It's not unusual to find a smattering of exchange-traded
funds thrown into the portfolio mix at many hedge funds. But
Louis Bacon's Moore Capital Management takes ETF investing to a
whole new level. The firm's most recent filings with the U.S.
Securities and Exchange Commission shows that Moore Capital had
the better part of $1 billion targeted at ETFs going into the
second quarter - nearly 10% of the dollar value of its total
For instance, the firm was sitting on roughly $225 million
in options in Diamonds Trust Series, the industrials-heavy
AMEX-listed fund. Diamonds' top holdings are an ensemble of old
guard names like IBM and Johnson & Johnson, as well as
cigarette-and-cheese maker Altria and oil giant Exxon
Some hedge funds use ETFs as a mechanism to short. But in
this case, it appears they were used to gain leverage. Indeed,
Bacon's team was so enamored...