By Sarah Wood
What happened to all the opportunity promised by the summer's liquidity squeeze?
As spreads tightened on a variety of asset classes, and as some big sales of the $300 billion-plus glut of leveraged loans were completed with slim discounts over the last several weeks, a question on some minds was how much the fleeting nature of many recent periods of opportunity has been caused by the hedge funds chasing them. Could it be that hedge funds, in aggregate, have finally attracted too much money for their own good?
Indeed, many longtime managers now running multibillion-dollar operations agree that the half-life of cheap buying opportunities following market dislocations - long a key source of hedge profits - is shrinking fast.
"What used to be Us have become Vs," says one manager, noting that curving ebbs and flows in the markets have been replaced by sharp plunges and violent rebounds...