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Bank Of America Corp (BAC) Financial News - Hedge funds feel the pain as losses set to deepen

Bank Of America Corp (BAC)

Hedge funds feel the pain as losses set to deepen

Quote: economy failed to recover as quickly as many had hoped and Europe's debt crisis worsened.So even the small gains nursed by big hedge funds like Dan Loeb's Third Point, and others at the end of July, are likely to have vanished in the first few days of August."All of those small gains were given back, gone, done," said one investor who asked not to be named because he is not allowed to speak about returns publicly.And for some, like John Paulson, who had already headed into August with losses of 15 percent in his Advantage Fund, the scars are expected to be even deeper.Bank of America (BAC.N) was a big loser on Monday, nursing a 20 percent drop. And since Paulson had owned more than 120 million shares in the bank at the end of the first quarter, investors reasoned that the billionaire fund manager took quite a hit.David Tepper, who had made billions two years ago by betting on battered bank stocks, sold off nearly 42 percent of his 17 million shares of Bank of America holdings in the second quarter, according to a regulatory filing. His lack of confidence in the lender was seen as accelerating the drop.BUT NO BLOODBATHAs talk of losses swirled, rumors swirled about who might have suffered fatal blows. But people familiar with a broad swath of managers said there had been no massive margin calls.A bloodbath might have been averted because hedge funds took more defensive positions heading into August. They lacked a sense of conviction about the markets and they were worried about politics and whether the U.S. debt ceiling would be raised, investors and fund managers said.Still, hedge fund investors who remember the rush to exit funds during the financial crisis are taking no chances. Worried that their own investors will pull money out, so-called fund of funds are fir...
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