The GAIM conference in Monaco – the largest annual gathering of the hedge fund conference circuit – is suffused with an air of quiet caution this year. Even at last year’s conference, after the fall of Bear Stearns, hedge fund managers and alternative investment gurus had reasons to be bullish. After an estimated $350bn of redemptions in Q4 2008 and Q1 2009, however, things are now a little more… considered.
Of particular interest from sessions on Tuesday morning though was the live polling of delegates (several hundred) on several key questions facing hedge funds and the investment industry as a whole. Results of the poll, and a few choice quotes from GAIM attendees, below.
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Is the latest credit crisis over?
Yes – 17.4 %
No, it will rumble on – 65.2%
No, it will get much worse 17.4%
Yes, it is over, in the sense that banks are unlikely now to go bust. And governments – the owners of much bad paper – are not going to be forced to sell. [Large new national debts, though] will hit GDP – which will hit equities. Credit will be ok.
- Marc Lasry, CEO & Co-founder, Avenue Capital
Where are concerns greatest?
USA – 35.5%
Europe – 58.9%
Asia – 0%
Other EM’s – 5.6%
There is complacency among the audience, if I may say so, about the scale of the problems facing emerging market economies.
-Thomas Thygesen, Chief Strategist, X-Asset class strategies team, SEB.
It is a huge fiction that Asia is fine and that there’s a shift of power. Asia needs a strong Europe and a strong US to grow.
- Marc Lasry
Has market volatility permanently jumped higher?
Yes – 46%
No – 54%
Let’s imagine Ben Bernanke is God and he picks the precise moment in time to take the punch bowl away. Do you believe, with US elections in three year’s time, they’ll let him do it? Two tigers should never ever be let out of their cages: leverage is one, inflation is the other.
- Lee Robinson, co-founder, Trafalgar Asset Management
Which investment styles do you see doing best in the next 12-18 months?
Equity hedge – 8.7%
General arbitrage – 9.78%
Global macro – 23.91%
CTAs – 17.39%
Short sellers – 3.26%
Distressed securities, event driven – 28.26%
Long only – 2.17%
Cash – 6.52%
[On legal problems with distressed debt strategies in Europe] France is a wonderful country. It’s beautiful. But you’d never invest here. There’s a country next door – Italy I think it’s called – where there was this company called Parmalat and it went to parliament to have bankruptcy laws changed. Europe! You can’t do that!
- Marc Lasry
What are your major concerns?
Market liquidity – 26.5%
Leverage – 7.1%
Counterparty risk – 14.2%
Lockups – 6.2%
Lack of alpha – 22.1%
Risk management – 19.5%
Offshore structures – 4.4%
Are managed accounts the way forward?
Yes – 30.9%
No – 69.1%