Hedge fund datapoint of the day
From Jesse Eisinger’s profile of Bill Ackman:
In 2007, he set up a special fund to invest in a single stock in a highly leveraged way. In a sign of how frothy the markets were, he raised $2 billion from start to finish in a week, about two-thirds of which came from other hedge funds. Investors knew the outlines of the investment but not that it would be in Target.
I can understand investors buying into a single-stock fund because they’re convinced about the thesis behind it. But raising $2 billion for a single-stock fund in one week, without revealing what the stock in question actually is? Yikes. Whatever sympathy I had for Ackman’s investors in PSIV has now completely disappeared.