One Of The Biggest 'Hedge Funds' In The World Is Getting Destroyed By The Yen!!!
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01/02/2013 06:58 AM
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One of the biggest leveraged hedge funds in the world got hit with a 2×4 during the 4th Q. This fund has a mixed bag of assets, but was heavily exposed to big FX positions.
The fund made a big “bet” recently when they went short EURYEN. This turned sour in a very big way; the EURYEN moved an incredible 14 big figures against them in just 60 trading days.
Street players, who know of this currency spec, refer to it as a “Size” position. At the end of Q3, it came to a lumpy short $40B. There were rumors that the fund added to the short during the Q (not confirmed yet). But even if the book was kept static, the mark-to-market loss comes to $5+B. That’s serious money to anyone.
Note: The short EURYEN book is looking terrible for this fund. The new Japanese Prime Minister is forcing a devaluation of the currency. The Japanese Central Bank is doing its best to achieve that devaluation. It’s possible that the fund will have to cover the short. If so, it could turn that “paper” loss into a cash loss.
I think the well-paid managers of the fund are kicking themselves in the ass over this speculation. They got creamed on this stinker, and this could be just the beginning of the losses.
Adding to the carnage was a monster sized bet short EURUSD. Last reported, this mega-position was $220B short! It’s possible that this number is now close to one-quarter trillion. It was a good Q for the EURUSD, and that means a bad Q for the fund. The 6+ big figure move up in the Euro versus the dollar translates into a paper loss of a staggering $11b!
All in, the losses from FX come to $16.5B. The fund has reserves of about $50b, so the quarterly swing is not a crisis, but it’s an eye-opener. 30+% of those reserves went out the window in one Q. Wow!
Read more: [link to www.businessinsider.com]
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