Hedge Funds (HF) are famous for being the ones that move money, and money moves the world. This is undoubtedly a simplification that helps to understand things but at the same time, too simple to explain everything.
When one analyzes why Russia attacks Ukraine, it is difficult to see economic reasons that justify it, no matter how many rare earths (vital for technological components) are found to be exploited in the eastern fringe of Ukraine. I think Russia attacked more for a political recognition problem than for economic reasons. We’ll come back to that another day. Money doesn’t explain everything, but it’s one of the key factors for sure.
The economic crisis with skyrocketing inflation, skyrocketing energy prices, falls in the values of large companies (Nasdaq -32% since the beginning of the year and SP500 -23%) would seem that this is not a good time for investment funds .
That’s not rue. Now is when HF have more work. What is done now affects the outcome of what will be the results of the next Bull run.
And a good example of this is this graph:
The HF are hiring! Even in August the balance of entries and exits in the sector is extraordinarily positive. When logic would say that a sector like this should be seriously affected not only by what has happened but by what is coming, shouldn’t we be noticing cuts in the teams and adjustments in the HF?
Maybe their results in 2022 are good, and that’s the reason they are hiring? Well, I don’t think so…
I took a database of 1.024 HF and analysing the results of a random representative sample the outcome is this:
Last year was a great year for most of them (although the pandemic world situation, thanks to the FED massive printing madness), but this year it’s being tough.
*reader will have noticed that I have incorporated a subtle comparison with our results, sorry, sometimes we can’t hide we are pride, if we are doing well, it has to be said ;-).
Anyway, HF are growing. And big ones are the ones that are growing more:
The nº 1 in this Rank of hiring is a HF called Citadell (NY). But in this interesting analysis of the Vision company, from what I have been able to investigate, an important factor is not taken into account: many of these exits from the sector go to crypto.
In conclusion, while the economy worsens with skyrocketing inflation, skyrocketing sovereign debt and rising rates, which will affect the financing capacity of many companies that will suffer to survive, a sector such as Hedge Funds continues to grow oblivious to this macro situation. If we add to this the inevitable, for me, transformation of the traditional financial industry to Decentralized Finance (DeFi), I think the foundations are being laid for some interesting movements in the coming months and years in the Hedge Funds future.
Yours in crypto