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Hedge Funds Essay

809 words - 4 pages

Title: A Hedge Fund manager’s New Groove
Date: November 2, 2010
Section: Money and Investing methodology
According to the Wall Street’s journal article, a former manager of hedge funds has made a lot of money by switching to the high long term decision from his shorting stock. William Von Mueffling made a surprising announcement by saying that he would close his hedge funds and return about $3.5 billion to investors. Williams Muefflling’s firm contillion capital management of New York only managed an unattractive piece of business of business worth $1 billion in long only assets for a very long period of time. Due to his fortune he currently manages more money than he did while he was ...view middle of the document...

Mr. Von Muffling’s firm last less money compared to other hedge funds firms. However, his clients decided to withdraw their funds in anticipation for a larger hedge funds bubble. He explains that this withdrawal was a result of the fact that hedge funds face a harsh reality when loses continue to linger. These losses cannot be recovered easily which means that the firm will not be able to earn big fees. Some of the reasons why hedge funds that specialize in short term selling have the worst performance is because of the macroeconomic reasons such as the low interest rates that continue to affect the prices of stocks. Mr. Contillion’s strategy includes searching for companies that have an above average returns on its equity for shareholders with relatively cheap prices. The companies are able to survive inflation and also have exposure to currencies in various parts of the world. Some of the stock that Contillion capital management holds includes Intertek Group PLC which manufactures a wide variety of products, Colgate Palmoure Company and the Heineken Brewery Company.
In trying to run a business, the financial manager faces three basic decisions which include what productive assets a firm should buy, how the firm should finance the productive assets purchased and how the firm should manage its day to...

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