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Hedge Fund Made a Killing Betting Against Lina Khan
- justinclift 3y agohttps://archive.li/lY56r https://archive.li/lY56r
- deleted 3y ago[deleted]
- varelse 3y ago[dead]
- AlbertCory 3y agoI saw this. Betting on whether a merger will go through has a very long history. https://en.wikipedia.org/wiki/Ivan_Boesky https://en.wikipedia.org/wiki/Ivan_Boesky
- RobLach 3y agoHedge fund ad built on top of anti-FTC / Lina Khan prejudice clickbait. FTC routinely scrutinizes large mergers and people bet on the outcomes of that uncertainty. Trying to wrap it in allusions to “sticking it to Lina Khan” is silly.
- burkaman 3y agoThis seems kind of like an ad for the hedge fund? There's not really any news here, it's like publishing a headline like "Area Man's Stock Portfolio Did Well This Year".
- walthamstow 3y agoI've seen pieces like this in the FT too. I think it's one of those things that is interesting to the people in the industry but irrelevant to everyone else. We know a thing or two about that here!
- short_sells_poo 3y agoIt's not even interesting for people in the industry, but it garners clicks so even reputable publications produce this drivel. The number of "Random Goober XYZ made 200% this year" articles that turn up on Bloomberg is quite high. By and large it turns out that they had one really good year in a sea of mediocrity, or the P&L is an accounting trick (hello Universa and the disingenuous numbers that got pushed around them). In a sufficiently large collection of clueless people, there'll always be a small number whose bets happened to be very good in a particular year and the media likes to run with it.
- deleted 3y ago[deleted]
- reedf1 3y agoGoing to financial publications and "talking your book" is a common thing for hedge funds to do. Keep in mind they can also influence the market like this, and generate inflows to their fund. Generally financial publications allow this barefaced aggrandisement because everyone knows the bias, and just like you learned in high school history class, biased accounts are just as useful sources of information.
- kristopolous 3y agoIt's hard to tell whether these are "lottery winner sells strategy to pick lottery numbers" kind of nonsense
- passwordoops 3y agoWSJ is very invested in seeing Lina Khan fail, because pro-consumer policy is bad for monopoly is bad for shareholders of said monopoly. So anything will be spun as a negative against Khan
- ComputerGuru 3y agoThe article is a little too breathless in its amazement at the performance of the hedge fund - if mentions in passing that the annualized return rate is something like 11% which means, despite all these “massive wins” demonstrating “amazing predictive prowess” or whatever, there were (admittedly fewer) hedges that didn’t work out so well for them, too. It’s just business.
- mamonster 3y agoYou don't understand how the HF industry works. If his benchmark (HFRI Event Driven) returned 4.47% annualized from 2007 to 2023 and he averaged 11.1% then it is literally anywhere from an "amazing" to an "extremely exceptional" hedge fund. Put it another way: Over the last 16 years, you have more than twice the money if you were with him all the way as opposed to with the "average" event driven fund(represented by the index). There are some particularities due to how HF indexes work(you submit performance voluntarily etc) but these numbers are literally exceptional.
- ComputerGuru 3y agoI fully understand that. But the numbers they are mentioning (excluding the flops) would give you insane performance numbers.
- mamonster 3y agoMy point was that given how hard this guy destroyed his benchmark over the last 16 years it is completely appropriate to be "amazed" at his performance, he is literally like top 1-0.5% in his field.
- burkaman 3y agoWhy would you use that benchmark? If you invested in an S&P 500 index fund you'd have about the same amount of money, without paying his (probably very large) fees.
- 3y ago
- DesiLurker 3y agoIn other news, A turkey did really well till a day before thanksgiving.
- jamesliudotcc 3y agoIt should have been clear enough from reading the abstract of Khan's law review note https://www.yalelawjournal.org/pdf/e.710.Khan.805_zuvfyyeh.pdf https://www.yalelawjournal.org/pdf/e.710.Khan.805_zuvfyyeh.p.... Quote: "This Note argues that the current framework in antitrust policy--specifically pegging competition to “consumer welfare,” defined as short-term price effects—-is unequipped to capture the architecture of market power in the modern economy." In other words, the current law is wrong, and it should be this other way instead. Courts, especially U.S. District Courts, apply the law as it is, not the law as the FTC chair wishes it to be. If I was a hedge fund manager with a law degree, I would draw the same conclusion, and make similar bets.
- xitrium 3y agoThe current law is more general; it’s the current policy’s consumer price heuristic that has become a bad approximation to the law. I like “The Economists’ Hour” on the topic.
- fourthark 3y agoMy understanding is it's the precedent from the past 50 years, rather than the law, that emphasizes "consumer welfare". Source: Matt Stoller's book "Goliath".
- AlbertCory 3y agoPrecedents are the law (if the decision is considered "precedential").
- bbatha 3y agoHowever, precedents can also be changed by the court system. So using the FTC as a lever to change precedent is in fact potential route to change the law. It may even be the only option with congress's dysfunction.
- AlbertCory 3y ago
- yieldcrv 3y agoAll the best political analysts work for hedge funds Capital hill bloggers are too emotional and ideological to be good analysts
- pcurve 3y agoThey sure did make some money though "killing" would be an exaggeration given what they had to put up in capital. It also could've gone the other way too; hence aptly called 'betting'. One would assume they had appropriate hedging strategy in place, but given how hedge funds perform poorly in aggregate, I'm inclined to say these funds just had a little bit of luck on their side.
- 1123581321 3y agoLTCM performed a similar "arbitrage" with no edge. It's risky, and professionals underestimate the loss from a deal failing (these bets require a lot of capital) and often don't have serious models to explain why the delta between the market and acquisition price is too large. It's possible to understand a powerful individual and an institution well enough to bet for or against them with an edge, but easy to be influenced by a subjective narrative about them without realizing it. All that said, when someone has a good streak going, it's sour grapes to complain it's only luck. :)
- keiferski 3y agoI can’t seem to find the article (I think it was in the Financial Times) but it talked a bit about how there is an entire sub-section of the finance industry that evaluates the likelihood of mergers and acquisitions going through. One interesting point being that often deals have so much momentum behind them that the actual economics of the business become secondary to finishing what the acquirer started.