Don't look now, but one of the funds Anselm of Madison Marquette told
me is a big investor in Capital Guidance, which owns MM, now "faces
billions in losses", according to today's Wall St. Journal.
See 'Alpha' Bets Turn Sour.
Apparently, PERS, the Pennsylvania State Employees Retirement System
used a strategy called, "portable alpha" to finance investments of $9.2
billion in hedge-funds. Now PERS could be forced to make cash payments
of $2.5 billion or more to Wall St. trading partners, according to the
Journal.
Last month Anselm and I argued over whether Capital Guidance is a
hedge fund or not. At that time I was concerned that MM's investments
here could be in trouble if Capital Guidance were a hedge fund and
found its credit lines had dried up, since hedge funds are highly
leveraged. Anselm insists Capital Guidance isn't a hedge fund. But the
PERS situation is another matter.
PERS may have to liquidate some of its investments to shore up its
losses. Let's hope Capital Guidance has them locked in for couple of
years.
Anyone want ot venture forth on this one?
Maureen
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