               10/19/2008                 www.tigersoft.com      

                    The Rise and Fall of Commodity Hedge Funds.

Their Drop's Devastating Effect on The Stock Market of 2008.

                               Boom and Bust, Pump and Dump, Binge and Purge

                               Oil, Silver, Gold, Food Commodities - It's All The Same.

    Systemic Failures: The "Free Market" Is Too Expensive.
                               Dangerous Leveraging by 200:1
                              Bonuses Give Managers Every Incentive To Speculate Wildly.
                              Huge Commodity Positions Dwarf Normal Trading.
                              Vicious Circle of Rumors, 'Front-Running', 'Rogue Shorting', Margin Calls & Redemptions.
                              Confidence Will Not Come Back Soon.
                              The Lessons of 1998 Were Lost on Bush and Paulson

                               De-Regulation Made The Crash of 2008 Much Worse.    
                                                    by William Schmidt, Ph.D.  


Before we consider the reasons for this year's collapse of both the stock and the commodities'
                          market,   look at the graphs just below showing this year's steep rise and even steeper fall of
                          CORN, WHEAT, NATURAL GAS, CRUDE and SILVER, as starters.  The TigerSoft
                          internal strength indicators are explained more on

                          The CEO of JPMorgan said on October 17th that a third of all Hedge Funds may fail.

                          Suffice it to say initially, the collapse of hedge funds in 2008 because of excessive
                          leverage and lack of regulatory control was exactly forewarned by the collapse in 1998 of the
                          Long-Term Capital Management in 1998, when that firm used a mere 100:1 leverage
                          with $2 billion dollars.  That caused a 20% from in the US stock markets in 1998.
                          By comparison, hedge fund leverages now approach 200:1, thanks to US Treasury
                          Secretary Paulson.  The sums of money run by commodity Hedge Funds alone are
                          now estimated at 55 billion.  All hedge funds now manage at least 1.9 TRILLION dollars.
We should be very scared!  Paulson's non-verbal communication confirms that.

                          Use TigerSoft's Inventions: Opening and Closing Power, and Our Accumulation Index.
        ------------------------------------------------------ Corn's Collapse --------------------------------------------------------wpe12F.jpg (64470 bytes)

          ----------------------------------------------- Wheat's Collapse --------------------------------------------------------
wpe130.jpg (70323 bytes)

        ----------------------------------------------- Natural Gas's Collapse --------------------------------------------------------
wpe13A.jpg (73522 bytes)
      ----------------------------------------------- Crude Oil's Collapse --------------------------------------------------------
wpe12C.jpg (79565 bytes)
wpe12D.jpg (17833 bytes)

          ----------------------------------------------- Silver's Collapse --------------------------------------------------------

wpe115.jpg (77460 bytes)
-------------------------------------------- Crude Oil's Collapse --------------------------------------------------------                                                                                     
wpe4F.jpg (33251 bytes)  

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The Rise and Fall of Commodities' Hedge Funds

                                          Pump and Dump

         Oil, Silver, Gold, Food Commodities - It's All The Same.

                                                            THEY MUST SELL EVERYTHING.


by William Schmidt, Ph.D.  
                                 Author of TigerSoft and Peerless Stock Market Timing: 1915-2008  and Nightly Hotline

                          Wall Street Is Not Trusted. But Who Has Confidence in Washington?

It is hard to imagine a set of policies that would more effectively
                       destroy long-term confidence in financial markets than the
                       one Bush, anti-regulation ideologues and Wall Street hipsters have
                       foisted upon the American people since 2000.   Speculative excess,
                       unbridled greed, unchecked de-regulation, rampant cronyism and
                       greed lay behind the Crash of 1929.  We are headed there again,
                       unless an abrupt U-Turn is made by the nation's policy makers.  
                       The administration's obsessive devotion to the principles of laissez-faire
                       has now been matched by massive bailouts, totaling a trillion dollars,
                       for Wall Street bankersNo wonder wealth is more concentrated
                       than at any time since 1928. 

                                  Will an Obama or a McCain Administration bring a U-Turn?  Can
                       A depression be avoided?   Despite all their talk about more regulation,
                       the bailouts for Wall Street have the approval of Democrats Obama,
                       Nancy Pelosi and Harry Reid and Robert Rubin of CitiGroup.
                       An ugly truth is emerging: a class war against Main Street,
                       the middle class and the working class is now being waged by both
                       political parties' elites.  With real wages declining for workers for
                       30 years, credit supremely tight, and the costs of health insurance and
                       education rocketing up, how can a long recession that amounts to an
                       economic depression be avoided?  

                                wpeF7.jpg (19101 bytes)

                               Bush has robbed the US Treasury dry.  He has given billions,
                       even trillions, to the Wall Street bankers, private military contractors
                       and oil company executives who put him in office. 
Incredibly, one
                       twelth of the nation's entire annual GDP (all the nation's goods and services),
                       has now been ear-marked to save American bankers from the
                       consequences of their own mistakes and greed.  Small wonder
                       confidence has been so badly shaken. 

                               For his final insult, Bush has now turned the job of fixing the economy
                       to the very Goldman Sachs thief (Treasury Secretary Paulson - with
                       a personal net worth of $700 million) who lobbied from 2000 to 2004 for 
                       banking and financial markets' de-regulation and authority for hedge funds
                       to use much greater leverage.  This is EXACTLY what caused the very mess
                       we are now in.  How can confidence be restored by Paulson? 

                                Hedge funds are not regulated.  Hedge fund managers are allowed
                       to take huge chunks of hedge fund profits, but never be liable in any
                       way for the losses they might create for their clients.   In this situation,
                       of course, they took dangerous risks and used too much leverage.  

                               But that's just part of the story.  Commercial banks were allowed
                       to sell home mortgages to others once they were allowed to become
                       investment bankers in 2000.   They hyped, obfuscated, packaged and
                       sold the home mortgages they made and used the proceeds to permit
                       still more unsafe loans.  Lending standards became a joke.  They were
                       nearly unimportant.   Someone else could always be counted on to
                       buy the neatly packaged mortgages. 

                                      Another element in the picture was the freedom of hedge funds to
                       sell short without bothering to even borrow stock, do so on down-ticks
                       and to not have to report their positions, as they would have been obliged
                       to if they were buying shares.  In this unregulated environment, they
                       were seldom accountable.  They could mercilessly try to drive a
                       company's stock down, down, down.  They could spread false rumors
                       about the company they were shorting with very little chance that they
                       would be caught and prosecuted.  The SEC still refused to ban short
                       sales on down-ticks.  All in the name of a "free market".  The truth
                       is probably much more sinister.  SEC Chairman Cox has probably
                       received some special considerations from the hedge funds he refuses
                       to limit.  This we cannot know.  The SEC does not investigate itself..

                                       In all these way,  the anti-regulation zealots have created an
                       investment climate that could not have been better designed to
                       create a financial disaster, had that been their intention all along. 

                                        Paulson has long been dead-set against trying to cool the bubble in
                       commodities, just as Greenspan had steadily opposed trying to
                       contain the housing bubble.   "Wall Street profits should not be
                       contained."   Like Greenspan, an earlier backer of the bank deregulation,
                       Paulson consistently maintained that commodity and stock prices
                       should be left to themselves.  "There was no need for the government
                       to intervene in financial markets", he stated time after time.  The
                       economic outlook was rosy as ever. There would be no recession. 
                       As a result, he did not lift a finger to prevent the bankruptcy of
                       Lehman Brothers in September 2008.  When Freddie Mac and
                       Fannie Mae failed, the US government nationalized them, because
                       these two entities owned $5.5 trillion in home mortgages and
                       the US Government has long implicitly guaranteed them.   Paulson
                       changed his laissez-faire approach with the collapse of AIG.  This
                       insurance giant was closely linked to hedge funds.  If they started
                       selling their assets, even more hedge funds might fail.  So, he stated
                       "AIG was too big to fail" and the US bought an 80% interest in it.

                                The financial debacle among hedge funds we are seeing now
                         has had far-reaching ripple effects.   While hedge funds were set
                         up exclusively for very wealthy and experienced investors, it is
                         average investors who typically are now suffering the bulk of the
                         financial distress caused by the failures of so many hedge funds.  

                                 Financial stocks and commodities' stocks make up a heavy
                        percentage of the SP-500 and DJI-30, which so many mutual funds and
                        ETFs have endeavored to match.  For years, small investors have been
                        told to simply "buy and hold" these investments.  "Never sell until, you
                        retire." "The market cannot be timed".  This they were told by the
                        "experts",   who it turns out were only the unthinking salesmen of the
                       very firms who pushed for de-regulation and the prime beneficiaries
                       of the unregulated boom.  Conveniently, they swept out of sight the
                       rocky, roller-coaster years, 1929-1941 and 1966-1982.  Small
                       investors were no to quickly buy and sell, like the hedge funds
                       did.   What hypocrisy!   It seems that each generation forgets the lesson
                       that markets are highly cyclical.  

                                                           The Dangers of Excessive Leverage

                                Billion dollar hedge funds have used their leverage to buy
                      of billion dollars' worth of commodities and securities.  Even so, the prices of
                      commodities like Wheat, Corn, Crude Oil, Natural Gas and Silver collapsed
                      in the Summer of 2008, even as the hedge fund chiefs doubled down their bets,
                      a tactic they had often used successfully in the past. 

                                                            The Dynamics of "De-Leveraging"

                               A wider financial disaster was now hiding in the shadows.  When
                      the hedge funds' efforts to prop up prices on the decline failed in July
                      and August, it was mostly because prices were just too high and
                      beyond the reach of world consumers.  When they double-downed in
                      September,   they were blind-sided by the take-overs of Freddie Mac
                      and Fannie Mae, the bankruptcies of Lehman Brothers and Washington
                      Mutual, the government takeover of bankrupt AIG and the near-bankruptcies
                      of Merrill Lynch and Morgan Stanley. 
                              When there was no rebound, these hedge funds started to panic. 
                      Prices fell disastrously.  Because of the over-leveraging, margin and
                      new collateral calls came quickly.  Word leaked out that big funds were
                      selling big positions under duress.   The polite term was "de-leveraging". 
                      Rumors spread and stock brokers front-ran the hedge funds' Sell orders.
                      Other "rogue" hedge funds smelled blood.  They used their extra leverage
                       to sell short the very stocks and commodities that the troubled funds
                       had to unload.  And now they could sell on down-ticks, thanks to the SEC
                       and Chairman Cox.  As prices dropped, good stocks had to be sold
                       along with the bad.  Nothing could escape.  Other over-leveraged hedge
                       funds were caught up by the same dynamics.  As losses mounted,
                             articles started appearing. This made investors want out.  Redemptions
                        rose.   Expectations of rising redemptions rose.  More stocks had to be sold. 
                        Seeing prices fall much more quickly than normally, regular buyers
                        withdrew their buy orders and chose to wait for the decline to stop.  This
                        just made matters worse.  Such were and are the dynamics of the 2008
                        financial panic. 

Collapsing Hedge Funds and Falling Commodity Prices
                                                       Create Short Term Weakness in Gold

Many hedge fund managers are under severe pressure to liquidate positions as
                                          banks request more collateral to back funds' borrowing. Many hedge funds, including
                                          some of the largest, have gone to the wall in recent months and Credit Suisse estimates
                                          that 30% of roughly 8,000 hedge funds will close over the next few years. Wealthy
                                          investors are turning their backs on high risk hedge funds as there is a reevaluation
                                          of the sensibility of massive leverage and banks are no longer willing to fund the hedge
                                          funds' speculations.
" 10/17/2008 Source.

                                         George Soros wrote in January 2008 that the "
era of superleverage" had
                              ended.   Ihe was six months' premature.  He was right in saying there has been a
systemic failure" and there was then no financial sherif on watch

                               NYTimes - 1/23/2008 comment to article on Soros:
The derviatives market, incluing the credit swap market, is over
                                      $750 Trillion (that’s with a “T”). Global GDP is estimated at $50 Trillion.
                                      It doesn’t take a “systemic failure” to cause a nightmare. A failure of less
                                     than 7% of derivatives contracts wipes out global GDP. The fact that derivatives
                                     are the most highly leveraged asset class on the planet (up to 100 to 1) means
                                     that the 7% failure could be brought about by only a fraction of real, underlying
                                     asset decline.
"   Mark S

                                                -   1/23/2008 comment
We need new words in the English language to express the unbelievable
                                     corruption of the US government in its allowance of the banking and Wall
                                     Street crowd to take this country to the edge of financial disaster due to greed.
                                     Now how do we justify the government bailing out these greedmeisters with
                                     public tax money? Bush will go down in history as the most corrupt and
                                     incompetent president ever.
A Systemic Failure
                                In the financial world, you would be hard pressed to design a
                       system better able to produce an extreme cycle of binge and purge,
                       boom and bust,  pump and dump.   This was the system that the Bush
                       Administration has set up after 2000, all in the name of "free markets"
                       and "private enterprise".  In light of the bailouts, his hypocrisy would
                       be humorous, if it were not so tragic. He has destroyed much more
                       enterprise and labor than he ever created.  We are far less safe.
                       And his markets are anything but "free". 

                                            It's easy to see in retrospect what produced the financial panic
                       of 2008.  But, for me, it was the TigerSoft charts showing heavy insider
                       selling that was the first alert.  When you see such very red "Distribution"
                       and a pattern of sell-offs after a string of strong openings, you should
                       be put on high alert.  

                            I don't pretend to know more than I really do.  But elsewhere
                       I have warned frequently about the housing bubble and how banks
                       sold bundled mortgages that they knew, but did not care, were not
                       soundly financed.

"Housing Bubble Trouble"
                                                      6/5/2006 "Home Building Stocks Are Particularly Weak"
                                        3/10/2007 "Insider Selling in Mortgage Lenders"
                                       5/14/2007   "Is Washington Mutual the Next Bear Stearns or Northern Rock?
                                                    6/14/2007  "Absolutely, The 1929 Crash Could Happen Again."
    "Far from Over, The Credit Crunch Is Worsening:"
                                       7/16/2008  "Investing in A Perfect Storm

                             Here I want to talk about billion dollar hedge funds using
leverage.  Their callous, unbridled and selfish greed is to blame.   They
                       created the commodities' boom, apparently not caring one iota about:

                       (1) the deleterious effects on poor people around the world that
                       were starving for rice, wheat and corn;
                                      (See -
4/19/2008 - TigerSoft News Service - Hoarding, Food Riots, Starvation ...
                                                 2/26/2008 - Food Commodities Streak Upwards.
                                                2/22/2008 - Food Commodities Are Going Hyperbolic

                       (2) that they were making consumers pay sky high gas prices,
                       which were sure to deprive consumers of so much buying power
                       that a recession would became a foregone conclusion;
                                              4/20/2008 -
"Yes", People Are Bitter. 

                       (3) that they would create an artificial bubble in commodities, not
                       unlike the Hunt Brothers' effort in 1979 and 1980 to corner the
                       market in silver, and this ould only end very badly and wipe out
                       the savings of millions, in its aftermath.

                               From 1979 to January 1980, the Hunt Brothers from Texas tried to
                       buy up all silver futures' contracts and corner the market.  They would
                       have succeeded.  But the commodities' exchange changed the rules
                       on them and limited the numbers of contracts that could be held
                       individually.    The result was that they had to sell.  Silver collapsed
                       75% in ten weeks, from $48/ounce in January to $11/ounce. Margin
                       calls drove prices, down, down, down after prices broke below
                       the neckline in the head and shoulders at 3100. 


                            -------------------------------------------- Silver 1980 ---------------------------------------------------
wpeF7.jpg (43458 bytes)

                         A generation later, in 2008, silver like many other commodities is doing
                the same thing, going down, down, down.  Will it have to drop 75%
                and fall below $5/ounce, as it did in 1980?  In many ways, the commodities'
                bubble of 2008 is much bigger than in 1980.

                                                          Tiger Crude Oil: Boom and Bust

                           Crude Oil broke its uptrtendline and its blue 50-day ma. while still above 130,
                  Red and Blue Sell signals flashed from TigerSoft.  TigerSoft's Accumulation Index
                  was in negative territory.  Our Opening and Closing Power Lines were both falling.
                  This is the bearish of combinations.  The black 200-day ma is violated straight away.
                   Prices do not get back above it and are hit with renewed selling.  Technical conditions
                   do not get better.  A 12-month low is made.

wpe12C.jpg (79565 bytes)
wpe12D.jpg (17833 bytes)


                                      The collapse of one big firm endangers others.  First, it was Bear Stearns,
                               then Morgan Stanley and Washington Mutual.  Then Fannie Mae, Freddie
                               Mac and AIG had to be bought out by the US Government.  It is not just
                               a matter of shattered confidence.  It is also that these firms' holdings had to
                               be dumped on the market, making market valuations drop sharply for the
                               securities that they are selling.  And that produces more margin calls and
                               under-capitalization notices by the FDIC.  This produced yet another round
                               of selling.  And so  the cycle was self-perpetuating.   

                                     Seldom does only a single commodity crash.  Others commodities
                              soon also drop, out of fear and out of necessity.  Hedge funds and commodity
                              funds get margin calls and they must sell out their other positions.  This puts
                              the same pressure on more and more firms investing in commodities.  Below
                              you can see  that 10 of the 19 commodities topped out in July 2008.

                              Commodity        Fall 2007 Low                    Earlier 2008 Peak           Now - 10/17/2008
                              Corn (C)                   345.                             754.75 (6/27/2008)                403.
                              Coffee (CC1600)    118.90                         164.60 (2/29/2008)                115.60
                              Crude Oil                   80                              145.10
(7/14/2008)                 71.85
                              Corn                         2000                            3360
(7/1/2008)                   2122.
                              Copper                     287.30                          407.75
(7/2/2008)                 219.45
                              Gold                           72                                99.22                                      77.21
                              Heating Oil             220                               407.66
(7/11/2008)              213.29
    exception          Lead                          80                                98.00 (2/12/2008) hit 62.25   87.48
                              Live Cattle                94                                103.33
(7/1/2008)                 91.05
                              Live Hogs                  52                                78.60
(7/25/2008)                56.30
                              Lumber                     225                               270.10   (8/20/2008)           199.     
                              Natural Gas                 7                               13.39
(7/2/2008)                    6.79   example
                              Oats                          261                               455
(7/3/2008)                  282
    exception          Orange Juice           130                               128.85
(7/1/2008)                83.55  
                              Platinum                    13800                           2276.`10 (3/5/2008)         872.50
                              Silver                        1325                              2068.50   (3/5/2008)         931
                              Soybeans                   920                               1658
(7/3/2008)              894.
                              Sugar                         9.70                              14.13 (8/7/2008)                11.58
                              Wheat                        752.50                          1257 (3/12/2008)            566.25         

                                      Tiger Index of 19 Commodities and Metals 
               wpe12A.jpg (51078 bytes)


                                      FREEDOM FOR THE PIKE IS DEATH FOR THE MINNOWS     

By creating stock market bubbles, highly unequal and unrestrained power
                       threatens the security, liberty and livelihood of smaller investors and all American
                       workers.   Taliban-like, hypocritical devotion to a free market is a dagger pointed
                       at the heart of American democracy.   All booms seen to foster an unsavory
                       assortment of hipsters, promoters, parasites, swindlers and cheaters.  They
                       just be regulated, or the results are tragic for millions that don't even own any

                                   WHAT's A HEDGE FUND?

                             Hedge funds are private and unregulated pools of capital that invest across all markets.  Hedge funds
                             often do not hedge.  They are not more conservative as the word "hedging" might suggest.  Most often, they
                      use complex, aggressive and risky strategies, in seeking higher returns for their wealthy backers. 
                      The most important commonality among hedge funds is how managers are compensated.   Typically
                      this involves management fees of 1-2% on assets and incentive fees of 20% of all profits.    This is in
                      striking contrast to more traditional investment managers, who do not receive a percentage of profits.
                      These compensation structures encourage greedy, risk-taking behavior that normally involves leverage
                      to generate sufficient returns to justify the enormous management and incentive fees.

                                 A HEDGE FUND NEARLY CRASHED THE MARKET IN 1998
                     US Federal Reserve Board chairman Alan Greenspan acknowledged in 1998 that the collapse of the
                      hedge fund Long-Term Capital Management last month could have brought a huge crisis on
                      Wall Street and global financial markets.
  As it was the DJI merely fell 20% in 3 months.
                      Testifying before the US House of Representatives Banking Committee, Greenspan said the
                      $3.6 billion bailout organized by the Federal Reserve Bank of New York was necessary because
                      of the fragility of international markets.
:"Had the failure of LTCM triggered the seizing up of
                      markets, substantial damage could have been inflicted on many market participants, including
                      some not directly involved with the firm, and could have potentially impaired the economies of
                      many nations, including our own.
"   Greenspan warned that had LTCM been liquidated through
                      a "fire sale" of its assets this would have resulted in a "severe drying up of market liquidity"--in other
                      words, a credit crunch that could have rapidly spread, setting the stage for further collapses.

                                  WHAT HAPPENS WHEN MARKETS BECOME ABNORMAL?

                       Greenspan's testimony pointed to the the strong possibility of future financial collapses. He said
                       LTCM had based its transactions on mathematical models that sought to profit from differences
                       between the current price of financial assets and their historical trend.  By investing vast amounts
                       of capital, borrowed from the banks and other financial institutions, the fund was able to make
                       substantial profits just so long as "normal" conditions applied and the price of financial assets
                       returned to levels predicted by their historical models.  But markets change

                       In the case of LTCM, it assumed that short-term interest rates would tend to rise in the market.
                       However, in the aftermath of the Russian ruble collapse and default in August 1998, there was
                       a rush of capital into US Treasury bonds--the so-called "flight to quality"--that pushed up prices
                       and sent short-term interest rates to their lowest levels in almost three decades. As a consequence
                       LTCM suffered what Greenspan termed "stunning losses," and was forced to liquidate the majority
                       of its capital base.

                                HEDGE FUND PROLIFERATION AND 100:1 LEVERAGE IN THE 1990s

                       Hedge finds using predictive models based on normal market behavior have proliferated.  A New
                       York Times estimated that their number has doubled from 1990 to the end of 1997, and then
                       stood at 4500, while investors' capital in them has increased six-fold to $300 billion. As large as
                       these sums are, they are only partially indicative of the potential impact of hedge funds on the
                       global financial system. In the case of LTCM, for example, the $2.2 billion supplied by investors
                       was used as collateral to buy $125 billion in securities that were then used, in turn, as collateral for
                       derivatives transactions worth $1.25 trillion. 

                      Commodity hedge funds now oversee about $55 billion in 2008, up from $30 billion in 2007 and
                       $14 billion in 2006, according to Cole Partners Asset Management in Chicago, an investor in these
California's public employees' pension fund, the world's largest, made its first investment of $1.1 billion
                        into oil and other commodities early 2007.   
Other pension funds rushed to get in on the action as
                        the prices of oil, precious metals, corn, uranium and other vital goods rose in early 2008
                        to   record highs.    Montgomery County officials shifted 5 percent of their $2.7 billion pension
                        fund away from stocks and into commodities in 2008. 

                        Commodity markets are not geared to have big funds sitting on long term positions of thousands
                        of commodity contracts for long periods for foods and so on. http://www.brownfieldnetwork.com/

                                 EXAMPLES OF FAILED COMMODITY HEDGE FUNDS

                        Ospraie was the world's biggest commodity-focused hedge fund, with
                    $7 billion under management. It failed in early September. 
Ospraie sent a letter to
                         investors saying it was closing its nearly $3 billion flagship fund after a 27% loss in August
                         left it down over 37% for 2008.   According to SEC filings, Ospraie had large positions in
                         Alcoa, Arch Coal, NRG Energy, and XTO Energy, which suffered disproportionate losses
                         this week, after the fund's problems were publicized   Osparie's collapse settled the fate
                         of Lehman Brothers, which owned 20% of it. 
                        What were the main reasons for the failure by a huge hedge fund, like Ospraie that had $7 billion under
                         management?    When commodities dropped they doubled their bet, hoping for a recovery as before. 
                         But it didn't.  They weren't like individual investors.  They were using leverage of 150-200 to 1.  That
                         means they were committing $450-$600 billion.  They suffered from   "front-running" by their agents,
                         brokers putting in their sell orders. .For example, oil's steep drop on Aug. 22 may have been related
                         to Ospraie's efforts to raise capital ahead of Tuesday's letter, where the fund said it plans to disperse
                         40% of its assets to investors by Sept. 30.   When prices kept falling all that leverage worked against
                         them very quickly. And they had to sell even faster. Other commodity hedge funds made a similar
                        mistake with the same bad result.  They, too, got margin calls because of the falling prices.  
                        In commodities,  speculators can buy silver or oil futures with only 7% down.   Sound familiar? 

                        Highland Capital Management LP plans to close its flagship Highland Crusader Fund and the
                        Highland Credit Strategies Fund after losses on high-yield, high-risk loans, and other types of debt.
                        Highland will end up with two funds in the next three years with more than $1.5 billion of assets.

                        Citadel Investment Group LLC, one of the world's largest hedge funds with about $18 billion
                        of assets, told Reuters that September 2008 was the worst month in its history.  Its main fund,
                        the $10-billion Kensington Global Strategies, is down approximately 22 percent for the year.

                       Rumors are circulating Atticus Capital is liquidating positions, although executives at the $13 billion
                       hedge fund deny that's the case, The WSJ reports.

                        $386 million Merchant Commodity Fund, run out of Singapore.

                      MotherRock, a $400 million fund run by the former president of the New York ercantile Exchange,
                      Robert Collins, said in August that it was closing.

                      Amaranth Advisors, which collapsed after it took a $6.5 billion loss on bad natural gas wagers.

                      Sentinel Hedge Fund imploded in August 2007.  A list of its creditors shows how wide the
                      ripple effect is.




             "Imploding" Hedge Funds:
               See - http://hf-implode.com/

54. Highland Capital Management [2]
53. Gordian Knot - Sigma Finance, Ltd. [1]
52. Modulus Europe (Powe Capital) [1]
51. Ospraie Fund [1]
50. Dalton Melchior Japan Fund [1]
49. Windmill Management (SageCrest funds) [2]
48. Turnberry Capital Management [1]
47. Absolute Capital Management [2]
46. Lydia Capital [1]
45. Endeavour Capital [1]
44. Old Lane Partners (Citigroup) [1]
43. Rumson Capital [1]
42. Russell Investments (Alternative Strategies Funds) [2]
41. Cornerstone Quantitative Investment Group [2]
40. GoldLink Capital [2]
39. North American Equity Opportunities (Goldman Sachs) [1]
38. Pentagon Capital Management [1]
37. Absolute Capital Group [3]
36. Drake Management - Global Opportunities [3]
35. ASAT Finance (Citigroup) [3]
34. MAT Finance (Citigroup) [3]
33. Blue River Asset Management [1]
32. Carlyle Capital Corporation [1]
31. Tequesta Mortgage Fund [1]
30. Focus Capital [1]
29. Peloton ABS Master Fund, Multi-Strategy Fund [2]
28. Falcon Strategies (Citigroup) [2]
27. CSO Partners (Citigroup) [1]
26. Sailfish Capital Partners [1]
25. Polar Capital - Lotus, Tech. Absolute Funds [2]
24. Standard Chartered - Whistlejacket SIV [1]
23. Deephaven Event Fund [1]
22. Rhinebridge Plc (IKB) [1]
21. Niederhoffer Matador Fund [1]
20. Cooper Hill Partners [3]
19. Pirate Capital (Activist Funds) [2]
18. Synapse High Grade ABS Fund [1]
17. Cheyne Finance LLC (Cheyne Capital Management) [1]
16. Geronimo Multi-Strategy, Sector Opportunity, and Option & Income [3]
15. Basis Capital Fund Management, Ltd. - Basis Yield Alpha [1]
14. Solent Capital Partners LLP, Mainsail II [1]
13. Sentinel Mangement Group [1]
12. Sachsen LB: Ormond Quay conduit fund [1]
11. Parvest Dynamic ABS, BNP Paribas ABS Euribor and BNP Paribas ABS Eonia (BNP Paribas) [3]
10. Union Investment Asset Management Holding AG [1]
9. Oddo: Cash Titrisation; Cash Arbitrages; and Court Terme Dynamique [3]
8. Sowood Capital Management [2]
7. Galena Street Fund [1]
6. United Capital Markets Holdings Inc.: Horizon Funds [4]
5. Caliber Global Investment [1]
4. Lake Shore Asset Management [1]
3. Ritchie Capital Management [2]
2. Bear Stearns High Grade Credit Funds [2]
1. Dillon Read Capital Management (UBS) [1]

Historical Implosions:

1. Amaranth Advisors [2006-09]
2. MotherRock [2006-08]
3. International Management Associates LLC [2006-02]
4. Wood River Capital Management [2005-10]
5. Bayou Group [2005-07-27]
6. GLT Venture Fund [2007-07]
7. KL Group [2005-03]
8. Eifuku Master Fund [2005-01]
9. John Hancock Business Services/Epic Investment Capital et al. [2003-11]
10. Lancer Management Group [2003-07]
11. Orca Funds [2002-09]
12. Integral Investment Management [2001]
13. Long-Term Captial Management (LTCM) [1998-12-31]
14. Askin Capital Management [1994]

Ailing/Watch List*:
35. Tontine Partners [1]
34. Gradient Capital Partners [1]
33. Wyser-Pratte Eurovalue [1]
32. Atticus Capital [2]
31. Ore Hill Partners [1]
30. SRM Global Master Fund [1]
29. Ritchie Capital Management [1]
28. Clinton Group Multi-Strategy Fund [1]
27. AQR Capital Management [3]
26. Polygon [1]
25. Plexus Partners [1]
24. Pardus Capital Management [1]
23. Tisbury Capital [1]
22. Platinum Grove Asset Mgmt. [1]
21. Global Alpha and Global Equity Opportunities(Goldman Sachs) [2]
20. Carrington Capital Management [1]
19. MKA Capital Advisors [1]
18. Alcentra European Credit [1]
17. Pursuit Capital Partners [1]
16. GPS Partners [1]
15. JWM Partners LLC - Relative Value Opportunity fund [1]
14. ING Diversified Yield, Regular Income [2]
13. GO Capital Global Opportunities Fund [1]
12. Ellington Capital Mgmt. (certain funds) [2]
11. Golden Key Ltd. [1]
10. Queen's Walk Investment, Ltd. (Cheyne Capital Management) [1]
9. John W. Henry & Co. [7]
8. Campbell & Co. [1]
7. Tykhe Capital, LLC [2]
6. Black Mesa fund [1]
5. Second Curve Capital (various funds) [4]
4. Axa IM [2]
3. Macquarie Fortress Investments Ltd. [1]
2. Frankfurt Trust [1]
1. Mariner Bridge [1]
"Imploded" funds: The "imploded" list contains hedge funds (or other unregulated and autonomous speculative investment funds) which have gone through some sort of permanent adverse change. This is a somewhat subjective call, and does not necessarily mean total shutdown or bankruptcy. It can also mean steep and rapid mark-downs in net asset value; or abnormal "bail-out" by corporate parents or peers in order to avoid write-downs and provide liquidity. The funds are of any type and sector.

Ailing funds haven't shut down, but they've suffered significant value declines and/or temporarily halted redemptions. Funds on watch may not even have unusual declines, but may be posted if it is felt there may be risk of developing a more serious condition eventually.

Attention: This site changes rapidly, and some information may be inaccurate (particularly if it is very recent). You should always check other sources regarding information found here, and check with the funds and/or parent companies themselves if you plan on doing business with them. And as always, please let us know if you have corrections, clarifications, or additions.








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