Thursday, June 21, 2012

Uncle Sam squeeze: Hedgies get hurt shorting US debt

Wagering against Uncle Sam can be a sucker bet.  Just ask Andy Redleaf, the chief executive of Whitebox Advisors, a $2.3 billion hedge fund known for its savvy fixed-income plays.

“We’ve been short Treasurys since sometime in ’09, which has been painful,” Redleaf said. Still, Redleaf is in good company. Other big hedge funds who are bearish on US government debt include Paul Singer of Elliott Management, Michael Novogratz of Fortress Investment Group and Seth Klarman of Baupost Group.

When Treasury yields hit 3.0 percent in the middle of 2009, the smart money thought they could go no lower, but yields have been sinking just about ever since.

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