Final dispatch from un-named hedge fund gathering in Boston
Oct 21st, 2007 | Filed under: Hedge Fund Industry Trends, Institutional InvestingDay three of this un-nameable hedge fund event provided a bit of pessimism for everyone. NYU professor Ed Altman got things rolling with a grim assessment of the US economy and successive speakers after lunch – namely professors David Hsieh and Harry Kat – presented research which they said was evidence that most hedge funds still weren’t making the grade.
Altman: Enjoy the Olympics America, then get ready for economic mayhem
In the conference programme, Altman’s presentation title contained over 30 words. But the straight-talking and entertaining academic said it could be summed up as simply, “A New Paradigm or a Giant Credit Bubble?”
From the sounds of it, he comes down solidly in the “credit bubble” camp. As evidence, he pointed to the massive increase in global liquidity (from petro-dollars, a growing money supply and sovereign wealth funds), an explosion in hedge funds, private equity funds, easy credit and low spreads, and growth in the CDO market (now 2 to 3 times the size of the global equity derivative market he says).
These developments, argued Altman, would lead to huge opportunities in distressed debt investing in the coming years (he’s a huge fan of distressed debt - check this out). After apologizing for being excited about what he predicts is a coming wave of corporate bankruptcies, he shared the following secret with the audience:
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