Quantitative funds rebound | stockbee

8/23/2007

Quantitative funds rebound

When the market hit turbulence, the quant funds lost money. Immediate reaction from clueless perma bears and everyone else was to pile on and claim doom and gloom for quant funds. Now news is percolating down that most of them have rebounded. Obviously you would not see any comment or mention about it from the usual suspects. Go back and see the news and blog coverage from just 10 days ago, there was no shortage of commentators writing obituaries of quants.

Goldman Sachs Group Inc.'s Global Equity Opportunities hedge fund rose 12 percent last week after the securities firm shored up the money-losing pool with $3 billion of cash, investors said.

Assets more than doubled to $7.5 billion as New York-based Goldman put $2 billion into the fund and raised $1 billion from investors including Maurice ``Hank'' Greenberg, the former chairman of American International Group Inc., and billionaire Eli Broad. The fund lost about 30 percent in early August as rising mortgage defaults caused stocks to tumble, upending the computer models its managers use to select trades.

Global Equity and other so-called quantitative funds rebounded as market turmoil eased, said the investors, who asked not to be identified because the Goldman fund's performance is private. James Simons's $29 billion Renaissance Institutional Equities Fund made up almost the entire 8.7 percent decline it suffered in the first eight trading days of August, investors said.


Keeping calm during market correction is very important. Most immediate analysis about market corrections is often faulty and no more than just fear mongering by perma bears. See my previous post about this here.

6 comments:

Bill said...

http://www.billakanodoodahs.com/2007/08/beautiful-stop-run-plus-hedgies-and-mark-to-market/

"Provided that the market inefficiency the strategy capitalized on still exists, why not buy in now? That doesn’t mean I’ve suddenly become a fan of the leveraged spread trade; I still think that type of trade will kill more hedge funds in the next year than my SUV’s tires will kill possums in the next 100,000 miles, but assuming Goldman’s folks are comfortable with the trade, the right thing for them to do is to keep the fund afloat. In other words, I think it’s good odds they’ll get their $3 billion back."

Rhonda said...

Nice to have you back!;)

BullPreacher said...

GREAT THAT YOU ARE BACK: NEED YOUR INSIGHT>

Grow Your Funds said...

Completely agree with your analysis on the importance of keeping calm. Those who sell into panic are the ones who never profit from the large upswings, they simply become the bottom of the market by their fear selling. The bears always say its heading to 5,000 or whatever number they pick, sure they are right once in a while, but the market in the long term will disappoint a permabear who constantly roots for lower prices.

Aaron
GrowYourFunds.com

Pankaj said...

Welcome back Pradeep!! BTW, as I am reading ur blog, I had some mirchi chi bhaji today ;)... thought, u'd like to know.. cheers..

mrstrader said...

It is almost a miracle. Pradeep, your sight is wonderful for many, many reasons, but if nothing else, please be sure to let us know the beginning and end dates of your next vacation!