Hedge fund datapoint of the day

By Felix Salmon
April 22, 2009

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.

3 comments

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Plus ca change …

http://epicureandealmaker.blogspot.com/2 008/12/plus-change.html

The supply of idiots in the investor population seems to remain constant over time. Perhaps that is an axiom we can use to construct a new and improved Ridiculous Markets Hypothesis.

“a company for carrying on an undertaking of
great advantage, but no one to know what it is”

Some things truely never change.

Posted by SeanMatthews | Report as abusive

Ha. I post my comment, and then I follow EDM’s link, only to discover that he had _precisely_ the same thought.

Posted by SeanMatthews | Report as abusive