Never underestimate the capacity of the hedge fund industry to deliver the unexpected - and, occasionally, a nasty surprise. Indeed, it happened again in recent weeks with the sudden implosion of MotherRock, the energy fund headed by Robert "Bo" Collins, which is now shutting down.
Of course, there have been continuing problems - within the United States - of blowups occurring amid allegations of fraud, in such cases as Lancer and Beacon Hill, whose managers were accused of having misled investors about the true value of the portfolio.
The problem at MotherRock does not seem to have been one of those. MotherRock is a case that looks more like Long Term Capital Management - where the managers simply put on the wrong trades, and were unable to control the risk when markets turned violently.
The MotherRock collapse does look different from LTCM, of course, in one vital respect. With assets of little more than...