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Citibank = Another Reason Hedge Funds Pulling Most of Their Money Out of Market at the End of Each Day



February 27, 2009 – Comments (2) | RELATED TICKERS: C , UDN , FAZ

From Bloomberg:

Citi Gets Third Rescue as U.S. Plans to Raise Stake (Update1)

By Bradley Keoun and Rebecca Christie

Feb. 27 (Bloomberg) -- The U.S. government ratcheted up its effort to save Citigroup Inc., agreeing to a third rescue attempt that will cut existing shareholders’ stake in the company by 74 percent. The shares fell as much as 48 percent. (Overnight!)

From George Washington Blog:

Hedge Funds Pulling Most of Their Money Out of Market at the End of Each Day

In October, the Washington Post wrote:

The largest swings have often occurred during the last hour of trading, prompting a closer look by the Financial Industry Regulatory Authority, a nongovernmental regulator of securities firms. The end of the trading day is when institutional investors, including hedge funds and mutual funds, rush to meet client demands to pull cash out of the market, analysts said.

Today, trader Tyler Durden wrote about a tip he received from a trusted source: the average equity hedge fund is 70% in cash at the end of each trading day. Durden comments:

Explains why the market performs like a schizophrenic day trader, as investors try to game the greater fool in unison, running the market up and down especially in market leading sectors such as financials. As long as a fund is not the last man in, the first 50% in any wave are set to make profits. While this has long been the modus operandi for ... notable algo trading outfits ..., the fact that it is spreading to most hedgies is shocking ....

Durden told me by email that "most portfolio managers are well aware of ths fact, and the ETF explosion especially in 2x and 3x level is all a direct function."

More on this topic (What's this?)
From Rumor Bag: Average Equity Hedge Fund Is 70% In Cash At End Of Each Trading Day (Zero Hedge, 2/26/09)
The Upcoming Hedge Fund Redemption Scramble
(Zero Hedge, 2/26/09)
Hedge Fund Citadel Letter to Investors Re: Redemptions (market folly, 2/23/09)
Read more on The Impact of Hedge Funds at Wikinvest

For Fools that are "buy and holders", you might want to wait until the law, legitamacy, morality and capitialism return to the US. You are witnessing the Foxes guarding the Hen Houses and they are hungry....

Good News

Ron Paul "The Federal Reserve Is the Culprit!" on 25 February 2009

Here is Congressman Ron Paul stating "you cannot reinflate the bubble" toSpace Shuttle Ben on 25 Feb 09


2 Comments – Post Your Own

#1) On February 27, 2009 at 11:17 AM, GNUBEE (< 20) wrote:

Tyler Durden? really? I thought he was still making soap.

Looks like the big boys straws are making that "drinks almost done" gurgling noise. Don't give them free refills.

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#2) On February 27, 2009 at 1:01 PM, abitare (30.30) wrote:

Another "gem of wisdom" here:

Madoff: "I'm very close with the regulators." 


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