In this Wall Street Journal column, which includes the now-ever-present depressing (and depressed) mug of John Paulson, the author notes that this is a scary time of year for hedge funds. Many face their notice periods for year end redemptions by their investors.
This is truly scary. Imagine you work at a desk, in an office. And, you get paid for this. If you perform successfully, you might even get a bonus. One day your boss fires you. That's tragic. Suppose you say to your boss, "No problem. I'm out of here. However, as you might recall, you have to keep paying me until I say my work is done, and I clean out my office. Oh, and I no longer have anywhere to move the stuff that's in my office, so I'll just sit here with my tchotchkes. Call me in two years. Don't sue me, please, because I can pay my lawyers with your corporate card."
This is essentially the scary situation faced by hedge fund managers. If investors "ask" for their money back at the same time as others, no one gets their money back. The hedge fund managers suspend redemptions, and keep charging fees as long as they feel appropriate.
The only Halloween surprise in sight is just how poorly investors will be treated (and tricked) by those entrusted with their assets.
