Brokers Fight Club

A day at the office for a trader can be a roller coaster ride of highs and lows. You just called the Dow for +100 points, then threw it all away on Oil. Yahoo and Microsoft pair trade not going your way? Or have you spent the day whipping the Hang Seng?

Whatever your day has been like it is always great to let off steam at the local watering hole, or if you are more fitness oriented, down at the local gym. But beware! Taking your office enthusiasm to the gym might be harmful for your health.

Monday saw the acquittal of stockbroker, Chris Carter, who was charged with confronting a noisey gym customer during a spinning class in an Upper East Side fitness club last summer.

Apparently our stock broking buddy was two bikes away from Stuart Sugarman in the Equinox sports club. By all accounts, Mr Sugarman, a senior partner at an investment firm, was grunting, groaning and shouting, issuing exclamations like "You go girl".

Now shouting such exclamations in our office would have the 'fool of the week' award locked up for many a month, but doing so in a gym with a stressed stockbroker got slightly more reaction.

Mr Carter dismounted his bike grabbed Mr Sugarman's handlebars, raised the front end off the ground driving the rear of the bike into a wall and then let the bike go.

Mr Sugarman spent two weeks in hospital saying the injuries sustained have caused him chronic neck and back pain. The jury seemed to understand the frustration and pronounced Mr Carter 'not gulity'.

This incident occurred on August 15th 2007 when we were just seeing some problems in the markets.... with all the volatility we are seeing now maybe the local City gym is not the place to verbally vent your market frustrations... just a thought...

Rumors of my death have been greatly exaggerated

Regulators and doom merchants are shedding a tear today as the HF Global Hedge Fund Index is reported to have risen by 1.4% in May. Add this to the 1.2% in April and the industry is only 0.2% behind the game for 2008.

Easing of some volatility has helped the industry recover and the arb funds have benefited from buyouts moving closer to completion, such as Clear Channel Communications.

``Some people may have prematurely started writing obituaries for the hedge-fund business,'' said Stephen Oxley, managing director of Pacific Alternative Asset Management Co. in London, which has about $10 billion invested in hedge funds. ``I've been around long enough to have heard several times the cry that `this is the end of hedge funds as we know them'.''

Arbitrage funds, those that bet on a difference between prices, got a lift on May 22, when Clear Channel said banks had fully funded the debt portion of its transaction to be bought by firms including Bain Capital LLC and Thomas H. Lee Partners LP. Highfields Capital Management LP and Third Point LLC are among hedge funds that hold Clear Channel shares, according to filings with the U.S. Securities and Exchange Commission.Merger arbitrage funds in May had their best month since October.

Gains in the industry are reported to have been lead, not surprisingly, by the marco funds which can make bets across a wide range of investments from commodities to currencies and interest rates. These funds climbed 11 percent according to HFR data. The Global Hedge Fund Index is based on returns from more than 2,000 funds and is published with a two-day delay, according to HFR's Web site. H.

Clearly there has been some 'deaths in the family' with those funds that made the wrong bets on the mortgage market going the way of the Dodo and there will be, no doubt, some more to come.

``There's still a huge amount of uncertainty out there,'' said Sophia Brickell, an investment specialist at GAM in London, which runs $28 billion in funds of hedge funds, who expected 2008 to be a ``weed-out year'' for hedge funds.

It looks, however, like we are seeing a calmer environment for funds with most of the potentially big problems having already been removed.

``We're seeing a break from the big losses out there and that's a good start,'' said Cambiz Alikhani, who helps manage hedge-fund investments for Iveagh Asset Management, the investment arm of the Guinness family brewing fortune.

So the industry may not be totally strong and healthy, but it looks as if the hedge fund industry has, once again, shown that it is a long term player in the markets and is not going away in a hurry.