Watch for more hedge fund closings. They are coming. According to the FT, "Hedge funds are having their worst start to the year on record after March turned into one of the ugliest months for popular strategies and several funds imploded."
The news is bad for the hedge fund managers, but even worse for banks and brokerages that may have loaned them money. Even in a liquidation, these financial firms may not get all of their money back.
Institutional investors, like fund companies, also have money in hedge funds. That could affect the performance they post for their corporate and individual investors. Wealthy individuals often put capital into hedge funds as well.
If the hedge fund debacle gets worse, banks may have to write off the difference between what they loaned and what they got back in liquidation. Just another minefield for money center banks and brokerages.
And the number of trouble spots seems to be growing.
Douglas A. McIntyre is an editor at 247wallst.com.
