The hedge fund industry has no sense of
history. And this can be a good or bad thing depending on how
you look at it. Mistakes will be repeated by newcomers failing
to realize how other fund managers ran into trouble, but at the
same time fund groups won't be deterred from placing similar
bets that may actually pay off.
Take the airline sector as a sample case. Big investment
bets on battered airlines stocks apparently poised for a
turnaround have had a dubious history for the hedge fund
industry. Just ask Tiger Management's Julian Robertson, an
industry legend who was stuck with a ton of US Airways stock in
1999 that just wouldn't take off. And a combination of
recession and terror concerns again grounded airline stocks in
2001, hurting numerous value-focused funds.
But that was then, and in 2004 sentiments have changed quite
a bit. Sure, a...