[quote=Huckleberry]This is NOT an accurate account of what is happening.
1. Hedge funds are already saddled with HUGE losses related to CDO’s, why would they go out and start purchasing hard assets related to RE? They wouldn’t!
2. Hedge funds typically have an ROI around 20% annually. Unless they have run their risk modeling and it shows So. Cal. RE is going to go through a “V” shaped bottom and return to it’s bubblicious state in the next year, there is no way they would invest in houses.
3. Hedge funds do not invest in hard and illiquid assets. They have to be SUPER nimble in the markets. Hedge funds are day traders, not long term buy and hold investors.
4. These same principals hold true for money management companies, mutual funds, asset management company’s, holding corporations, etc…
This is hog wash![/quote]
The only statement I agree with is the last exclamation (assuming it refers to the 4 points preceding it.
Re: 1. Disagree: ALL hedge funds did/do not hold underwater CDOs. I would even venture to guess that some even profited off declines in real estate and stocks.
Re: 2. But they CAN make 20% annually.
If someone can buy property at 60 % current FMV in bulk one can make 20% (Ask Bruce Norris about this).
Re: 3. Hedge funds are not necessarily day traders and quite often operate in illiquid assets.
Re: 4. Same with fund managers. Consider REIT funds, for example. Many hold commercial properties which are not exactly the most liquid day-tradable item.
