Tightening of Capital Markets hurt Smaller Hedge Funds

June 17th, 2008
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Less and less hedge funds are being launched. The credit crunch and the tightening of capital markets have made it increasingly more difficult for hedge funds to raise the capital needed to be competitive. This year, the hedge fund industry expanded by only 589, due to the fact that so many funds were forced to close or merge. This was the lowest increase in six years. Investors are looking for security in this loosely regulated market, so they trend toward established larger firms as `safe havens' to invest their money. What is more, some of the larger hedge funds are beginning to resemble investment banks by lending capital. Large hedge funds are seeing an increasingly more important role in shaping the financial landscape. They use their investment strategies not only to take advantage of changes within companies, but now to influence those changes- as we have seen recently with Mr. Carl Icahn and Yahoo. Will this mean the end for small hedge funds- not likely. In the short run the industry with contract and consolidate, but once the US economy picks itself up and people are once again in the money, there will without doubt be a resurgence of hedge funds.
For Detailed Investor Profiles on these Investors, click below:
Icahn Associates (Carl Icahn)
Related People: Alexander J. Denner; Brett Icahn; Carl Icahn; Keith A. Meister*
Related Entities: High River Limited Partnership; Icahn Partners; Icahn & Co Inc; Icahn Associates; Icahn Enterprises (formerly American Real Estate Partners); Icahn Fund Ltd; Icahn Partners LP

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