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Hedge Funds Unsure When To Put Risk On Again

After interviewing four of the largest hedge fund managers on Wednesday at the SALT Conference, it’s fair to say they are a bit freaked out by the latest news from Europe and the worries that global growth is now truly in question.

But to be fair, they are only a “bit” freaked, not completely. And given that many of these funds did not weather the dislocation of 2008 particularly well, it’s only prudent that they head to the sidelines for now.

To do otherwise would expose them to risk they can’t afford to take should there be another severe downturn.

The question for them and all other investors who are derisking is: When do they believe it will be time to put risk on again? On that question, none of my guests were of great help.

Marc Lasry, the Chairman, CEO & Co-founder of Avenue Capital Group, who was pulling back from his markets (credit and distressed), thinks it will be a while until we no longer pay close attention to the news out of Germany; the Principal & Director of Fortress Investment Group , Michael Novogratz, sounded the most alarmed by the current action and its impact on global growth.


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