Sunday, 19 October 2014
Last updated 2 days ago
Jun 21 2012 | 11:31am ET
BlueMountain Capital Management earned a tidy profit from JPMorgan Chase's $2 billion credit-default swap index loss last month. Now, the hedge fund is profiting by helping the bank clean up the mess.
BlueMountain has been buying trades to allow JPMorgan to unwind its huge position in the index and selling them to the bank, Bloomberg News reports. Using BlueMountain as a middleman has helped JPMorgan quietly retire some of the roughly $100 billion portfolio of Markit CDX North America Investment Grade Index swaps the bank's Bruno Iksil, known as the London Whale, bought up.
JPMorgan lost billions—the precise amount is unknown and could be growing—when its swap purchases grew so large they began to distort the market. Hedge funds, including BlueMountain, led by former JPMorgan executive Andrew Feldstein, jumped in, earning impressive returns at the bank's expense.
"They used BlueMountain to disguise what they were doing," TF Market Advisors' Peter Tchir told Bloomberg. "It all gets a little bizarre, and shows how screwy this whole market is."
Feldstein helped build the credit-default swaps market during his tenure at JPMorgan in the 1990s. He co-founded BlueMountain in 2003.
Sep 22 2014 | 4:15pm ET
"I tell people that everybody likes good news and so if you have good performance that’s wonderful,” explains Mike McKitish of Peddie School's endowment, “but it’s the people that want to talk about the bad news or where they drifted and how they came back and how they stayed to their discipline…” that he wants to hear from. Read more…
Sep 30 2014 | 9:29am ET
The crisp Autumnal days of October are upon us, and so are a few of the hedge fund industry’s favorite charitable events. If you have never been to Rocktoberfest, well, you are missing out. And for a quieter evening of sipping and socializing, stop by HFC’s Wine Soiree. Read more…
Most traders agree that proper risk management is the key to successful trading. However, many traders depend on the deeply flawed measure of standard deviation as a benchmark of risk. Here we put it ...