Nassim Taleb’s Black Swan hedge fund caused 1,000 point Dow sell-off?

May 13th, 2010
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Large option contracts purchases by Nassim Taleb’s Universa Investments LP allegedly contributed to last week’s dramatic 1,000 point drop in the Dow Jones industrials. According to a Wall Street Journal report, shortly before the sell-off, the “Black Swan” hedge fund manager purchased 50,000 options contracts, betting that the S&P 500 would fall from over 1,100 to 800 by June. If successful, the $7.5 million bet could have netted Universa Investments approximately $4 billion.

Nassim Taleb co-founded Universa Investments with Mark Spitznagel in 2007. Nassim Taleb is the Global Macro focused hedge fund manager’s Senior Scientific Advisor, while Mark Spitznagel serves as its Chief Investment Officer. Mr. Taleb is the author of the bestselling book “The Black Swan”, which details his acclaimed theory on the extreme unpredictability of very rare events. Universa Investments emphasizes protection against these huge risks rather than more common risk factors.

Last summer, the firm made headlines when it launched the Black Swan Protection Protocol Inflation hedge fund. The fund focuses on protecting against what Nassim Taleb saw as increasing inflation caused by global government’s economic stimulus efforts.
For Detailed Investor Profiles on these Investors, click below:
Universa Investments (Black Swan)
Related People: Mark Spitznagel; Nassim Taleb
Related Entities: Black Swan Fund; Black Swan Hedge Fund; Black Swan Protection Protocol Inflation Fund; Universa Asymmetry Fund LP; Universa Asymmetry Master Fund
Related Article Tags: Multi-Strategy, Long Short, Equity, Debt and Global Macro Hedge Fund News

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