The Ultimate Hedge Fund Trade: Profiting From Your Own Demise
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Jonathan Weil of Bloomberg has a humorous article discussing the recent Wall Street insider trading probe.
In his article "What to Do When the FBI Raids Your Hedge Fund", Weil suggests that astute hedgies can profit from the ultimate insider knowledge - their own demise.
Here is a great passage from the article.
Imagine you are a skilled trader at a hedge fund with a few billion dollars under management. You learn that FBI agents have just arrived to raid your firm. Lesser beings might cower under the pressure. You, though, realize that you now possess the ultimate edge: The knowledge of what is happening to you at this very moment. You scan the latest news for headlines about your firm and, seeing none, set about on an action plan.
One Question
Soon the unsuspecting public will be told that financial stocks are plunging on the news that your firm is being raided. You have the benefit of knowing this in advance. The only remaining questions: Do you short Goldman Sachs? Do you short other large banks, too? More importantly, do you short them for your personal account, or for your fund's? Sensing nothing but upside in the downside, you settle on all of the above.
You can read the entire article here: http://www.businessweek.com/news/2010-11-25/what-to-do-when-the-fbi-raids-your-hedge-fund-jonathan-weil.html
In his article "What to Do When the FBI Raids Your Hedge Fund", Weil suggests that astute hedgies can profit from the ultimate insider knowledge - their own demise.
Here is a great passage from the article.
Imagine you are a skilled trader at a hedge fund with a few billion dollars under management. You learn that FBI agents have just arrived to raid your firm. Lesser beings might cower under the pressure. You, though, realize that you now possess the ultimate edge: The knowledge of what is happening to you at this very moment. You scan the latest news for headlines about your firm and, seeing none, set about on an action plan.
One Question
Soon the unsuspecting public will be told that financial stocks are plunging on the news that your firm is being raided. You have the benefit of knowing this in advance. The only remaining questions: Do you short Goldman Sachs? Do you short other large banks, too? More importantly, do you short them for your personal account, or for your fund's? Sensing nothing but upside in the downside, you settle on all of the above.
You can read the entire article here: http://www.businessweek.com/news/2010-11-25/what-to-do-when-the-fbi-raids-your-hedge-fund-jonathan-weil.html
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