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noting that curving ebbs and flows in the markets have been
replaced by sharp plunges and violent rebounds...