REUTERS Hedge Funds Wager on a Glencore-Xstrata Deal | With Xstrata expected to recommend Glencore's revised offer as early as this week, some hedge funds see additional profit opportunity, Reuters reports.
These contracts, known as credit-default swaps, effectively let banks and hedge funds wager on the financial equivalent of a four-alarm fire: a default by a company or, in the case of Greece, an entire country.
New York's cover story this week, by Gabriel Sherman, is on "The Emasculation of Wall Street": With all the major banks unable to wager their own funds on big bets, there's a growing sense that the money that was being made during the Bush boom won't be back.
After the success of his pound wager, Mr. Soros's fund focused on Asian currencies.
John Paulson, who rose to fame in 2007 with a prescient bet against subprime mortgages, earned a record $4.9 billion in 2010 as a result of a big wager that his fund, Paulson & Company, made on gold.
Odds are that you'll be better off wagering on the funds (and the managers) who've proven themselves in all kinds of weather, on all kinds of tracks.
A little later that day, in an email to a consultant who was doing research for some of the hedge funds wagering on Fairfax's fall, Loeb wrote: "die, Prem Die!" A month later, Fairfax sued Loeb and Sender, as well as famed short-seller James Chanos and billionaire hedge fund trader Steven Cohen, claiming they had teamed up to "crush" the company's stock.
Hedge funds that wager on currencies have shrunk or left the market in recent years.
Senator Christopher J. Dodd, Democrat of Connecticut and the chairman of the Senate Banking Committee, also took aim at credit-default swaps, which allow banks and hedge funds to wager on whether a company or country might default.
BLOOMBERG NEWS Hedge Funds Reduce Bets on Gold | Bloomberg News writes: "Hedge funds cut wagers on a gold rally for the first time in three weeks on mounting speculation central banks will curb record stimulus and as this year's slump in bullion spurred losses for billionaire John Paulson".
Indeed, possibly the world's greatest investor, the Oracle of Omaha, Warren Buffet, six years ago wagered $1 million that hedge funds would not beat the S&P 500 over the next ten years.
