Hedge Fund trouble will steepen - Outrages -Citi is going completely insane

My assumptions are confirmed by Morgan Stanley analyst but as the markets have to drop again into end Dec but more likely early Jan again the momentum will get even worse as instıitunional investors tend to panic as well but that might be just wrong timing as markets will drop much further over the next 1-2 years. Hedge Funds have unfortunately proven not be what they were marketed as the protection for bad markets in absolute terms. They have dropped in average less than long only funds but thats not the idea behind them - the problem is that every analyst was told the last 2-5 years he was fit to run a hedge fund - thats complete bullocks as most of them call markets wrong most of the time. Same is true for the young trading crowd who all traded the same easy bets as markets went up and they thought but more importantly people giving money to them thought they know there job. This huge bubble in human resources is a simple equation of stupid greed and that is bursting. as they will be regulated soon and the leverage options dimished only the real talent will survive that will be around 25% at best within the next 2 years even people with real talents might be reduced to 5%. The point is as I do know from my experience that some made money on insider basis and some of the big ones are members of insider groups hence they do not make money because they are smarter but because they know what will happen.

Excerpt

http://www.bloomberg.com/apps/news?pid=20601087&sid=aBuuDHzkmrSI&refer=worldwide

The hedge fund industry may shrink as much as 45 percent by the end of this month to $1.1 trillion from its peak of $1.9 trillion in June because of investor redemptions and market losses, Morgan Stanley analyst Huw van Steenis said in a Nov. 24 report.

Hedge funds have posted losses averaging 22 percent this year through Nov. 24, according to Chicago-based Hedge Fund Research’s HFRX Global Hedge Fund Index. Investors such as pension funds and university endowments are pulling their holdings from hedge funds after they “over-committed” to private equity investments, van Steenis said.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aHh9SCbk6DvA&refer=worldwide

The events around Citi are unbelievable - first of all why does the Treasury bailout every case by different standards, that is a complete dilution of free capital markets competition. Pandit did not make the mess they say that is not really true he sold his HEDGE Fund to Citi for around 800 mil. which produced losses and was closed down since they were heavily invested in Indian garbage. That was a total loss of 800 il produced solely by Mr Pandit and he lies til now about the financial situation of Citi but the most amazing part after receiving 45 bil direct money from taxpayers and guarantee's close to 300 bil. he goes and buys one of the most risky assets for 10 bil. - he is either insane or has bad intentions. Again its unbelievable that the guy Obama hired as treasury chief Mr Geithener is part of this. Furthermore the chairman Mr. Rubin (ex CEO of Goldman and also a tight Obama and Clinton advisor) got this special Citi bailout from his Goldman buddy Treasury Paulson. Nothing has changed they keep on making there frivolous deals and Obama watches them without any objection - even hires the people to work for him.

Sacyr to Sell Itinere to Citi Fund for EU7.9 Billion (Update1)

By Brian McGee and Charles Penty

Dec. 1 (Bloomberg) -- Spanish builder Sacyr Vallehermoso SA agreed to sell highway operator Itinere Infraestructuras SA to a Citigroup Inc. fund for 7.9 billion euros ($10 billion) to cut debt.

The sale to Citi Infrastructure Partners will trim Sacyr’s debt to 12.5 billion euros, the company said in a filing to regulators today. The purchase is comprised of 2.87 billion in cash and 5 billion euros of assumed debt. Sacyr’s shares have been suspended from trading.

Sacyr, Spain’s fifth-largest construction company, ended September with 16.5 billion euros of debt, more than seven times its market value, after the company increased borrowings to expand in energy and counter a slump in domestic construction. In 2006 it spent 6.5 billion euros to buy a 20 percent holding in oil company Repsol YPF SA.

Citi will offer to buy 100 percent of Itinere at 3.96 euros per share, Sacyr said. The Spanish builder will sell a 42.8 percent stake to Citi and another 11.6 percent once the first transaction is complete, the builder said. Itinere closed at 3.37 euros on Nov. 28.

The company has tumbled 70 percent in Madrid trading this year, the most on Spain’s benchmark IBEX 35 Index, which is down 41 percent over the same period. That gives the company a market value of 2.3 billion euros.