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Funds of Funds to start buying closed HFs in 2ndary market

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From a story about how some Funds of Funds are being formed to specifically bid for locked up Hedge Fund portfolios.
This warms my cynical heart.
The premise of a functioning capital market is there will be bids. The reasons for our current debacle relate in part to the lack of bids for what was AAA collateral in the form of CDOs, CLOs, RMBS etc.
Now some prescient fiduciaries are raising money to bid on funds w/ long lockups, or that have otherwise halted redemptions.
15-20% discounts? than the closed end fund situation.
This will persist. Who was buying Hedge Funds? Well.....people with either very poor memories, or those too young to remember what happens when asset markets turn into a self-liquidating tailspin.
We might have staved off the collapse of banks, but they are all behaving now as if it were 1958, and everybody is Mr.  & Mrs. Jones, humbly stepping into the bank manager's office, hoping to secure a mortgage. All credit is now subject to the review of the bloodless, "Mr. Smith", eying each lender for any tics that might betray a less than 100% willingness to repay.
Get used to it....

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Guest Saturday, 25 May 2024